If you are a land investor looking for ways to fund your land deals, you have the option of bringing a passive investor on board to partner with you on lucrative deals that you might not otherwise be able to close.
In this episode of the Forever Cash Podcast, we meet Reid and Halie Kurtenbach, who provide a range of funding options for land investors.
Reid started off his real estate career by flipping mobile homes in 2008. Since then, Reid and his wife Halie have diversified their business interests to build both active and passive income.
Reid and Halie discovered land investing and completed several courses as well as the Land Profit Generator Program. However, with an already complex business portfolio to manage, they decided that rather than building their own land investing business, they could support other land flippers in a more passive role.
What is a passive investor?
When you are starting up your land investing business, a few upfront costs need to be covered to get a property under contract and sold for profit. Some of these costs include sending mailers, marketing, and closing costs, among others.
If raising this capital is a challenge for you, you have the option of partnering with a passive investor to help with some of those upfront costs, especially if you are just getting started.
A passive investor is a third party willing to fund a transaction on your behalf. In most instances, the passive partner has minimal involvement in the deal process. The relationship between the passive and active partners is governed by a mutually agreed upon contract. This contract will specify the terms and conditions of the agreement, including profit split on closing.
What are the pros and cons of having a passive partner in your land investing business?
As with any business relationship, bringing a passive investor onboard has some pros and cons:
|If you are a beginner investor, having the support of an experienced passive partner can help you to get your deal done without risking your own capital.||Once you have a passive investor in a land deal, you will commit to a net profit split with your investor once the sale is closed. However, 40 %-50% profit on a deal done is better than no deal at all.|
|A passive investor can help get you to income generation if you don’t have a lot of capital to invest upfront.|
When you enter into a contract with a passive investor, it is your responsibility to fulfill your contractual obligations to your investor. If you fail to do so, you could lose the deal altogether.
|You can use capital provided by a passive investor to scale your land investing business. If the passive investor covers some of your deal costs, you can invest money in a team and systems, for example.|
There is always a risk that your passive investor pulls out of a deal and leaves you hanging. Therefore, it is essential to partner with reputable passive investors experienced in the land investing business.
What criteria do you need to fulfill to bring a passive investor onboard?
Reid and Halie have set out some reasonably clear criteria for land investors to tap into their passive investing offerings. These include factors such as:
- The property needs to be inside the USA
- The purchase price should be between $1K – $250K (50% or less of retail value)
- They offer land investors 12 months to sell the property
- And offer their services for a net profit split of between 55%-75% – Investor | 45%-25% – Funder
While they are both very business savvy and are looking for deals that make sense for the primary investor, buyer, and seller, they are very focused on building long-term relationships rather than doing one-time deals.
“We strongly believe in the principle of a rising tide lifts all ships,” Reid explains. “We are more interested in building strong mutually beneficial partnerships with people that we connect with for everyone’s benefit.”
If you would like to find out if Reid and Halie are a good fit for you and your land investing business, call them on 719-508-7201 or visit www.parcelfunders.com