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Buying land when you can't get a loan from the bank

ivmarkov1992@gma

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Dec 6, 2020
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Hi Guys,

so I'm from Croatia and I run a small family hotel in Murter. In front of the hotel, there is land for sale and I want to buy it. The price is 300.000,00 EURO. For 1000m2. In building zone with permits.

I would build an apartment building with 6 apartments and rent it.

I can't get a loan from the bank because my paycheck is small and all that.

One option is to open an LLC for that project (the total value of the project is around 1 million EURO), I would offer collateral that I have, which is worth 2-3 million EURO, but I would still need 200k EURO of my own money, which I don't have. - this is the information from my friend that works in a small bank.

What are my other options?
 
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Last edited:

Kak

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Hello!

If I was in this position, I would feel like I had two major options:

1. Shop around at a bunch of banks, including those that take on new developments and see if other banks have different terms. Does the seller offer financing?

2. Take on an investor in the new project that can foot the down payment for a percentage of the development. This will require you building a case that your project is a great idea and why investing in it makes sense. It might also help you build more and end up costing you less than you think.

Rudimentary example: You currently want 6 units. Can the land fit 12? Let’s say you offered an investor 40% in the project for their down payment on 12 units and land… Many would say they don’t want to give up 40%… I understand, but if allows you to build more, it doesn’t matter. It’s just adding zeros to paper to make your deal work. If you build 12 units because of the investor, you effectively own 7.2 units and they own 4.8. Obviously a better scenario, in this example, than just personally owning 6 units.

Now, can you build 40 on this land? Do you need this land? Is there even more adjacent land? Could you build 100? If you gave your investor a generous 80% of the 100 unit project you get to effectively own 20 now. If that works, why not do it 10 more times in your town? Why not leave your town? Why not give the biggest developer in Croatia a run for the title? Why not build some stuff outside of Croatia too… :rofl::thumbsup:

Happy hunting!

@Antifragile help this man. How many banks were you telling me you shopped a deal to recently? ;)
 
Last edited:

ivmarkov1992@gma

Contributor
Read Fastlane!
Dec 6, 2020
43
23
Hello!

If I was in this position, I would feel like I had two major options:

1. Shop around at a bunch of banks, including those that take on new developments and see if other banks have different terms. Does the seller offer financing?

2. Take on an investor in the new project that can foot the down payment for a percentage of the development. This will require you building a case that your project is a great idea and why investing in it makes sense. It might also help you build more and end up costing you less than you think.

Rudimentary example: You currently want 6 units. Can the land fit 12? Let’s say you offered an investor 40% in the project for their down payment on 12 units and land… Many would say they don’t want to give up 40%… I understand, but if allows you to build more, it doesn’t matter. It’s just adding zeros to paper to make your deal work. If you build 12 units because of the investor, you effectively own 7.2 units and they own 4.8. Obviously a better scenario, in this example, than just personally owning 6 units.

Now, can you build 40 on this land? Do you need this land? Is there even more adjacent land? Could you build 100? If you gave your investor a generous 80% of the 100 unit project you get to effectively own 20 now. If that works, why not do it 10 more times in your town? Why not leave your town? Why not give the biggest developer in Croatia a run for the title? Why not build some stuff outside of Croatia too… :rofl::thumbsup:

Happy hunting!

@Antifragile help this man. How many banks were you telling me you shopped a deal to recently? ;)
Hey,

you gave me a lot to think about, thanks.

1. Seller does not offer to finance.
2. That is a good idea.
On this particular land, I can build max 6 apartments.

The main reason why I wanna buy this land?
It is right in front of my hotel.
It would add more units to the hotel because now I only have 10 units which is not enough for smaller groups.
 

Antifragile

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Happy hunting!

@Antifragile help this man. How many banks were you telling me you shopped a deal to recently?

Last acquisition was harder than anything I’ve ever done… for many reasons outside of my control I ended up talking to over 60 lenders. Yes. Sometimes that’s what it takes.
Keep trying, keep asking, keep doing… until you find a way. That’s entrepreneur mindset.

And your advice above Kyle is what I would have said.
- VTB
- Investors
- leverage your current hotel
 
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ivmarkov1992@gma

Contributor
Read Fastlane!
Dec 6, 2020
43
23
Last acquisition was harder than anything I’ve ever done… for many reasons outside of my control I ended up talking to over 60 lenders. Yes. Sometimes that’s what it takes.
Keep trying, keep asking, keep doing… until you find a way. That’s entrepreneur mindset.

And your advice above Kyle is what I would have said.
- VTB
- Investors
- leverage your current hotel
Thanks man.
 

GoodBoyGilbert

New Contributor
Dec 5, 2021
12
7
Maybe a debt partnership with an investor for the 200k euros you need would work? I'm sure you can find a wealthy investor who believes in you
 

jerrywil

New Contributor
Apr 29, 2022
43
12
Maybe a debt partnership with an investor for the 200k euros you need would work? I'm sure you can find a wealthy investor who believes in you
Also thought about the investor.
Any other financial institution which can borrow your money for some time?
I had a deal with this nextloan lending once and everything went smooth.
Maybe it is something worth checking?
 
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