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I am going to fast forward a bit here to the meat of it all:
I am stuck in the mud that some call math, lol. That, and I'm now on cold medicine (got sick RIGHT after I posted about not getting a flu shot --no joke. So bear with me here please.)
I am trying to figure out how to structure a somewhat small scale commercial project that has a potentially great ROI. I have already found the land and the owner is willing to owner finance it with great terms. (17 unzoned acres, with a house, for $285k, at 6%; 10% down over 25 years with a balloon in 10. The land is beautiful--breathtaking really, and is already a tourist draw.)
I have experience with cabin rentals and have a handyman who is familiar with putting these cabins up and getting them hooked to utilities.
All-in-all, I would like to put up about 15 cabins on this land.
To make this happen, I could:
1. Finance the whole thing on credit cards/loans and own the whole project 100%. If I were to finance the whole thing, then I would need about $48k a year income to cover all the payments on the loans I'd need. I'd prefer to have at least $48k liquid in the bank as a reserve just in case--or at least half of it, as I do anticipate income coming in during the first year!
...Loans are kinda hard to get right now, and the SBA loans that I've looked into are high interest and have fees and want 40% down and on and on. So the loans I could get would be from either credit cards and/or friends or family. Paying borrowed money (esp. on credit cards with the BS games they are playing now with jacking up interest rates with no notice)with borrowed money makes me a little nervous--so I guess I'd need some input on this one! ...I suppose I could take out a cash advance of like $50k (I have those checks where it's 0% interest for the first year and then jumps to like 21% in year two with a 3% transaction fee) and then go to the bank and take out a loan for $50k at a decent interest rate and then if the credit card pulls something slick, I could either transfer the balance or pay it off from the bank. (Just thinking out loud here.)
2. Sell shares of the company. I could sell shares of the company and have the company buy the cabins and own 50%. I could get investors to buy in for $x per share (I think I'd make the buy in low--like $10k a share), and tell my investors to expect nothing for the first 6 months. After 6 months the odds of you getting 9% is very high. The goal at this point would be to get them their 9% and anything over that, we'd split 50/50. Then once the investors split reaches the amount they put in, we continue to split the profit until the investor is capped out at a certain amount--maybe $20k (so double their money--just pulling numbers out of a hat here as I don't know how to figure the math on this one. I have no idea how to figure what a share would be worth or what a reasonable return would be--for both me and the investor.)
3. Sell investors cabins only. Investors buy cabins from us for $50k (let's say) and give us 30% down. We presale 3 of these--their down paymnets are what I would use to float all the startup costs--and pay the monthly payments. The investors get mailbox money from their cabin as I would manage it.
I have done a ton of research and am continuing to do so. The touism in this area is steady and 2009 was a record breaking year. I know from my experience that the cabins I would be developing would fit the demand that is there.
Is this concept fastlane? No. Could I potentially scale it to where it could become fastlane, sure.
...So how would you dice this?
I am stuck in the mud that some call math, lol. That, and I'm now on cold medicine (got sick RIGHT after I posted about not getting a flu shot --no joke. So bear with me here please.)
I am trying to figure out how to structure a somewhat small scale commercial project that has a potentially great ROI. I have already found the land and the owner is willing to owner finance it with great terms. (17 unzoned acres, with a house, for $285k, at 6%; 10% down over 25 years with a balloon in 10. The land is beautiful--breathtaking really, and is already a tourist draw.)
I have experience with cabin rentals and have a handyman who is familiar with putting these cabins up and getting them hooked to utilities.
All-in-all, I would like to put up about 15 cabins on this land.
To make this happen, I could:
1. Finance the whole thing on credit cards/loans and own the whole project 100%. If I were to finance the whole thing, then I would need about $48k a year income to cover all the payments on the loans I'd need. I'd prefer to have at least $48k liquid in the bank as a reserve just in case--or at least half of it, as I do anticipate income coming in during the first year!
...Loans are kinda hard to get right now, and the SBA loans that I've looked into are high interest and have fees and want 40% down and on and on. So the loans I could get would be from either credit cards and/or friends or family. Paying borrowed money (esp. on credit cards with the BS games they are playing now with jacking up interest rates with no notice)with borrowed money makes me a little nervous--so I guess I'd need some input on this one! ...I suppose I could take out a cash advance of like $50k (I have those checks where it's 0% interest for the first year and then jumps to like 21% in year two with a 3% transaction fee) and then go to the bank and take out a loan for $50k at a decent interest rate and then if the credit card pulls something slick, I could either transfer the balance or pay it off from the bank. (Just thinking out loud here.)
2. Sell shares of the company. I could sell shares of the company and have the company buy the cabins and own 50%. I could get investors to buy in for $x per share (I think I'd make the buy in low--like $10k a share), and tell my investors to expect nothing for the first 6 months. After 6 months the odds of you getting 9% is very high. The goal at this point would be to get them their 9% and anything over that, we'd split 50/50. Then once the investors split reaches the amount they put in, we continue to split the profit until the investor is capped out at a certain amount--maybe $20k (so double their money--just pulling numbers out of a hat here as I don't know how to figure the math on this one. I have no idea how to figure what a share would be worth or what a reasonable return would be--for both me and the investor.)
3. Sell investors cabins only. Investors buy cabins from us for $50k (let's say) and give us 30% down. We presale 3 of these--their down paymnets are what I would use to float all the startup costs--and pay the monthly payments. The investors get mailbox money from their cabin as I would manage it.
I have done a ton of research and am continuing to do so. The touism in this area is steady and 2009 was a record breaking year. I know from my experience that the cabins I would be developing would fit the demand that is there.
Is this concept fastlane? No. Could I potentially scale it to where it could become fastlane, sure.
...So how would you dice this?
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