How to Leverage a Business With Other People's Money

Step-by-Step Guide

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   Step 1: Read books and articles about using other people's money to leverage a business

   You stand on the shoulders of the previous generation in some businesses, or families.
   
   Trump U. tells a story about "Ben" who went to a friend and said something like, "If you lend me $40,000 to make a down payment on a house and renovate it, I will handle all the details for you (and discussed how they would share the cost and profit)." Well, it indicates that he found a property, negotiated and made the purchase, supervised the renovation and sold it so that they split a profit after costs were paid, making about $35,000 each on their first joint venture.
   
   They did another deal, then Ben went out on his own.
   
   It does not mention how long that took.
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   Step 2: e-Commerce

   , Make sure that:
   You are getting a good deal (paying less than market value, as it stands) in a stable or improving/or transitional location (edgy, but luck may go either way(?); it probably does not depend just on you or depends on moving faster than others, etc.
   - caution/caveat). , So that, there is potential to increase the value quite significantly by fixing up, with repairs or more extensively remodeling, re-inventing the product, or the market
   -- dressing up with some inexpensive improvements, or that more expensive ones can/will increase value quite well. , Consider holding your purchase so that the business income or rents pay it off for you over the course of time. , Do you see that when you own a business or rental property that you must make a "positive cash flow" (call it a profit) to have the business pay for itself, or fail, fall prey to lack of equity and appreciation, or not following through by you or ones depended upon.
   
   If you do not make a positive cash flow, significant profit, you might still stay in business if the reason that there is "not a good profit" is called a "loss on paper," ie: after all expenses of the business are paid and depreciation is figured on the equipment, improvements and fixtures you are still able to exist, well or not so well, ie: "loving"
   
   eating beans and rice, living in a back-room or attic. , Realize that without a good profit: then there is a cruel-risk for you, the seller and/or the lender (that's why conventional financing for an inexperienced owner is difficult or even impossible).
   
   So then a motivated seller becomes highly desirable to put you in the best position to profit enough.
   
   You most likely would not have enough operating capital to reinvest in new equipment, improvements and to grow the company
   -- unless the customers pay a hefty amount in advance, down payment or such.
   
   In rentals (leases) you receive security deposits and some rent paid in advance by new renters, but you often have to pay back all of that including the security deposits if renters have maintained the property except for ordinary wear and tear, and they leave it clean. , In this case the seller or lender is paid off by funds received from common people as your customers and/or renters "similar to common-stock investors" having no ownership rights as money is paid to you and you pay the seller. ,, So your customers and renters being dependable and prompt to pay you is so very important, just like stock investors buying issues of stocks at a good price for that stock market is necessary to that issuing corporation. ,, Owner is moving to another county, state, or province. , Perhaps you get a mortgage company to finance and set the terms that you must accept on the real estate.
   
   Long term financing is not commonly done by banks.
   
   Banks are usually not mortgage companies.
   
   You may be able to find a partner to invest with you, if you can find someone who would own part of the company for example.
   
   Partners as investors are often leery of financing such deals for new inexperienced owners. , This may depend on how the paper work or contract is written, if it is sold all together as a business (as a "bundle") or in pieces as individual items. ,,, The warranty deed in general means that the seller warranties (guarantees) having the right to transfer title of the ownership of real estate.
   
   Merriam Webster Online Dictionary warranty deed Seller sometimes will pay for the warranty deed, legal work and also owner finance it for you, if they are motivated and you seem like a good risk and impress them as being a good worker, and a good manager. , There are title companies in the USA that specialize in getting deed and title papers correctly made out and ready for closing, ready to sign for the parties for the title to real property to be passed to the new owner (yourself). , The seller might become a temporary employee of "your company" (consultant) and train you, if that is part of the deal.
   
   That is risky, of course.
   
   You may get bossed around, and it could turn out to be like a scam if the seller "hangs in there."
   
   Title companies make sure that the real estate is under (or is brought into condition of) "clear title," so that all liens are paid off at the the closing including paying back taxes.
   
   Require title insurance policy to be part of the closing (passing title) to cover the risk that the real estate property title might be bad, ie if:
   Seller did not have title or clear title due to unsatisfied (uncleared) liens of lenders or taxing authorities, etc.; or A mistake or even a fraud (misrepresentation) were involved for example. , Register the business in your name as an individual at the county courthouse, or license and register a corporate name at the state level; check the laws of your locale.
   
   You may have to hold various licenses, pay fees and taxes as the owner of some kinds of business, to legally operate or collect taxes, etc.
   
   Of course some business, such as restaurants, have additional matters to comply with because of state and local health department laws and regulations. , Caution: restrictions placed on real estate by covenants in the deed can restrict how and the purpose for which the land and improvements may be used, regardless of zoning.
   
   Contract can throw out uses that are legal but disallowed in the contract! , Publishing and general commercial printing companies are one kind of business and religions, too, that are not licensed under USA and U.S. state laws because of the U.S.
   
   Bill of Rights which says congress shall make no law restricting the freedom of the press, or religion.
   
   This is an important issue to consider.
   
   Some persons create either or both combined to do whatever without a license, yet courts and laws do assign certain responsibilities and protections of the public as well, ie: against fraud or other crimes. , Sounds wrong, but possession is a large part of ownership over time after the intruder or defaulting party is known but allowed to stay; laws vary from state to state.
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   Step 3: iMarketing/publishing

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   Step 4: or real estate

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   Step 5: for example: Barry Lenson Executive Editor at Trump University wrote:from "use other people's money" page at TrumpUniversity.com "...in the world of real estate investing

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   Step 6: where it is possible to apply leverage in all kinds of different situations

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   Step 7: it can be a very smart thing to do."

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   Step 8: Define leverage: the use of credit to enhance one's speculative capacity Merriam-Webster Online Dictionary

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   Step 9: Buy the business or real property in your name or corporate name.

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    Step 10: Make your profit at time of your purchase (meaning loaded with potential

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    Step 11: or not) by how you buy

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    Step 12: with what plans and your creativeness.

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    Step 13: Visualize that your customers and/or your renters pay for the deal for you -- you

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    Step 14: therefore

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    Step 15: would need little money to own your business or property.

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    Step 16: Make a strong profit possible

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    Step 17: and do it to succeed.

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    Step 18: Be realistic

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    Step 19: but not paralyzed by negativity or over-concern.

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    Step 20: Compare this leveraging idea to issuing stock in a market economy based on stock markets where the stock investors "pay for the business" for the corporation and common stock investors have no ownership in the company

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    Step 21: as such

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    Step 22: but must sell the stock to other investors.

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    Step 23: Realize that you could lose it all -- like any investors when you invest time and money in a business or real estate; you may lose on the business or the real estate investment -- and sellers may repossess the business

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    Step 24: or investors foreclose on your property

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    Step 25: if you can not pay your commitment and do not have adequate operating funds.

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    Step 26: Issue stock

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    Step 27: perhaps

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    Step 28: when your idea is developed

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    Step 29: as your business succeeds

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    Step 30: then you

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    Step 31: the lender and seller may profit and pay off loans by issuing

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    Step 32: selling stock

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    Step 33: ie: "selling paper".

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    Step 34: Realize that if your leveraged business is being a "landlord"

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    Step 35: that you may develop this into either: A real estate type of "business

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    Step 36: " with multiple properties

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    Step 37: and managing your rentals; or

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    Step 38: Remain as an "amateur

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    Step 39: individual" with a small investment in real estate

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    Step 40: and then it may not really be a business as such but more like a "hobby

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    Step 41: " a sideline.

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    Step 42: Finance through the seller

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    Step 43: owner financing

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    Step 44: is a probable way of leveraging which would mean that the owner sells a business or property to you and finances it for you with a down payment and a monthly payment -- examples: Owner is retiring and moving to the retirement home or a farm and wants a monthly income

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    Step 45: and little or no responsibility for managing and up-keep (for the seller).

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    Step 46: Find conventional or investor financing and so borrow your money from a financial institution

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    Step 47: if you can pay a large down payment.

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    Step 48: Check consumer laws

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    Step 49: if you are buying "personal property" which will become business materials as an individual

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    Step 50: as a proprietor -- not as a corporation -- you may have consumer rights that protect you in some states or countries for 72 hours of some such period of time

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    Step 51: as consumer protection

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    Step 52: to vary items quickly (without procrastinating).

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    Step 53: Get a precise list of any/all materials

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    Step 54: stock merchandise

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    Step 55: furniture and/or equipment that go to you as part of the business -- or else

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    Step 56: you may have problems knowing what you are buying or have bought.

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    Step 57: Know that fixtures attached to the property are part of the real estate in many countries

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    Step 58: but unattached equipment can be removed

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    Step 59: and you could be surprised by what you thought was part of the deal as opposed to what is and is not given over to you by the previous owner/lien holder.

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    Step 60: Be sure to get the seller to furnish you a "warranty deed"

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    Step 61: or whatever that deed is called in you area

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    Step 62: if real estate rental property is involved.

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    Step 63: Register the deed immediately and get legal work verified as part of the deal using your attorney or a title company

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    Step 64: if real estate is involved.

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    Step 65: Take possession of the property as you must not allow renters to continue living there without paying you

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    Step 66: nor paying to the old owner

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    Step 67: nor allow another operator to retain the business or property

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    Step 68: nor even have the seller to remain in possession of the business or property.

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    Step 69: Check the laws in your particular country or state to find out about real estate title insurance through your title company.

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    Step 70: Urgently get any real property warranty deed recorded and registered in your name and put on the county tax rolls to be sure you are correctly shown as the legal owner.

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    Step 71: Have your lawyer check contracts

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    Step 72: financing (liens) and any real estate deed(s) for standard and desired covenants (the correct legal agreements) and avoid some unusual deal: One is

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    Step 73: the right to pay-off early with or without penalty

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    Step 74: or the owner-financier may have put in no early pay-off to assure retirement income flow to the seller

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    Step 75: tying your hands!

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    Step 76: Get any business licenses required for a business

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    Step 77: and check with the state to get set up to collect and pay sales taxes if retail is involved

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    Step 78: and find out about business taxes which may be more demanding (like estimating income and paying quarterly taxes

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    Step 79: etc.).

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    Step 80: Beware of possible squatters who may "own property" by having been allowed to hold adverse possession by previous owners

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    Step 81: for the statute of limitations.

Detailed Guide

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