What would you rather have?

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by a searcher from California State University, East Bay - College of Business and Economics
in San Francisco, CA, USA

2yrs ago

What would you rather have?

Would you rather have A or B? Is the debt risk worth it?

A: Business that you finance and put $500k down and buy for $5m, after debt you net $200k

B: Business that you pay cash for at $500k and nets you $200k

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reply by an intermediary 2yrs ago
from Gonzaga University in Tacoma, WA, USA

A all the way! Although the map is pretty bad on that one because to be honest at a 5 million price point chances are doing 1.5 million which means the post at cash flow should be 750 to 800 so on your math that means that you’re probably overpaid. I wouldn’t recommend that.

but in general to get $10 value three dollars a cash flow for one dollar and using most of it as other peoples money to get that value 100% do that all day every day.

because with every payment your equity is building and you have plenty of cash left over to pay yourself and just protect that cash it crazy and you’re talking three or four years and you’ve now got $3 million in equity after an initial investment with 5K while it’s also been paying you 700 grand a year.

reply by an intermediary 2yrs ago
from The University of Chicago in Chicago, IL, USA

Compute your future net worth. That will answer your question.
Option B is buying a "job". Option A is buying a "business".
Btw, if a business is making $1 M in EBITDA, over the 35 years, price would beredactedx. Our average has been 5+ x.