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In land development, many factors determine the success of a project here are 5 ways to creatively fund your land development project in 2023. One is the ability to secure the necessary financing to complete the land development project.
There was a time when finding funding for a land development project was limited to a few options, such as traditional institutional lenders like banks. These banks usually do not fund small projects or projects not being developed by established land developers.
Many projects have been left unrealized due to the inability to secure funding in time. This changed drastically with the advent of the Internet to locate non-traditional funding sources.
5 Ways to Creatively Fund Your Land Development Project in 2023
This time-tested approach will never disappear entirely, but there are a greater variety of loan types and more flexibility in structure than before. Loans still fall into these basic categories:
- Conventional loans: From banks, credit unions, etc.
- Personal loans: Borrowed from those you know and with whom you have a relationship.
- Private/Hard Money loans: Contrary to normal commercial loans, hard money loans have a shorter term but a similar repayment schedule. They frequently incorporate 12-month to three-year interest-only payment schedules.
In some cases, part of the financing for a land development project may come from a seller. One of the most significant advantages to developers is that it can be less expensive money than loans from other sources. It also keeps the seller involved and caring about the property. An advantage for the seller is that it often helps them delay or lower their sales tax burden.
2. Joint Venture Partnerships
In this scenario, a financial partner joins in with the owner. This financial partner invests in exchange for a percentage of the profits. There are many ways to do this, with various partners adding value in different ways.
The rise of crowdfunding platforms dedicated to real estate is an exciting development for the industry. These sites offer pre-vetted projects to registered investors and manage the entire transaction online. Projects are exposed to a vast audience of investors, and funding goals are often met with remarkable speed. This rapidly growing area has attracted the notice of many traditional lenders.
In real estate syndications, a group of investors funds real estate loans for a percentage of the profits. Or, they can be paid a set return on their initial loan.
5. Equity Trades
This involves trading the equity in a separate property into a real estate deal or project in exchange for being paid when the real estate property sells. In this scenario, one can invest equity as part of the down payment for interest in a completed project.
Securing the necessary funding can be a big project hurdle, but considering some of these creative options is one way to get past it. Flexible developers can secure capital from several sources to make the plan work.
About Gap Equity Loans
Since 2008 Gap Equity Loans has been helping with secured equity loans to expats and locals that need creative project financing to start, complete, or expand a project, renovate their home, buy a new car or get that must-have item.
“Whatever the circumstances—weather, economy, politics, or any other justification—someone is closing deals today. Get out there and improve people’s lives by assisting them in achieving their financial independence, mental stability, and legacy.“
We work with residents and non-residents using a similar process as commercial lenders but without the long wait time and our personal touch. Also, we offer legal and investment consultant services.
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