Once you find willing sellers, how do you buy the land from them? Do you pay out of pocket? Do you get out the credit cards? What about finding investors? There are some great options to fund your first deals.
1. Use your own money or credit
When you are first starting out, I highly recommend that you try to fund your first 2-3 deals. For one, you have skin in the game and makes you more aware of what you are doing. Secondly, you don’t yet know what you are doing. It’s hard to get investors to buy in on your business if you don’t have a track record of success.
After your first deals however, self-funding could hamstring your growth. While it’s much easier to use profits to fuel other deals, you can only fund one deal at a time in the beginning (unless you are sitting on a huge pile of cash).
You can also use credit cards and take out loans, but that’s tricky and requires special knowledge to do correctly.
2. Use a money partner
Finding an investor is a great way to take your young land business from start up to empire. While you might have to offer a bigger cut of the profits to the investors initially, it’s well worth it. I began by offering up to 50% of the profit to my investors, and as they learned to trust me (and I built a reputation for getting their money back) my terms became more favorable.
For instance, when a find an amazing property that I think can sell for $50k and can buy for $10k (this isn’t usually the case, often it will sell for $20-25k these days), it makes sense to me to tell an investor that I will split the profit of $40k with them. I’m still making $20k without having to use any of my money and they get amazing returns just for cutting me a check (or pressing a button to transfer money). It’s a win for everyone!
Your options are far broader than just self-funding and money partners. There is also bank lenders as well as buyer and seller financing. Unfortunately, those are far too complicated to dive into with a basic course. We will tackle each of those topics later.