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s10350
06-02-2014, 12:57 PM
I am interested in purchasing a business that would also include a personal residence. I would be purchasing the business, home, and land with the intention of living there. I currently own my home and would keep that to rent out. I have a high debt to income ratio, about 46%, so I doubt i could go in to the bank and get a home mortgage to buy everything.

I have access to the financial records of the business as it is a relative. It is a dog boarding/grooming facility, and when near full capacity it more than pays for the business expenses as well as the home mortgage. I have no idea if this is something that is even worth my time to look into considering my debt ratio? I don't know where to look for help so I figured i'd start with some questions on forums.

thanks

Freelancier
06-02-2014, 02:30 PM
Look at owner financing. In other words, you provide a significant down payment to the current owner and issue a promissory note to cover the rest. After a couple of years of known financials that are reasonably cash-flow positive, you would be in a position to close out the note. Current owner has to be willing to take that risk, though, and some may not.

Failing that, check with family. You're right, the bank isn't going to talk with you unless you can demonstrate financials that show the business is profitable and that you were committing a significant enough of your own money that the bank would be willing to take a risk. Generally, though, unless you can convince them that you are taking over the business and all customers, everything is going to look like more debt to the bank.