How to Buy Land With Other People’s Money (Step-By-Step) – Capital Raises – Investment banking
Many people who come to raises.com, they want to do a development product project rather. So how do you double your money on land using other people’s money? So how do you buy land without using your own money and sell it without taking any risk? There’s actually a very simple way to do this and basically it’s really in two steps.
To commence, securing land or having a piece of land under contract is crucial. For those unfamiliar with the term “under contract,” it means agreeing to purchase a piece of land, even if the funds are not immediately available. Surprisingly, after doing this, one can use other people’s money to buy the land, leveraging the fact that lenders might lend up to 75% of the cost. For instance, for land that costs 10 million dollars, one might only need to raise 2.5 million dollars.
How to Buy Land With Other People’s Money (Step-By-Step) – Capital Raises – Investment banking
To raise money, a strategy called a private placement can be implemented, where investors are offered a deal. There are various resources and videos that elaborate on this strategy. Once the land is acquired, some opt to rezone it instead of developing it, manipulating zoning, permitting, and licensing laws to determine what can be built.
In congested, populated cities, there are numerous regulations, making the process of changing the purpose of the land to build on it cumbersome. This involves acquiring permits and dealing with city councils. While the process is tedious and intricate, it can be lucrative once the land is rezoned and the licensing acquired to build a type of asset that yields a significant return on investment.
Some choose to sell the rezoned land to builders to mitigate the risk of developing it. This way, the specialization is in acquiring and rezoning land and attending city council meetings rather than in building developments. By doing this, the value of the land can significantly increase, potentially by 175% or more, just by attending a few meetings and waiting a few months.
For novices, the best approach may be to purchase and rezone land before selling it, letting someone else assume the development risks. This not only pleases investors but also alleviates the responsibility of navigating the complexities of building developments, allowing the seller to profit from the initial flip. It’s an understated yet profitable avenue, especially since acquiring land under contract is less stressful compared to real estate deals like multifamily projects which have shorter contract periods, necessitating expedited capital raising.
The lesser competition in land deals allows more time to raise money and is potentially less bureaucratically intensive, especially in less congested areas, making it cheaper, quicker, and simpler to rezone. This strategy, if appealing, can be further explored, and our team at raises.com is available to assist.
How to Buy Land With Other People’s Money (Step-By-Step) – Capital Raises – Investment banking
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