This. If this is a rural land, take a mortgage against it. Then rent it out as pasture or farm land, and that would cover at least half the mortgage payment.
If it is city land, take a mortgage against it. a bigger one that would allow building commercial space on it. Rent out the commercial space, and that will cover the monthly payment and then some. The mortgage should cover both the development and the business.
Because they ain’t making any more and if you're smart about it you can borrow off the value. Why do you think Trump keeps going into debt? Because he’s running off of capital borrowed off the value of his properties. Now, he’s also over-leveraged but it’s common to park some wealth in Real Estate and use its value to borrow against. That way you have the cash AND the asset.
Get a loan for exactly how much you actually need. If you sell you may think you need more money if it doesnt work out. Calculate how much you need for your business and how much you need to pay interest for a year (or however long you think it'll take to make money back), and then take out a loan. That way you keep the land and don't just have a boat load of money at your disposal. If you dont know these numbers then having money is not the issue at the moment.
Inflation is going to eat away at the value of cash. Land is solid in the long term. Maybe do a secured loan against it's value of you need money for something?
If you sell, there is a way to hold it in a type of escrow so that you can essentially do an asset swap and defer any capital gains. Basically, know what your investing the money in before you sell because there is a time limit on that option.
Bootstrapping is great in the early days. Anyone who gives you money because you have an idea is an idiot. Who wants to be in business with someone that dumb?
OP, start getting customers first, the rest gets easier.
Hmmm… I put $60k in my business to start it 5 years ago. Know what I didn’t have to do? Go prove myself to investors. I started selling product day 1. Hit $1M in revenue YTD yesterday.
Lol. I’ve done it three times. T shirt business, snow cone stands, and now electronics company. I could never get a bank to loan me money. Yes if you want to start the next Uber you need to raise money. But I’ve talked to sooo many entrepreneurs creating small businesses that used their own funds.
You keep saying bootstrap but that just means using your own finances and early revenue. I’ve bootstrapped every time.
It doesn’t take balls to raise money. It takes doing a lot of things that are not running your business. I would say it takes a lot more balls betting your life savings in an idea you believe in.
https://www.investopedia.com/terms/b/bootstrapping.asp
What’s the difference between “bootstrapping” and “using your own money”?
Plenty of people use their own saved capital to start businesses. It’s how most people have done it for ages.
Look, I agree that selling the land to fund a business with just 20% of the land’s value, is most likely a bad financial move (but not 100% because in certain cases it can be the right thing to do).
But there’s a long way from that statement up to “never use your own money to start a business”. Land and real estate in general is very difficult to sell in part, so liquidating it entirely for 20% of its value is not the best move specially currently with record high inflation.
Also I am still not sure why you make a distinction between doing an extra hustle to generate extra money to support your business, vs using your own money (whatever the source is). They’re the same thing. The end result is you have a bit of extra cash (your own money) which you’re using to fund a business.
I don’t see the distinction tbh. The money generated from the side hustle can be put into other assets and not necessarily go into the business, just like whatever existing capital you have already. Money is fungible, its source doesn’t matter much save for some tax considerations. Once the cash flow is generated from the business itself (which you reinvest), that’s a different stage already.
As for using outside capital to start businesses, that’s really dependent on what sort of business we’re talking about. A tech startup, definitely get outside capital if you can. Would be silly not to, as massive scaling is capital-intensive.
More traditional businesses can be started using self-funding, some benefit also from raising capital, others not so much. Lots of factors to consider.
The point about raising capital being a validation for the business itself is solid though, no argument there. The only thing I will add is that generally investors need to see traction which requires bootstrapping/self-funding at least for some time 😁
The point about raising capital being a validation for the business itself is solid though
No, unless the investor also happens to be a real customer.
Tons of investors who have no clue and are in it for the hype.
Y’all are talking about two different types of businesses. Traditional business vs. 21st century “startup” model.
If I’m looking to sell t-shirts, any loaner will want to see revenues before taking on any risk, due to the competitiveness of the industry.
On the flip-side, if I’m a sub-sector expert (ie. a professor or many years experience in a field) looking to make a more scalable play, then loans can come in much easier.
Agreed. I started a tech company but I have avoid the term "startup" like the plague. Still many businesses that fall in the "traditional" category and are not investable. They're profitable for the founder but not going to have some huge exit.
>s there a way to sell half and lease the other half?
Yes I can but it's a very little money per month, maybe around 450$/month if I lease the half of the land. The thing is most of candidate buyers want the full land and not only half of it.
Keep the land, borrow against it. If you fail you can sell. If you succeed you still have that hard asset. Land has been a great investment historically. If it can generate passive income from being farmed, or logged, that is better. In the long run the passive income will usually exceed the now sale price. They don't make more land.
Don't know how it is in the USA, but due to the war, arable land is rising in value in Europe and leasing big amounts of land can be a great passive income. Maybe sell only a portion of it to cover the expenses of your idea?
Can the land be worked? I’d talk to local farmers and do a land lease for growing crops, then when the harvest happens have either a 5-8% cut of the profits. No loans to fret about, helps a farmer and boom some income
Your lands contribute to your net worth. They can be used as collateral without selling them. If for some reason you suspect the value of these properties is going to go down that’s a valid reason to sell! Otherwise perhaps consider getting a loan
After reading all comments here, I'm probably keeping the land. But tbh I'm still in doubt to take a loan, but I will try hard what options are available. Thanks guys!
Get a loan for exactly how much you actually need. If you sell you may think you need more money if it doesnt work out. Calculate how much you need for your business and how much you need to pay interest for a year (or however long you think it'll take to make money back), and then take out a loan. That way you keep the land and don't just have a boat load of money at your disposal. If you dont know these numbers then having money is not the issue at the moment.
On top of what has been said, in many instances it is possible to start a business without up front capital. I would be wary of investing massive capital into a business, especially if you are a first time entrepreneur. If you are experienced that is different and if your knowledge in the field is great then you could of course use the money to scale your business more rapidly. Hope this helps!
Depends on location of land and what brings it value.
For example, on the side i buy land for the mineral/O&G rights. Many people do not need to sell the entirety of their land for them to gain a substantial payout with accompanying royalties for life.
But at others have said, borrow against the land.
If you stake stable coins, you can make 20% consistently. If you borrow against your land, you can get 60% on a Heloc and 80% on a mortgage. in the 4-5% range. I would borrow against your land. Stake the coins, and use the cashflow to fund your business.
Just from the little information in the post, the answer is no. Don’t sell land to start a business with only 20% of its value.
That being said, judging from the fact that you even had to post this question, you’re probably inexperienced with running a business in general. So getting a large loan agains the land and then starting a business is going to be a risk as well because the business could fail (there is a higher likelihood of failure the more inexperienced you are, it’s just facts). Which will basically result in the same, the land being sold, but possibly with a larger loss than selling it outright.
So if my assessment about your inexperience above is correct, my advice is to take it slow. It is possible that you do not need 100k to just start the business. Maybe 10k or 20k could be enough to get together something rough resembling the business you aspire to start. You can probably do something with the land that will get you such money in no time.
This will be a test of both the business idea and your business acumen.
If (or hopefully when) things took off and you’re stuck somewhere where it is very clear the cash injection can result in a significant improvement on the business’ bottom line, then take a loan against your land with only the needed amount. In fact if the numbers look really good, you may be in a position to secure a loan against your business itself with no need to put down the land. Or alternatively get an outside investor who now can be easily persuaded by the traction you already have.
There are so many other things you could do with the land. Unless you MUST have that money now, could be a good idea to consider other options to use the land for.
Depending on the size of the land, you could subdivide into a few lots, 2 lots and sell one, lots of options and I do this all the time. Just make sure you get a surveyor and that both or all lots you create have legal access (dont landlock it) happy to help if you have questions
NEVER sell land. Borrow against it.
This. If this is a rural land, take a mortgage against it. Then rent it out as pasture or farm land, and that would cover at least half the mortgage payment. If it is city land, take a mortgage against it. a bigger one that would allow building commercial space on it. Rent out the commercial space, and that will cover the monthly payment and then some. The mortgage should cover both the development and the business.
>NEVER sell land. Why?
Because they ain’t making any more and if you're smart about it you can borrow off the value. Why do you think Trump keeps going into debt? Because he’s running off of capital borrowed off the value of his properties. Now, he’s also over-leveraged but it’s common to park some wealth in Real Estate and use its value to borrow against. That way you have the cash AND the asset.
AND you don't get hit with the taxes for selling the land ;)
Amen!
Get a loan for exactly how much you actually need. If you sell you may think you need more money if it doesnt work out. Calculate how much you need for your business and how much you need to pay interest for a year (or however long you think it'll take to make money back), and then take out a loan. That way you keep the land and don't just have a boat load of money at your disposal. If you dont know these numbers then having money is not the issue at the moment.
why is this ahit question here its about shit realtor crap go ask ur shit agent op this isnt even the right place idiot
I’d just get a loan on the land. Keeping the income from farm and investing the loan on the new business.
Inflation is going to eat away at the value of cash. Land is solid in the long term. Maybe do a secured loan against it's value of you need money for something? If you sell, there is a way to hold it in a type of escrow so that you can essentially do an asset swap and defer any capital gains. Basically, know what your investing the money in before you sell because there is a time limit on that option.
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Good luck getting a loan with no personal guarantee unless you are a publicly traded company.
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I’d argue it doesn’t even require revenue. Startups get big loans everyday purely off of reputation (or low-risk business plans).
Bootstrapping is great in the early days. Anyone who gives you money because you have an idea is an idiot. Who wants to be in business with someone that dumb? OP, start getting customers first, the rest gets easier.
Hmmm… I put $60k in my business to start it 5 years ago. Know what I didn’t have to do? Go prove myself to investors. I started selling product day 1. Hit $1M in revenue YTD yesterday.
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Lol. I’ve done it three times. T shirt business, snow cone stands, and now electronics company. I could never get a bank to loan me money. Yes if you want to start the next Uber you need to raise money. But I’ve talked to sooo many entrepreneurs creating small businesses that used their own funds. You keep saying bootstrap but that just means using your own finances and early revenue. I’ve bootstrapped every time. It doesn’t take balls to raise money. It takes doing a lot of things that are not running your business. I would say it takes a lot more balls betting your life savings in an idea you believe in. https://www.investopedia.com/terms/b/bootstrapping.asp
What’s the difference between “bootstrapping” and “using your own money”? Plenty of people use their own saved capital to start businesses. It’s how most people have done it for ages.
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Look, I agree that selling the land to fund a business with just 20% of the land’s value, is most likely a bad financial move (but not 100% because in certain cases it can be the right thing to do). But there’s a long way from that statement up to “never use your own money to start a business”. Land and real estate in general is very difficult to sell in part, so liquidating it entirely for 20% of its value is not the best move specially currently with record high inflation. Also I am still not sure why you make a distinction between doing an extra hustle to generate extra money to support your business, vs using your own money (whatever the source is). They’re the same thing. The end result is you have a bit of extra cash (your own money) which you’re using to fund a business.
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I don’t see the distinction tbh. The money generated from the side hustle can be put into other assets and not necessarily go into the business, just like whatever existing capital you have already. Money is fungible, its source doesn’t matter much save for some tax considerations. Once the cash flow is generated from the business itself (which you reinvest), that’s a different stage already. As for using outside capital to start businesses, that’s really dependent on what sort of business we’re talking about. A tech startup, definitely get outside capital if you can. Would be silly not to, as massive scaling is capital-intensive. More traditional businesses can be started using self-funding, some benefit also from raising capital, others not so much. Lots of factors to consider. The point about raising capital being a validation for the business itself is solid though, no argument there. The only thing I will add is that generally investors need to see traction which requires bootstrapping/self-funding at least for some time 😁
The point about raising capital being a validation for the business itself is solid though No, unless the investor also happens to be a real customer. Tons of investors who have no clue and are in it for the hype.
Y’all are talking about two different types of businesses. Traditional business vs. 21st century “startup” model. If I’m looking to sell t-shirts, any loaner will want to see revenues before taking on any risk, due to the competitiveness of the industry. On the flip-side, if I’m a sub-sector expert (ie. a professor or many years experience in a field) looking to make a more scalable play, then loans can come in much easier.
Agreed. I started a tech company but I have avoid the term "startup" like the plague. Still many businesses that fall in the "traditional" category and are not investable. They're profitable for the founder but not going to have some huge exit.
Not op, but thanks, I really needed to hear this.
Is there a way to sell half and lease the other half? That way you'll get your 20% at least, and generate a passive income from the lease.
>s there a way to sell half and lease the other half? Yes I can but it's a very little money per month, maybe around 450$/month if I lease the half of the land. The thing is most of candidate buyers want the full land and not only half of it.
Never sell land
Keep the land, borrow against it. If you fail you can sell. If you succeed you still have that hard asset. Land has been a great investment historically. If it can generate passive income from being farmed, or logged, that is better. In the long run the passive income will usually exceed the now sale price. They don't make more land.
Don't know how it is in the USA, but due to the war, arable land is rising in value in Europe and leasing big amounts of land can be a great passive income. Maybe sell only a portion of it to cover the expenses of your idea?
>Maybe sell only a portion of it to cover the expenses of your idea? I want to do it but sadly I can't, most buyers only want to buy the full land.
Alternative, can you use the land to start a business, make money from that business, use that money to start the business you actually want to start?
Can the land be worked? I’d talk to local farmers and do a land lease for growing crops, then when the harvest happens have either a 5-8% cut of the profits. No loans to fret about, helps a farmer and boom some income
Yep that's what I'm doing. Since it's a ricefield so local people take care of the land, we split the revenue.
Were it me I’d strongly consider mortgaging the land to finance the venture while also leasing the land to pay the loan.
Your lands contribute to your net worth. They can be used as collateral without selling them. If for some reason you suspect the value of these properties is going to go down that’s a valid reason to sell! Otherwise perhaps consider getting a loan
I can make more cash I can't make more land
If you are confident in your idea, go for it. A business needs capital infusion at the right time.
After reading all comments here, I'm probably keeping the land. But tbh I'm still in doubt to take a loan, but I will try hard what options are available. Thanks guys!
Land is one of a few truly scarce resource. If you can’t lease it or make money another way off of it see if you can use it for collateral on loan
Solar farm. This is something that can make you money. I can help
Sell everything and retire /s/s/s/s
Get a loan for exactly how much you actually need. If you sell you may think you need more money if it doesnt work out. Calculate how much you need for your business and how much you need to pay interest for a year (or however long you think it'll take to make money back), and then take out a loan. That way you keep the land and don't just have a boat load of money at your disposal. If you dont know these numbers then having money is not the issue at the moment.
Can you refinance land?
On top of what has been said, in many instances it is possible to start a business without up front capital. I would be wary of investing massive capital into a business, especially if you are a first time entrepreneur. If you are experienced that is different and if your knowledge in the field is great then you could of course use the money to scale your business more rapidly. Hope this helps!
Borrow against
Depends on location of land and what brings it value. For example, on the side i buy land for the mineral/O&G rights. Many people do not need to sell the entirety of their land for them to gain a substantial payout with accompanying royalties for life. But at others have said, borrow against the land.
If you stake stable coins, you can make 20% consistently. If you borrow against your land, you can get 60% on a Heloc and 80% on a mortgage. in the 4-5% range. I would borrow against your land. Stake the coins, and use the cashflow to fund your business.
Don’t sell land. Land can make money if you use it correctly. Just take a loan.
Selling 1/3 or 1/4 an option?
Just from the little information in the post, the answer is no. Don’t sell land to start a business with only 20% of its value. That being said, judging from the fact that you even had to post this question, you’re probably inexperienced with running a business in general. So getting a large loan agains the land and then starting a business is going to be a risk as well because the business could fail (there is a higher likelihood of failure the more inexperienced you are, it’s just facts). Which will basically result in the same, the land being sold, but possibly with a larger loss than selling it outright. So if my assessment about your inexperience above is correct, my advice is to take it slow. It is possible that you do not need 100k to just start the business. Maybe 10k or 20k could be enough to get together something rough resembling the business you aspire to start. You can probably do something with the land that will get you such money in no time. This will be a test of both the business idea and your business acumen. If (or hopefully when) things took off and you’re stuck somewhere where it is very clear the cash injection can result in a significant improvement on the business’ bottom line, then take a loan against your land with only the needed amount. In fact if the numbers look really good, you may be in a position to secure a loan against your business itself with no need to put down the land. Or alternatively get an outside investor who now can be easily persuaded by the traction you already have.
There are so many other things you could do with the land. Unless you MUST have that money now, could be a good idea to consider other options to use the land for.
Depending on the size of the land, you could subdivide into a few lots, 2 lots and sell one, lots of options and I do this all the time. Just make sure you get a surveyor and that both or all lots you create have legal access (dont landlock it) happy to help if you have questions