Homeownership seems more out of reach than ever for many Americans, especially for those who have been waiting for real estate prices to drop. But there are still multiple ways to buy a home right now, or to position yourself for a future purchase.
Build up your down payment. The higher real estate prices climb, the bigger you’ll want your down payment to be. Having at least 20% saved up as a down payment can help you avoid paying private mortgage insurance (PMI) on a conventional loan.
Ask for a gift. One-fourth of first-time homebuyers used a cash gift or loan from family or friends as a down payment in 2021 and 2022, according to the National Association of Realtors’ Profile of Home Buyers and Sellers. Depending on the type of mortgage, you may also be allowed to receive a down payment gift from your employer or labor union, a charitable organization, or a government agency that assists first-time or low-income homebuyers. So don’t be afraid to ask!
Improve your credit score. A better credit score can help you qualify for more home loan options and better interest rates. The most important steps you can take to improve your credit include making all bill payments on time, paying down revolving debt to get a lower credit utilization ratio, and refraining from opening new accounts or closing old ones.
Consider several loan types. Look at different types of mortgages that could help you get into the home you want, including government-backed home loans. As an example, FHA loans let borrowers put down as little as 3.5% with a credit score as low as 580. For those with scores between 500 and 579, a down payment as low as 10% of the purchase price will suffice.
Start working with a realtor early on. Have a realtor working on your behalf early in the buying process, particularly if you live in an area with a hot real estate market. By having a professional on your side who knows what you’re looking for and how much you can afford, you could find out about available properties before they’re snagged by someone else.
Remember you can always refinance. Keep in mind that today’s high mortgage rates don’t have to be forever. Take out a home loan for the property you want when you’re ready and remember that you can always refinance your mortgage when rates drop in the future. This could help you save money on interest later down the road, and you can also qualify for a lower monthly payment when rates drop.
Like a bundle of sticks, good business partners support each other and are less likely to crack under strain together than on their own. In fact, companies with multiple owners have a stronger chance of surviving their first five years than sole proprietorships, according to U.S. Small Business Administration data.
Yet sole proprietorships are more common than partnerships, making up more than 70 percent of all businesses. That’s because while good partnerships are strong, they can be a challenge to successfully get off the ground. Here are some of the ingredients that good business partnerships require:
A shared vision. Business partnerships need a shared vision. If there are differences in vision, make an honest effort to find common ground. If you want to start a restaurant, and your partner envisions a fine dining experience with French cuisine while you want an American bistro, you’re going to be disagreeing over everything from pricing and marketing to hiring and décor.
Compatible strengths. Different people bring different skills and personalities to a business. There is no stronger glue to hold a business partnership together than when partners need and rely on each other’s abilities. Suppose one person is great at accounting and inventory management, and another is a natural at sales and marketing. Each is free to focus on what they are good at and can appreciate that their partner will pick up the slack in the areas where they are weak.
Defined roles and limitations. Before going into business, outline who will have what responsibilities. Agree on which things need consensus and which do not. Having this understanding up front will help resolve future disagreements. Outlining the limits of each person’s role not only avoids conflict, it also identifies where you need to hire outside expertise to fill a skill gap in your partnership.
A conflict resolution strategy. Conflict is bound to arise even if the fundamentals of your partnership are strong. Set up a routine for resolving conflicts. Start with a schedule for frequent communication between partners. Allow each person to discuss issues without judgment. If compromise is still difficult after a discussion, it helps to have someone who can be a neutral arbiter, such as a trusted employee or consultant.
A goal-setting system. Create a system to set individual goals as well as business goals. Regularly meet together and set your goals, the steps needed to achieve them, who needs to take the next action step, and the expected date of completion.
An exit strategy. It’s often easier to get into business with a partner than to exit when it isn’t working out. Create a buy-sell agreement at the start of your business relationship that outlines how you’ll exit the business and create a fair valuation system to pay the exiting owner. Neither the selling partner nor the buying partner want to feel taken advantage of during an ownership transition.
Bartering, the act of trading goods or services with other goods or services instead of money, is more popular than ever. And with many businesses dealing with constrained cash flow, bartering may be a good way to create value for your business.
The new world of bartering
Bartering traditionally worked something like this: You know someone who has something you need and you have something they need. You talk, figure out comparable value and make the swap. Everybody’s happy. But other than blind luck, finding a match to barter with was very difficult.
But with online platforms, bartering is now easier than ever with the creation of posting sites and exchanges. Posting sites provide a platform where businesses can skim for or post items they are looking to acquire or trade. These are usually free and unmonitored, so surf at your own risk. Bartering exchanges offer a marketplace and bartering credits that act as a middleman. You can trade goods and services and receive credit that you can use towards acquiring a different good or service. These tend to be actively managed and typically charge a monthly membership fee.
Remember, most bartering can create a taxable event. If you receive something of greater value or trade a deductible expense for a non-deductible expense, the difference is taxable income and needs to be reported on your tax return — so careful record keeping is very important.
When bartering can help
You have a unique need with no available resources. Identify what you do well and look at your income statement to identify services you typically must pay for yourself. For example, consider a photographer who is paying a monthly tech support bill to administer their website. That photographer could reach out to the web development company to see if they need photos for their website services or other marketing material. They then barter their photography for coding expertise. It saves each party the necessary cash to purchase these services.
You need to offload aging inventory. As inventory ages, decisions need to be made. Letting it sit can take up valuable space and paying to dispose of it is usually not the most efficient practice. There might be a business that has the same issue, but with something you can use. Take some time to think about the type of businesses that might find your old inventory useful.
You have customers who can’t pay. Use bartering as a method for collecting from customers who can’t pay your invoice. Instead of sending an account to collections, consider whether your customer has something of value your business could use. Even if your customer doesn’t have anything of direct value for your business, you might be able to accept an asset and then sell it online to settle your outstanding bill.
Finding bartering partners can often have long-term benefits without having to dip into cash reserves. And if structured correctly, the service provided can offset the expense of the service received.
