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Justification for Buying a Home for Business?

MoreValue

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My business venture requires a great deal of room and I currently live in my parent's and there isn't enough room. Renting or Condo doesn't work because I will have some machinery that will quickly outgrow it, but also they make noise, so I can't work when I want. Definitely gonna cause problems in apartment scenario. Could definitely see myself getting kicked out.

The best decision I have found is to buy a home, but it is massive debt. Should I lock myself in mortgage payments so I can freely run my business in it. This is obviously better than having a separate office space. Honestly fee like those are a big waste of money.

The lowest cost homes in this area are like 150k. So few I can count them on my fingers. Should I just buy a mobile home? They run like 70k. But then again a mobile home does not appreciate. Although not my main goal, if I'm putting this much money down might as well get something that appreciates.

The benefit of buying a home is that over the long run, it seems it will be cheaper to own (plus I need control). But in my state, property taxes high as hell. Even paying off house it looks like I will be paying $500/month in property tax...

But if I spend money on the home, I will not have enough money for the machinery. Machines I need are going to run 1k, 3k, and then like 5k. Got a lot of costs coming.

Another risk is ensuring I will actually stay here. My dream is to eventually be either in Dallas, TX, New York, or San Diego, CA. If I settle down now, I will really be paying the price in moving costs with the machinery.

Actually blows my mind how people have their own business industrial manufacturing space in the city. Costs are absurdly expensive.
 

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JScott

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Should I lock myself in mortgage payments so I can freely run my business in it. This is obviously better than having a separate office space.
Why is locking yourself into mortgage payments obviously better than having a separate office space?

Based solely on what you wrote, I don't think that's obvious at all...
 
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MoreValue

MoreValue

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Why is locking yourself into mortgage payments obviously better than having a separate office space?

Based solely on what you wrote, I don't think that's obvious at all...
I feel like if I buy a home, it is killing to two birds with one stone. I will most likely need industrial office space which could be more expensive. Also it saves time if I work on business from home. No commute.
 

ChrisV

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I mean I don't see why not. As long as you're positive that's the business you want to do and you want a home.

I feel like the answer to this question is: is it a good idea to buy this home even if the business weren't an option.

What kind of equipment is it if you don't mind me asking
 
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MoreValue

MoreValue

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I mean I don't see why not. As long as you're positive that's the business you want to do and you want a home.

I feel like the answer to this question is: is it a good idea to buy this home even if the business weren't an option.

What kind of equipment is it if you don't mind me asking
Specialized sewing machines and possibly a CNC machine
 

ChrisV

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Maybe your parents would let you soundproof the basement or the room you're using? it's really easy to do... my friend used to have a heavy metal and and he did that.. worked great

That way you can try it out without having a huge commitment
 

Mike S

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Buying a home requires a down payment (20% if you want to avoid PMI) plus tons of hidden costs (furniture, lawnmowers, etc...) I'd find the cheapest rental space in a shitty part of town (lower lease rates) and use every dollar you save to invest and grow your business. Don't strap yourself with a mortgage or you'll wind up getting a crappy job to make mortgage payments and abandon the entrepreneurial lifestyle.
 

minivanman

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Is running a business out of the home legal in your area, or should I say, the area you might buy a home in? And for heavens sake, don't move to an HOA.
 

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Mack X

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Do you already have clients/customers for your business venture?
 
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MoreValue

MoreValue

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Don't even bother if you haven't already sold something. Let alone buying a house for that.
Machine is necessary to make the prototype. Product prototype needs to be made before selling

Is running a business out of the home legal in your area, or should I say, the area you might buy a home in? And for heavens sake, don't move to an HOA.
Avoiding HOA like plague. Never though home based business would be illegal anywhere

Do you already have clients/customers for your business venture?
Yes
 

ChrisV

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Machine is necessary to make the prototype. Product prototype needs to be made before selling
Oh Jesus Christ... you're buying a home just to make a prototype? No. No. No. NO.

Outsource the work. Go find somewhere that has a machine shop, (local technical school, perhaps?).. do it at a friends house... Get a company to make it. Get someone with machining skills to make it. Get it 3D printed. Do not buy a home just to make a prototype.

Like I said in one of my other replies.. don't buy a home unless you want a home.

Do you already have clients/customers for your business venture?
Who are the clients/customers you have? Because lemme tell you something... everyone is a customer until their little fingers have to go in their wallets. When you tell people about your widgetmadoodle everyone and their mom is like "F*ck yea I'll buy 36!" but then when it comes to actually shelling out the cash it's more like "Welllllllll, the mortgage is due tomorrow.. so maybe next month?"

Please do not buy a home just to make a prototype. Please.


Don't even bother if you haven't already sold something. Let alone buying a house for that.
I was trying to politely say this in my last reply.


But if I spend money on the home, I will not have enough money for the machinery. Machines I need are going to run 1k, 3k, and then like 5k. Got a lot of costs coming.
So then what's the point of this thread? You want to buy a home so you can run your machinery, but if you buy the home you won't be able to afford the machinery. So I mean there's your answer right there. Just outsource it. Buy a home because you want a home.
 
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broswoodwork

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I've been ping ponging back and forth with this notion as well.

My existing business has outgrown my current light industrial space, and buying a house in a more rural locale would definitely solve the shop size problem short term; moreover, it'd all be less $$$ monthly than what I'm currently paying, and much less than moving up to a bigger rented space.

The problem is: what happens when the business outgrows my new house?

I think it's honestly better to keep it all compartmentalized, especially if you're still in the building a prototype phase.

Like @ChrisV recommends above, if you can find someone with equipment to rent, or a contact fabrication operation that'll help you out, you'll likely be miles ahead vs a huge capital layout PLUS a mortgage to test an idea.
 
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MoreValue

MoreValue

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Oh Jesus Christ... you're buying a home just to make a prototype? No. No. No. NO.

Outsource the work. Go find somewhere that has a machine shop, (local technical school, perhaps?).. do it at a friends house... Get a company to make it. Get someone with machining skills to make it. Get it 3D printed. Do not buy a home just to make a prototype.

Please do not buy a home just to make a prototype. Please.

So then what's the point of this thread? You want to buy a home so you can run your machinery, but if you buy the home you won't be able to afford the machinery. So I mean there's your answer right there. Just outsource it. Buy a home because you want a home.
Outsourcing design and prototyping was probably one of the worse decisions I made in the past. Will never do that again. Painfully expensive and you get a design that doesn't come out how you like EVER.

With my current sewing machine, I made a prototype for different product. And it took multiple iterations and changes. Possible because I invested in the machinery (sewing machine) I can make changes on demand. I cannot imagine the costs if I outsourced design of the first product I made. I have full control and feel every material and component myself thus creating a something I am proud to bring to market.

If you outsource and the prototypes don't work out, you just permanently burned money. No way of recouping costs of failed prototypes. With in house method: machinery and materials pretty much gives you nearly unlimited trial and error.

Also lack of drive is another problem working with outsourcing. They would say things like "It is not possible" which I knew was BS. They didn't want to go through the hard steps of prototyping and just gave me that answer.

If outsourced, you have very little room for error. Which doesn't make sense because prototyping is full of trial and error.
 
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MoreValue

MoreValue

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Realized that this is just the cost of starting business.

For example, guy wants to start renting out homes. He puts 20% down for first property. Doesn't have renters or customers yet. So startup costs for rental business could be like $20-30k. Which makes my costs for my machine nothing at all. Just gotta accept this and stop trying to get by "on a budget" mentality.
 

minivanman

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Machine is necessary to make the prototype. Product prototype needs to be made before selling



Avoiding HOA like plague. Never though home based business would be illegal anywhere



Yes
It depends on the business if it violates your local laws or not. Many businesses violate local laws but people keep them on the down-low.
 

broswoodwork

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just the cost of starting business.
I understand where you're coming from, but if there's a way to get customers to pay for your equipment, you'll be way ahead of the game.

Here's my first "table saw". I built it out of a repurposed upturned chop saw a relative didn't want anymore and some scrap wood, and I let paying customers buy me a better saw. (I'd still be using that thing if the shitty direct drive motor didn't burn out... I loved that saw :( )

Edit: p.s. get them to pay for your house too. :)
 

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broswoodwork

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Also, and I apologize for kind of blowing this thread up, but I've seen some of your other posts about low start up capital for the gear you need.

You say you need a cnc machine, and I'm not sure how sophisticated you need it to be, but this dude has some awesome diy stuff you can probably modify to fit what you need for low to no cost: Router copy carver - YouTube
 

Longinus

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Machine is necessary to make the prototype. Product prototype needs to be made before selling
You seemed to have learned nothing from all the time you spent here.

Not gonna waste any more time on this, you probably want to learn it the hard way.
 

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MoreValue

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You seemed to have learned nothing from all the time you spent here.

Not gonna waste any more time on this, you probably want to learn it the hard way.
How would you sell something if you had no prototype? It seems that you tend to promote going into business with absolute zero expenses.

Presell before prototype is terrible idea because if you don't have prototype you don't even know if it is possible. I had to change my design multiple times after "doing." My design is much different than my concept. Pretty much selling unproven concept aka borderline scammer. Hence, why kickstarter requires an actual prototype.

Do you think prototyping is free? That is the general trend I get from your posts. You think you can create value with a total of $0. Have you ever tried a physical product business? "Doing" costs money. It tells me that you have never tried.
 
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Longinus

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How would you sell something if you had no prototype? It seems that you tend to promote going into business with absolute zero expenses.

Presell before prototype is terrible idea because if you don't have prototype you don't even know if it is possible. I had to change my design multiple times after "doing." My design is much different than my concept. Pretty much selling unproven concept aka borderline scammer. Hence, why kickstarter requires an actual prototype.

Do you think prototyping is free? That is the general trend I get from your posts. You think you can create value with a total of $0. Have you ever tried a physical product business? "Doing" costs money. It tells me that you have never tried.
You should bootstrap. Buying expensive stuff and material without even knowing if it will sell is the quickest road to failure.

Selling physical products myself btw.
 

mtnman

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Get some revenue first. Doesn't matter if you rent or buy... A competent tax attorney can show you how to write either one off. As others have echoed, pay someone to create the prototype instead of buying machines to build something you don't know will sell or not.
 
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MoreValue

MoreValue

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You should bootstrap. Buying expensive stuff and material without even knowing if it will sell is the quickest road to failure.

Selling physical products myself btw.
Required for prototyping. It is like a guy trying to rent a home to someone without a home. Some costs are just necessary. Plus these materials and machines are assets. Like I said above, I can prototype a ton.
 

broswoodwork

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Required for prototyping. It is like a guy trying to rent a home to someone without a home. Some costs are just necessary. Plus these materials and machines are assets. Like I said above, I can prototype a ton.
We just want to help.

I'd imagine most of us made the same mistake, putting the cart before the horse; the "if you build it, they will come". Some folks, myself included, and possibly you, can only learn through failure.

"We are taxed four times by our folly.", Father Abraham. Way to Wealth by Ben Franklin.

Good luck, dude!
 
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MoreValue

MoreValue

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We just want to help.

I'd imagine most of us made the same mistake, putting the cart before the horse; the "if you build it, they will come". Some folks, myself included, and possibly you, can only learn through failure.

"We are taxed four times by our folly.", Father Abraham. Way to Wealth by Ben Franklin.

Good luck, dude!
Oh yeah, I know. It just that Longinus and I don't agree very often. I appreciate the help.
 

ChrisV

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You can't rent the machinery or find someone with a shop? I don't think sinking 30 grand into a prototype is the best idea honestly. And sinking 150 grand into a house just so you can quietly run the machinery (that you won't be able to afford after buying the house) is an even worse idea.

It would be helpful if you told us what the prototype is, but if you don't want to you don't have to.
 

Champion

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dont buy the machinery just to create one prototype. Check for Universities or places near your area where they have these maschines and let students work them for free, try to get access.

Otherwise just pay someone who already has the maschine to use it and make ur prototype!!!!
 

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