One of the biggest problems that consumers find they have to deal with is cash flow. It does not matter whether it is credit card debt or as in this case large renovation projects. If you do not have the cash to pay your bills eventually it will catch up with you and your going to need a loan.
This consumer buys homes that are in need of tender loving care, renovates them and sells them at a profit. Of course it takes time to complete the purchase, finalize the plans, finish the renovations and then make the sale. Only once the sale is completed is there cash to pay for materials, labor and taxes.
Managing your cash flow is extremely important, especially when there are delayed payments such as in this case. This consumer did not set aside any cash to account for the taxes that he owes on the profit he made in the past year. He wants to know what the best solution would be for him. He needs to be able to pay his $100,000 tax bill shortly.
It will be very difficult to find a lender to provide an unsecured loan. There simply is too much risk associated with this kind of loan. If the consumer has sufficient equity in the various properties he is working on, he might be able to obtain a loan secured against one of these properties. He will enjoy a better interest rate as well. There will be less risk for the lender since if he defaults on the loan, the home will be sold to recover the balance on the loan.
Depending on the actual timing of the due date for the taxes and the expected sale of his next development, there may perhaps be another alternative. He may want to enter into discussions with the government regarding a plan to pay his taxes over time. Of course there will be penalties and interest charges with this approach. However the government could end up being the lender for this $100,000 loan.
The accountant would along with the consumer need to put together a proposal to review with the government tax authorities. If they feel that this is a valid plan with a high chance of success, they might be willing to consider this approach as an option.
The bottom line for all consumers regardless of how much you owe is to manage your cash flow to avoid sudden payments that become due. Set aside funds to deal with the emergencies and in particular set aside funds to pay for future known invoices and tax debts.
DEFAULT LOAN APPLICATION FOR BORROWER’S INFORMATION
Home/Mortgage Loan Amount : $100,000
Home Loan Application and Processing Speed (when do you need the funds): Immediately, my taxes are due now
Do you currently have a mortgage? : yes
What City/Town, State and County do you live in? : San Jose, California
Zip : 95113
What is your employment field? : Flipping Real Estate
Employment Position : Self Employed
When are you paid? (monthly/weekly/biweekly): Biweekly
Your credit rating to be – excellent, fair, or bad? : Fair to Excellent
How did you find us? : searching online for loans for taxes
How are you paid? (direct deposit/paper check): direct deposit
Gross Amount Per Paycheck : varies depending on activities, typically it averages $4000 biweekly
Do you agree to have this information published online, without your PRIVATE information of course? : Sure although I really do not want the public to know I need money, since it could affect sales of upcoming home.
Extra information here please (some detail): I have a really difficult cash flow problem. I owe $100,000 in taxes and looking for a loan to pay this debt to the government. It will only be temporary until I complete the sale of one my properties that I am developing. Until then, a loan for $100,000 would really help.
Last year I made a lot of money in flipping real estate. All of the money has been re-invested into additional properties that are in various stages of completion. Basically we buy a home, invest in the home by improving it and then sell it for a profit. Timing is everything in terms of taking advantage of opportunities as well as selling at the right time to the right buyer. This is just like you see on TV reality shows that show people buying and developing various homes.
Unfortunately, several are nearing completion and have not yet sold. Until they do, I am equity rich and cash poor. I have no money readily available to pay the taxes that are now due on the profits I made last year. My accountant and I are looking at various options to deal with this problem. We are considering a loan to tied us over until a home sells. A fire sale is another possibility, however we would sacrifice a lot of money by doing this. We could also delay payments to creditors for a month or two, but that would impact our credit rating significantly.
Another option is to negotiate with the government. We could arrange to make a partial payment now and the remainder once we complete sale of one or more of the homes under development. Of course there would be interest and penalties to pay. We recognize that this is part of doing business.
In terms of equity for the loan, all of the properties have been appraised assuming upgrades and finishing completed. There is sufficient equity in these homes to support a loan of much more than $100,000. We have mortgages on all of them. We buy them with an all cash offer and then place a small mortgage on them so that we can reuse the money to purchase another home or to fund renovations.
This is one of the best ways to make money if you know what you are doing. One of the issues that needs a lot of attention is cash flow. If you do not, you end up in a situation like the one we have. Cash poor at the moment and owing a lot of money to the government in terms of unpaid taxes.
Can you recommend a lender that we can use or make a suggestion regarding the strategy we should use?
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