5 Creative Ways to Fund Your Land Development Project this year

Are you looking to develop the land but need help creatively funding your land development Project? In land development, ensuring the necessary financing is critical to the success of a project. However, finding funding for a land development project was limited to a few options in the past, such as traditional institutional lenders like banks. These banks usually only fund small projects or projects not being developed by established land developers, leaving many projects unrealized due to the inability to secure funding in time.

But don’t worry, in this article; we will explore five creative ways to fund your land development project in 2023. These funding sources offer more flexibility and variety in structure than traditional loans and can help you get your project off the ground.

1. Loans

Loans are a time-tested approach to financing a land development project and will never disappear entirely. However, there are now more loan types available and greater 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 have a relationship with.
• Private/Hard Money loans: Unlike average commercial loans, hard money loans have a shorter term but a similar repayment schedule. They frequently incorporate 6-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 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 a joint venture partnership, a financial partner invests in the project in exchange for a percentage of the profits. There are many ways to structure these partnerships, with various partners adding value in different ways.

3. Crowdfunding

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 quickly met. This rapidly growing area has attracted the notice of many traditional lenders.

4. Syndications

Real estate syndications involve a group of investors funding real estate loans for a percentage of the profits. Or, they can be paid a set return on their initial loan.

5. Equity Trades

Equity trading 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. As a flexible developer, you can secure capital from several sources to make the plan work.

About Gap Equity Loans

If you’re an expat or a local looking for creative project financing to start, complete, or expand a project, renovate your business or home, buy a new vehicle, or get that must-have item like a swimming pool, Gap Equity Loans can help. Since 2008, Gap Equity Loans has been helping with secured equity loans. We work with residents and non-residents using a similar process as commercial lenders but without the long wait time and our personal touch. Additionally, we offer legal and investment consultant services.

In Conclusion

You can find a funding source that fits your unique needs and budget by exploring these five creative funding options. Don’t let a lack of funding stop you from pursuing your land development project in 2023.