Instead of borrowing money, investors offer a portion of ownership in exchange for funds. This method is particularly popular in the land investing industry due to its potential to attract significant capital without incurring debt.
Investment: We usually pay 100% of the capital required for the land purchase and take title.
Profit Split: We take 30-50% of the profits, with the rest going to the investor.
This funding option allows you to leverage our capital to acquire properties without upfront costs and quickly turn around the investment for substantial profits. It relieves the investor of the immediate burden of interest payments or loan repayments.
Hard money loans are a type of asset-based financing commonly used in land investing. These loans are secured by the land. Designed to be a short-term solution, hard money loans are ideal for projects requiring quick capital with flexible terms.
Loan-to-Value (LTV): Hard money loans typically offer an LTV ratio of 50%. This means you can borrow up to 50% of the property's intended sales price.
Interest Rates: Interest rates for hard money loans generally range from 10% to 15%, depending on the deal's specifics and risk level involved.
Loan Term: These loans are short-term, often ranging from 6 to 12 months. However, terms can be negotiated based on the project's timeline.
Points: Expect to pay 1-2 points upfront, which translates to 1-2% of the loan amount.
Approval Speed: One of the primary advantages of hard money loans is the rapid approval process. Loans are typically approved within a few days, ensuring you can move quickly on lucrative deals.
Repayment: Repayment terms are flexible and may include interest-only payments. The principal is usually due as a balloon payment at the end of the loan term.
Hard money loans are especially beneficial for land investors who need quick capital for property acquisitions, development projects, or other time-sensitive opportunities. By leveraging these loans, you can secure the funding you need without the extensive underwriting process required by traditional lenders.