Using Funding Partners for Your Land Deal
Do you have a great land deal that you want to invest in but have decided against, either because you don’t have the money or because that single investment would tap out your funds? You may have considered using alternate sources of capital to fund your deal but don’t know where to start, who you can trust, or if it even makes sense to do so.
Although you may initially have reservations about working with an investor in your land deal, partnering up to buy land has many advantages and benefits.
What are the benefits of having a funding partner for your land deal? Do the benefits outweigh any associated risks? How can bringing a funding partner on board help you achieve your goals?
We hope to address why we think using funding for your land deals makes sense (most of the time)!
Higher Return on Investment (ROI)
When you use outside capital to fund 100% of the land acquisition costs, your investment is close to $0. Even after splitting your profits with the capital partner, your ROI dramatically increases compared to funding the deal yourself.
Not only does joining forces with an investor with similar goals to yours bring in the much-needed capital injection required to boost your land deal, but it also makes securing additional funding in the future much more straightforward.
Bringing a funding partner on board means that you get the financial muscle to get more deals done than if you relied solely on your resources. As a result, you will be better prepared to move quickly on any lucrative offers as soon as they become available, increasing the volume of deals you can complete and boosting your profitability.
If funding allows you to double your volume, but you’re splitting the profit 50% with a funding partner, it doesn’t take a mathematician to see this doesn’t work. However, with a larger land deal volume, you can take advantage of the benefits of scale. By increasing your current deal flow by five times, for instance, you can see why a funding partner helps you make the most of your investment.
As with any other investment, there is always the possibility of suffering losses when you enter a land deal. However, the benefit of having a funding partner is that you bear any losses together, so the burden on you is much less compared to taking on the entire loss from your deal.
Using funders also allows you to protect your principal and ultimately spend more time, money, and effort on improving your systems or sending more mail.
A Second Pair of Eyes
Besides your due diligence, your capital partner will also play a role in analyzing the deal since they also have an interest in the success of the land deal. They provide a new perspective – validating a sound investment, or potentially uncovering some red flags.
When you have an investment partner sifting through the details of a potential land deal, you can take the opportunity to tap into their knowledge and experience to help you make informed decisions. What’s more, you will possibly save yourself plenty of financial headaches as a result.
Leverage Funder’s Network/ Knowledge
Depending on the land-specific experience level of your funding partner, the capital partner can assist either deal-specific or a more general level by providing tools, tips, and other valuable resources and connections.
Additionally, you cannot overstate the importance of networking to the success of your investment. When you work with a funding partner, you increase the pool of potential buyers, agents, title companies and other land investors available to you.
When you know you have a capital source ready, willing, and able to fund your deals, your confidence in the investment goes up. Acquiring much larger and more profitable properties will become a reality.
By placing you in a stronger purchasing position, having a funding partner allows you to invest in property deals that you would otherwise be unable to afford. As noted above, if your funding partner specializes in the land-buying space, you could leverage their knowledge and connections to find bigger deals.
Talk To Us about Funding For Your Land Investments
Even the most seasoned land investor knows that they cannot do everything themselves. You need to do whatever you know well and let your funding partner handle their specialty to succeed.
Understanding that no one wants to hassle with additional layers of complexity in their deals, Freedom Land Capital aims to create a simple, streamlined approach to funding land investments.
If any of the above resonates with you, please visit www.freedomlandcapital.com to learn more.