The process of “financing”, whether it be land or a home or a car involves the owner/seller – in most cases a bank – agreeing to let the buyer pay slowly over time instead of making one large payment at the outset. In these situations, the buyer is paying more for the convenience of extending the payments over a number of years because the seller will typically not be breaking even, or even profiting on the deal until months or years in the future. Because we are a small company, and unable to afford the financial risks associated with such transactions, we prefer instead to only deal with buyers prepared to pay the full purchase price upfront. As we realize this does not work for many of our customers, however, we thought it best to supply the remaining buyer pool with other options from which they can obtain easy, low-interest sources of financing to help purchase their dream property.
Below is a short list of companies who either provide funding for such purchases or access to funding. This is by no means a comprehensive list, but many of the options provided are ones the managers of The Hemingway Land Company have either used personally or have had buyers use to obtain the funding necessary to purchase from us. None of the links below are affiliate links and we are not associated with these companies in any way.
PROSPER
What Is Prosper?
[From their website] Prosper was founded in 2005 as the first peer-to-peer lending marketplace in the United States. Since then, Prosper has facilitated more than $12 billion in loans to more than 770,000 people. Through Prosper, people can invest in each other in a way that is financially and socially rewarding. Borrowers apply online for a fixed-rate, fixed-term loan between $2,000 and $35,000. Individuals and institutions can invest in the loans and earn attractive returns. Prosper handles all loan servicing on behalf of the matched borrowers and investors. Prosper Marketplace is backed by leading investors including Sequoia Capital, Francisco Partners, Institutional Venture Partners, and Credit Suisse NEXT Fund.
Why We Like Prosper
Most banks will not finance the purchase of undeveloped land. Prosper, on the other hand, doesn't get into many particulars about what you want the money for. In fact, their 'home repairs/improvements' category is likely as specific as you'll ever need to be when applying for one of their loans. Aside from this, loans are generally easier to obtain through Prosper because of their 'community financing' method. Similarly, they guarantee fixed rates, 3-5 year terms and no pre-payment penalties - all very favorable lending conditions for their clients. Plus, the lending decisions are made automatically by evaluating your credit and 'credit worthiness', meaning the loans are approved using the same sort of real time evaluation method used by banks when you apply online for credit cards.
Have We Used Prosper?
While the managers of Hemingway Land have helped finance different investments through Propser and seen steady and reliable returns on our money, we have never sought funding through this site.
Drawbacks
As with any type of loan or financing that you apply for, a Propser loan comes with a built in interest rate. Meaning, if you apply for a $10,000 loan to purchase a $10,000 property and elect to pay off the balance slowly over the course of a 5 year term, you will end up paying more in the long run than if you had simply paid off the purchase immediately or made larger payments each month throughout the durtion of the loan. As noted, however, this is common with most any type of 'financing' and Propser offers very favorable interest rates.
Who Is Prosper Best Suited For?
Anyone buying land for personal reasons, such as to relocate or downsize to a more "off-grid" lifestyle. Many of our clients are looking to do such things and in budgeting out how best to build their own rainwater catchment or septic system, or construction of a container home they come to realize that they don't quite have the funds necessary to finance their ambition. A Propser Loan can help those people realize their dream.
Learn More
You can visit Propser's website here.
FUND & GROW
What Is Fund & Grow?
[From their website] An A+ Better Business Bureau-rated financial services firm, Fund & Grow helps small businesses and real estate investors obtain unsecured funding (up to $250,000 and more) via creative Zero Interest Business Credit Lines. Founded by a real estate investor and former owner of a California based Mortgage brokerage, Fund & Grow now funds thousands of entrepreneurs each year. Fund & Grow has formed many profitable relationships with some of the largest financial institutions, affiliate networks, attorney and financial advisory firms in the country. Fund & Grow’s main objective is to help small business owners obtain the affordable financing that best fits their needs. Fund & Grow develops relationships for our clients with financial institutions such as Bank of America, Chase, Citi Bank, Elan, American Express and many of the other largest banks in the country to fulfill the clients’ funding needs.
Why We Like Fund & Grow
Fund & Grow is able to access large amounts of credit for individuals's small business aspirations. They also help to get you larger lines of personal credit and provide helpful advice about how best to utilize the credit so as you can continue to transfer balances from one 0% APR credit card to another while rarely paying any penalties or fees besides a balance transfer charge. Additionally, they will also teach you how to pull the cash off the credit cards without enacting the high interest cash avdance charges commonly associated with such transactions.
Have We Used Fund & Grow
We have and we used it to help fund another real estate venture we started a few years back and which is still successful today. A lot of that success we attribute to the loans that Fund & Grow initially got us, and the techniques they taught us for effectively getting access to the most financing possible. Similarly, they also helped improve our personal credit scores and goosed the credit lines on all of our personal cards.
Drawbacks
Generally speaking, while the business credit you're gaining access to is not linked to your individual credit score, your credit worthiness will be used as a "jumping off point" for the company to obtain initial funding. While Fund & Grow can assist in repairing your credit score, for their services to be the most effective, it's best to hire them only if your credit is already fair to decent (say high 600's, low 700's). Similarly, it costs a few thousand dollars to enter this program (at the time we utilized their services it was $3,500) and while we found their services invaluable, the initial buy-in may be more than most people can afford.
Who Is Fund & Grow Best Suited For?
Anyone trying to start a business. Often times people call us wanting to purchase land because they want to build an AirBnB on the property, or are looking to create a solar or wind farm or have some similar dream or vision that they're just looking for one or two breaks to help get off the ground. Fund & Grow is an excellent resource for the financial assistance that those entrepeneurs desire.
Learn More
You can visit Fund & Grow's website here or listen to this interview with their Founder & CEO, Ari Page here.
CREDIT CARDS . COM
What Is Credit Cards Dot Com?
An aggregator of credit card information, with individual sections profiling different types of cards, from ones that specialize in Rewards Points, to others that cater to customers with fair or poor credit profiles. While there are a number of sites like this on the internet, all of which works as some sort of affiliate for the credit card offers they promote, Credit Cards Dot Com is the one we find to have the most comprehensive information displayed about each card and each offer program. Similarly, we find it to be the most well designed and user-friendly of the credit card information aggregtor websites. To be clear, however, the suggestion of Credit Cards Dot Com as a resource is less about the website, then the product it helps promote.
Why We Like Credit Cards
To be clear, the intelligent and responsible utilization of credit cards to help achieve your land buying goals is what we like, not the accumulation of debt. As most every card on the market offers some sort of 0% APR on Purchases or Balance Transfers for the first 12, 16 or even 18 months in the life of the card, it's very easy, and ultimately more affordable, to simply apply for one of these cards and space out the pay off of the property over the duration of that 0% APR period. Furthermore, if you believe it will take you longer to pay off the balance, simply wait until the 0% APR period is ready to sunset, then apply for another card and tranfer the balance. If done intelligently, you can go the entire life of the loan never having to pay more than nominal Balance Transfer Fees.
Have We Used Credit Cards?
In the life of any entrepeneur, much less those who have created two successful real estate companies, the importance of start up capital, whether it be in the form of bank loans or credit cards, can never be underestimated or over exaggerated. Yes, we have. Many times. But always responsibly.
Drawbacks
Credit card companies offer these 0% APR periods on Purchases and Balance Transfers, and are able to not only stay in business but thrive, because they know from experience that most people will default on one or more of the terms dictated in the initial agreement, and hence, needlessly subject themselves to some inflated 20%+ rate when they do invariably default. It's important to keep in mind that if you do choose to utilize one of these 0% APR offers that you 1) find out the monthly payment due date 2) always pay at least the minimum on or before that date and 3) don't charge anything else on the card. If you're able to be even a little disciplined about it, you can go the entire life of the loan without ever incurring any interest or fees.
Who Are Credit Cards Best Suited For?
While most banks will issue a credit card to anyone who can fog a mirror, this source of financing is best utilized by anyone - individual or business - who can be responsible about reliably paying the monthly minimum (at least). If you have 0% APR on Purchases for 18 months, and you make a $5,000 payment in Month 1 and are financially positioned and disciplined enough to afford the $278 monthly payment it will take to eliminate that balance by Month 18, then this is the perfect resource for you. If, however, you believe it may be a struggle to even pay $100 a month during that time, or stick to a reliable payment schedule, incurring additional debt or even purchasing land may not be the best thing for you.
As with most things in life, a lot depends on the user.
Learn More:
You can explore all the best credit cards offered by banks such as AMEX, Bank of America, Chase, Citi and others when you visit CreditCards.com's website here.