I was having a bourbon fueled discussion with a friend the other day & this hypothetical led to some interesting discussion. So I thought I would pose it here because you guys are pretty dang sharp & I'm guessing it might lead to an interesting chat.

If you had a rich uncle that gave you 100 grand to start a business, what would you do?

Rental properties

If he's rich I'd ask for a lot more as I couldn't do much with $100k.

LOL, Solid point OR.

I'll say that I was interested to note that my friend & I where very different in our approach to this. One thought to use the 100k to secure a loan for more from the bank & the other said buy some asset in cash (the 100k is a gift, not a loan) & put them to work (examples: tractor for dirt work, food truck, tools for subcontracting, etc).

Basically one plan was leveraged but potentially quicker growth with higher risk while the other was debt free but slower growth and less risk.

My buddy is a very good friend and he & I normally think alike, but in this case we could not have been more different. That's why I thought I would post this here. There is a ton of experience & knowledge on this board.

Sounds like Colin & OR are on the leverage side of the discussion.

Leverage it. If you have a skill, use it to start a new business. If not, use it to buy commercial property.

Apply for highway mowing contracts around Wilson county. If able to secure purchase tractor and box shredder.

My dad has a cabin john deer tractor and 15' box shredder in Wilson county, he is retired and spends a lot of time shredding his land. I wonder how difficult it would be to get one of these contracts. Something he could do for some extra cash flow.

Buy a Z06 and become an Uber driver.

But for a serious answer, I'm too busy at my current job to pick up a side job, so look into rental property or something passive. Or more likely save a big part for kids college and DCA over a few years into backdoor Roth. I'm a boring person when it comes to finances, sorry.

I'm with you 03, I'm boring as well, but I'm more than happy with my retirement & College fund is taken care of. Honestly my first thought was finish paying the house off, but that was against the rules of the hypothetical, it had to be spent on a new venture.

If you haven't guessed I'm the one that was in favor of buying an asset in cash. I don't like debt.

If your interest rate is low enough, paying off the house wouldn't necessarily be that wise either. I understand the sense of security aspect, but from an economic move, it's not that good.

I've always been a risk taker with money. I can afford to now since I'm young, not married, no kids, decent career, etc.. I'm sure my mindset will change once my moral responsibilities and obligations change.

I completely understand that way of thinking, Colin, I was like that when I was in my 20's. I've had a few experiences since then that have led me to covet the security of no debt above a slightly better interest rate. Additionally my wife & are both self employed in volatile industries so that makes certain aspects of our finances pretty conservative as well (primarily the rainy day fund thing).

That's the beauty of personal finance, it is personal indeed! And from these replies it looks like I'm in the minority. Interesting. I figured there would be more folks that would use it to start a business with no debt.

You aren't really starting much of a business with 100K unless you are service/consulting with little overhead and opex.

My main thought was Construction sub-contracting business, take framing for example: you could easily put 50 grand in tools etc & use 50 k as operating/payroll. If you are doing the take-offs yourself seems like it would work. Same for sheetrock, paint, HVAC, Electrical, or whatever you have experience in. Dirt work would be harder as the equipment is expensive, but you could still buy a used skid steer & back-hoe in that range & put it to work clearing lots, digging for pool contractors, etc. Maybe it couldn't be done 100% debt free, but I bet it could be done with very little exposure to debt.

Fair enough. I was thinking like machining or metal fabrication.

Buy land/commercial buildings

Or possibly a snow cone trailer and buy as much land with the leftovers

Do these snow cone trailers actual ever turn a profit/recoup the investment?

Not trying to be smug, genuinely curious for curiosity sake.

Open a banana stand business.

Theres always money in the Banana stand

My family has recently been presented with a similar not so hypothetical situation with a tad bit more than $100k. Commercial real estate seems to be the consensus as the best use for an investment that can be much more passive.

When people say commercial real estate, is that buying/building a strip mall, building with office space, warehouse?

quote:

---

When people say commercial real estate, is that buying/building a strip mall, building with office space, warehouse?

---

Or commercially zoned land

Land doesn't cash flow though

quote:

---

When people say commercial real estate, is that buying/building a strip mall, building with office space, warehouse?

---

I was just about to ask the same thing.

quote:

---

If you had a rich uncle that gave you 100 grand to start a business, what would you do?

---

If receiving the money is contingent on me starting a business, I just wouldn't accept it. I'm comfortable as is, and a $100k isn't enough to make it worth the hassle.

quote:

---

When people say commercial real estate, is that buying/building a strip mall, building with office space, warehouse?

---

Yes

quote:

---

When people say commercial real estate, is that buying/building a strip mall, building with office space, warehouse?

---

Seriously though, it could be a number of things including the examples you give. Not always land unless the idea is to hold and sell or develope later.

In my case we are looking at office/profesional/medical buildings.

As an alternative to directly buying real estate, what do you guys think of buying REITs?
There are many that develop shopping centers, apartments, & storage for rent.

that's pretty silly. There's a ton of "businesses" you could start with little to no active involvement.

quote:

---

quote:

---

If you had a rich uncle that gave you 100 grand to start a business, what would you do?

---

If receiving the money is contingent on me starting a business, I just wouldn't accept it. I'm comfortable as is, and a $100k isn't enough to make it worth the hassle.

---

So how much do you need & what did you have in mind?

Sounds like subcontracting tickles your fancy a little. It should. It can be extremely lucrative. If you simply show up when you say you will, and do an average job, builders will line up to hire you. There is an incredible shortage of labor these days. Incredible.

Put another way, you can make a insane living for being a C level student, average.

I tend to gravitate to more hands on stuff, absolutely. I make my living currently in Oil & Gas, but I was in Commercial Construction in a former life. I am self employed.

That being said I have been fascinated by some of the responses here; The average SBA loan in this country is substantially less than 100 grand, but the common consensus on this board is that 100k is peanuts and not enough to start a business. I'm kinda curious what industries these folks are in & who they work for. Maybe I could learn something from them as our experiences appear to be very different.

$100k is plenty, and you can borrow a lot on that amount with an SBA loan. I am sitting here thinking the same thing.

I see a lot of small businesses in my profession - $100k would have been more than enough to get them going!

I think for many $100,000 to start a new business where you are working in everyday is a good start. I would have loved to have that in my pocket when I started.

That said, many people who mentioned that it's not enough $$$ is likley looking at it as an investment/additional revenue stream. Most people here are "set" with their daily job/businesses and pay the bills well. An additional $100k, though it's helpful, is not necessarily a game changer. It would not be enough to shake the status-quo for many to quit their jobs and go in to business for themselves.

Exactly. I make more than small business owners and have great benefits. Would likely mean more hours and less pay along with a bunch of risk.

If I were to do it, I'd go into private consulting, doing what I do now. Would allow me a few months to build up projects and pay developers I'd outsource.

Very interesting conversation. I've been in construction management so I would start my own contracting business similar to the OP's idea. I wouldn't leverage it and I think that would be plenty to get going.

put it in commodity as they are dirt cheap and wait for the rise.