Purchasing a horse farm is a dream come true for many equestrian enthusiasts. Buying, maintaining, and living on a prime piece of equestrian real estate can be a beautiful, rewarding experience. It can also be an excellent long-term investment and provide ample opportunities for generating income.
But financing an equestrian property purchase can also be a major challenge.
Horse farms, and other types of equestrian real estate, tend to be large in scale. This makes them pricier than your average apartment or commercial office. However, that doesn’t mean you can’t finance one. In fact, there are many ways to purchase equestrian property, even if you have extremely limited capital. You just have to choose the right approach.
To help you successfully finance your equestrian property, we’ve outlined seven strategies you can use to your advantage. Read on to learn more about practical ways you can make your dream come true.
1. Take Out A Loan
Let’s start with the most common equestrian purchase method: taking out a loan. There are several different types of loans available for financing a horse farm or any kind of property relating to horses and horse care. For example:
- Equine Facility Loan – These loans are specifically created for financing different kinds of equine properties. You may qualify for one if the property you want is more than five acres and you are flexible about using the property as a private residence.
- USDA Loan – Also known as a rural development loan, USDA loans encourage development in qualifying rural areas, which some equestrian real estate forms part of. They tend to be much more affordable than other types of loans.
Important note: Income-generating properties are not eligible for USDA loans, so they only suit people who want to use the real estate as a private residence.
With these options, you only need a small percentage (typically 5% – 20% of the property value) to qualify for a large loan. However, you will need a good credit score and a stable income to make your application more appealing to banks.
2. Find An Investor
There is no shortage of equine enthusiasts in the investment and finance sector. If you can find an investor with a strong interest in the equestrian industry, you may be able to strike a deal.
Pitch your vision for running or maintaining a horse farm to an investor and indicate how it could be a profitable venture. In exchange for their financial support, you could give them a percentage of the farm’s profits for an agreed-upon time, the option to build a small home on the property, or to stable their horses.
Whatever avenue you pursue, ensure that you have a legally binding contract drawn up and that both your investor and yourself sign it.
3. Crowdfunding
These days, you can crowdfund just about anything, and horse farms are no exception. By using a crowdfunding platform, you can invite investors, friends, colleagues, and everyone else to invest in your dream.
Just remember to create a compelling campaign that focuses on how your vision could benefit and add value to the community.
4. Find A Lease-To-Own Arrangement
With a lease-to-own arrangement, a property owner lets you rent their farm for a certain period. At the end of this lease, you’ll purchase the property from them. During the rental period, you can save money and develop a good relationship with the property owner. This creates a stronger likelihood of a good deal and less debt.
5. Try Seller Financing
As strange as it sounds, some property owners are open to financing a purchase themselves. But only in exchange for monthly payments to them instead of a bank.
Seller financing is a great option if you have a good rapport with the current owner and want to avoid the traditional bank loan route. It’s a simple and often more affordable option than most. However, it does require a lot of trust between you and the existing property until the debt is settled. In this case, watertight contracts are essential, too, as they protect both parties.
6. Seek Out Grants And Sponsorships
There are grant and sponsorship opportunities available that could suit your financing needs. Conduct research on the options available in your area and find out whether your goals align with theirs. It may surprise you what’s on offer.
When it comes to government and private sponsorships, it’s important to remember that they prefer candidates with a clearly laid-out plan. You’ll also need to have all your taxes in order, a good credit score, and a clear roadmap for your financial future.
If you have a vision for a horse farm or other type of equestrian facility that involves research, sustainability, or community improvement, you’re more likely to receive a grant.
7. Buy Land With A Partner
If you have a friend or colleague with the same goal of financing an equestrian property purchase, why not team up and pool your available funds? If you have a solid, professional working relationship, buying land with a partner can be a great option.
Buying land with someone you trust can cut the property cost in half or wherever you agree to split the deal. It will also give you the luxury of working as a team rather than on your own.
Running a horse farm can be a lot of work. But it’s worth it when you’re doing it with the people (and animals!) that you love.
Just remember that with the partnership method, you need to establish very clear boundaries and expectations around the future of the property. You must also agree on who takes on what role throughout the financing process and determine who is responsible for all the costs involved.
Conclusion
If you’re an equine enthusiast with big plans for the future of your own horse farm, you have more options than you think.
Contrary to popular belief, you don’t need to be a millionaire to finance an equestrian property purchase. But what you do need is a good strategy, some connections, and a clear vision for what you are trying to achieve.
When appealing to investors, crowdfunding contributors, or government grants, some of the things they will look for are passion, experience, and commitment to your goal. This is what will help you to make an impression on the people who can help you purchase prime equestrian property.
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