Being in debt is one of the most overwhelming things to deal with. When most people are in debt, they only focus on how to repay it and not borrow more money for other projects. However, did you know that you could start a rental business to get out of debt? Debt shouldn’t prevent you from pursuing a venture that can streamline your finances. Although it’s challenging, it’s possible. Here’s how to start a rental business to get out of debt.
Identify Your Rental Business Niche
There are many rental businesses you can get into. The most important question is how profitable it’s likely to be. Ask yourself if the business can help you eliminate debt. Research the demand for whatever product you want to sell. For instance, the business of restroom rentals is one to consider as the need for portable restrooms keeps increasing.
With that said, you have to conduct market research. Where are these portable restrooms needed? They’re needed at weddings, corporate events, concerts, marathons, and much more! How many would one event need? According to the Knot, people are required to rent one bathroom stall for every 25 wedding guests. That means a wedding with about 200 guests would need 6 to 8 bathroom stalls. How do you plan to charge? For any rental business you opt for, ensure there is a need for it and that you can make a profit to help get out of debt.
Explore Your Finances
Starting a business requires capital. Unfortunately, this is tricky because you’re already in debt. The good news is that, with a good business plan, you can find a bank or investor that will give you the loan you need. For instance, your idea might be starting a car rental business. This business faces a lot of biases which can be a stumbling block in your pursuit of a loan. According to Drive Knowledge, every year, there are about six million car accidents in the U.S. That is such a huge number because your assets are at risk. An investor will want to know how you plan to protect yourself from such risks. You can do that through insurance coverage and being careful about the people you rent cars to. Give the bank or investor some confidence that their money is safe to increase your chances of getting the loan.
Choose a Location for Your Business
It’s important to find a location with a growing population and strong economy. How can you expect to make money if you don’t have customers? Plus, getting out of debt is impossible if you aren’t making profits. Take the example of starting a rental property business. Such a business can lead to positive cash flow, but only if you have customers to rent out to.
Check whether there’s demand for rental properties in the area where you want to start this business. For instance, the population of Birmingham City in Alabama is 192,557. In such a place, you can expect demand to be low, considering that real estate usually performs well in large cities with a growing population. With that said, the population may be low, but if the supply of rental properties is also low and the demand is high, your business can thrive.
Have a Debt Repayment Strategy
You’ll be expecting the rental business to generate income. This income is what should help you get out of debt. Create a debt repayment plan and stick to it. What percentage of your income will go towards repaying and reducing the debt over time? It can be 10 or 30%. Choose a reasonable figure that allows you to meet the other needs of the business and pay the debt at the same time.
If well managed, a rental business could be the solution to eliminating debt. You can get a steady source of income that can help you get out of debt gradually.
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