Author: Lasca Bird

Business (and all of life) is a challenge without high-quality partnerships. 

Let’s face it, we can’t be the best at everything! And even if you were an expert in everything you do, there’s not enough time in the day to execute all that needs to get done – especially if your goal is to maintain a thriving business.

On top of making business enjoyable, funding partnerships and real estate investors provide business owners with arguably one of the most important elements of a growing business: leverage. 

Romans 12:6 says, “…God has given us different gifts for doing things well…”. 

In other words, we can succeed by trying to do all we can with the gifts we have and then lean on others for everything else. Whether it’s time, expertise, cash flow, skills, resources, contacts, ideas, or motivation, there will always be something that your team lacks.

The good news is that business owners like you can find those missing parts in a partnership with others who can specialize in things like business administration, marketing, rental properties, commercial properties, or various types of land investments.

The key is to be self-aware so that you can identify what your company cannot do well and then, with humility and resourcefulness, find the team or tool that will help you fill the gap. 

On top of that, when you partner up with people who are passionate about their work, they become more invested in helping you grow your business than just being paid for their services. This means that they want to see you succeed as much as you want them to succeed.

This principle applies to all partnerships including the ones in real estate investing.

Okay – so, there’s value in partnerships, got it! So how do we find good partners? And once we do, how do we create lasting partnerships? There are many answers to this, but we think that it comes down to simply being a good partner first. 

As Bob Buford says in his book, The Go-Giver, “you give, give, give because you love to.  It’s not a strategy, it’s a way of life”. 

First and foremost, seek to add value to the relationship and the rest will fall into place. Give, add value, be generous, spend the extra time, go above and beyond expectations! We think this is not only a solid business practice, but it’s also the right thing to do.

Will some potential partnerships be unfruitful? Sure.

Will some partnerships come to you at the wrong time? Of course!

But even when things don’t work out, it’s still rewarding. And when things do work out, you get to make business enjoyable and you get to enjoy success together – both of which would only be made possible only through the time you put into building quality partnerships.

In brief, we believe that partnering up with other businesses is a great idea as long as both parties understand their roles and responsibilities. If they agree to these terms, then the rewards will far outweigh most risks involved.

And remember, no matter what happens, you should never forget why you partnered up in the first place. You probably did it because you wanted to grow your business and add value to your clients’ lives. That’s why you should keep working smart and with purpose every single day.

The end of the year is fast approaching and for small businesses, year-end tax planning is critical!  In addition to a careful review of our business’s financial health, we try our best to be deliberate in our approach to making charitable contributions!  

A Donor-Advised Fund (DAF) is an account through which an individual or a company can support charitable organizations they care about. DAFs are flexible, so you don’t have to worry about converting your donations to cash; simply contribute to your fund in the form of cash or assets. Your donations will grow tax-free based on a variety of investment options that you can choose from, and then you can make grants to the charity of your choice whenever you’re ready. 

There are several Donor-Advised options out there, but we recommend we recommend using the National Christian Foundation (NCF), which describes their “Giving Fund” as an “Easy-to-create, low-cost, flexible account for charitable giving that is a popular alternative to giving directly to charities or creating a private foundation.” Saving a few bucks while giving is always welcome, right?

Our Top 5 Reasons to use Donor-Advised Funds –

Your reasons may differ, but here’s why we used DAFs –

1. We are Called to a Lifestyle of True Generosity

We believe that we are called to a lifestyle of true generosity. Admittedly, this is much easier said than done, but we try to embrace the call to living charitably out of faith. According to Scripture, we are to love the Lord with all our heart, soul, mind, and strength, and love our neighbor as ourselves (Matthew 22:37); we aim to fulfill this call through giving and serving with a generous heart.

2. Money Leads, Hearts Follow

We believe that our focus is drawn to the things we invest in. As Randy Alcorn says in The Treasure Principle, “money leads, hearts follow,” which draws from Matthew 6:19-21. Giving doesn’t always come easy, but we encourage everyone to start where they are and grow into the life of giving. We want to be focused on the right things that create a lasting impact. It’s im

3. Convenience and Simplicity

We like DAFs for their convenience and simplicity. Giving is the priority, but we also understand the need to be as efficient as possible with administrative activities. DAFs help to minimize time spent actively managing your giving efforts. We assume that most DAFs are similar to NCF, providing a system to manage your investments and giving all on a simple online platform and from any device. If you are looking to give without spending unnecessary time on administration, DAFs are your best bet.

4. Multiply Your Impact

Giving through DAFs allows you to multiply your impact.  You’ll have the opportunity to choose an investment option that ranges from conservative to aggressive, based on your risk/return profile. This way, you can grow your money tax-free and then recommend grants to various charities whenever you’re ready to do so.

5. Immediate Tax Deduction

We believe that part of quality stewardship is being wise with both your investments as well as your tax strategies. No one ever said you can’t save while giving! Contributing money into your fund qualifies for an immediate tax deduction, but you’ll still have the flexibility of making a grant to the charity of your choice at a later date.

Final Thoughts

Are you interested in Donor-Advised Funds and looking to start one for yourself? If so, we would be thrilled to put you in contact with a Relationship Manager at NCF to figure out what works best for you and your business. Giving is rewarding, especially when done conveniently. Once the hassle is taken out of donating, you’ll likely feel more motivated to donate on a regular basis and hopefully make a profound change through generosity. 

“Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.”

Matthew 6:19-21

You’ve probably already heard about funding, and now you are wondering if you should look into it further. Maybe your knowledge about funding is limited, and you’re looking to learn more about the potential benefits – or risks – to your business. Wherever you are on your real estate business journey, we’ve got the basics covered here to help you determine whether funding is the right next step for your land investing business.

Bottom Line Up Front:

The land investment business is one in which your biggest expense relies on one thing – property acquisition. For this reason, you should take seriously where this capital comes from. Determine what your risk threshold is and ensure you stay within it. Carefully weigh the pros and cons of using funding and surround yourself with partners you think you’d want to work with long-term. A partnership engagement is a relationship, not just a transactional opportunity!

In businesses looking to expand, funding opens the door to scale. Instead of basing your goals on your own limited capital, establishing funding partnerships forms a business model that you can apply in a repeatable way.  We’ve used funding for our own investments and it was a game changer; we’d encourage everyone on this space to look hard at the opportunities funding provides, but go into it eyes wide open.

What is Funding?

In the simplest terms, Funding in the land investing space is leveraging other people’s money, connections, and experience. It’s bringing on a partner so you have more capital to invest in other parts of your business and not tied up in inventory. 

In addition to just the capital, a partner can provide motivation and encouragement. You’ll gain another viewpoint to confirm you are on the right path with your purchase and development plans. If done right, it will expand your vision, help gain access to larger deals and facilitate scaling your business.

There are a lot of different forms and structures that funding can take, but funding is not a loan: neither a hard money loan nor a short-term loan. Simply put, it’s an equity investment and a true partnership.

Limitations of Using Your Own Money

Using your own money to fund your land business involves many limitations, some of which are detailed below.

1. Entry Barrier

For many trying to break into the land business, one of their greatest challenges is a lack of funds. To get started, they feel they need to only target low-value deals because they don’t have the funds to take on bigger, more expensive, trophy properties. This can be time-consuming, delay growth, and demotivating.  It’s a shame when we see folks get used to doing small deals and then only target properties they can afford based on their account balance. We recommend, if the goal is to scale (not always the case), leverage others’ time, experience, and resources!

2. Tying Up Your Capital in Inventory

If most or all of your capital is tied up in inventory, this will impede growth and may ultimately be detrimental to your business. Many land investors find they reach a point when they hit a limit – everything stalls and comes to a halt and then it becomes hard to get your momentum back.  We’re seeing more and more, where land investors bring in the leverage of a funding partner before you actually need to. You also don’t want to put yourself in a position of needing to sell property just to free up capital to take advantage of a great opportunity; with the right partners in place ahead of time, this can be mitigated.

3. Spending Yourself Out of Money

If you are trying to scale your business, then you need a profitable and scalable business model. This involves repeated turnover of cash for investment, and you want to be ready to invest when opportunities arise. Try not to spend yourself out of money, especially as you start aiming for larger properties to purchase.

Is Funding for Me?

Setting your goal based on what you have is limiting. Your lack of resources, whether financial, experience, or skills, might make you shoot low. 

When setting your goals based on what you want to achieve, determine what your pain point is and how you can solve it. What exactly is holding you back from growth? What do you find fulfillment in? What do you struggle with?

The leverage of funding is probably right for you if:

• You are an experienced investor, and you’re getting into larger deals.
• You have an interest in cash sales, whether exclusively or in addition to seller financing.
• You find yourself being held back by capital flow issues.
• You are working hard for land investment to be a big source of income, so you can achieve other goals in your family, church, or any other organizations you belong to.

Funding may not be the best option in every situation. Some of the times when funding your business is not advised are:

• When the deal is too small to offer a worthwhile return to both parties.
• When the margin on the deal is not enough to split. In cases like this, you can go ahead by yourself if you have the money to fund it.
• If it’s not your goal for your business to grow too much. You might just be into the land business for some extra cash and that’s great!

Conclusion

Here at Freedom Land Capital, we have several clients who change their business model to include funding in every deal. Their target is newer markets and bigger deals, and their confidence in our ability to support the acquisition of any quality deal that comes up gives them the courage to go for it. We hope you do too!