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Land Loans

It makes a huge difference whether your land loan request is a purchase money request or a refinance. For example, if an experienced developer is buying the land for his next project, there are banks and hard money land lenders on C-Loans who will finance up to 60% of the purchase price of the land.

The thinking behind such a high-leveraged land loan is that (1) the value of the land has been established in the open market as opposed to by a highly-questionable appraisal; (2) the developer is putting cold, hard cash down (only a tiny second mortgage would be allowed in this scenario); (3) the development of the land will serve as the exit strategy for the lender; and (4) experienced developer will be adding value by either improving the zoning or by adding horizontal improvements (bringing utilities to the site, installing streets, gutters, etc.).


 

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On the other hand, if the land loan is a refinance, land lenders will typically underwrite the deal much more conservatively. Loan-to-value ratios on land loan refinances typically are limited to just 20% to 45% LTV.

If the proceeds of the land loan, however, will be used to add value to the land, then the typical land lender can often be much more aggressive. Suppose you own a $1 million piece of land and you want to borrow $700,000 against it to bring utilities to the site, the land lender will probably use the improved value of the land in his loan-to-value calculation.


Are you an accredited investor? If so, what are you doing with your IRA? Accredited investors are earning 11% to 13% in first trust deed investments.


But the deal that is tough is the guy who pays $200,000 for a piece of land and through mere luck watches his land increase in value to $500,000. If he wants to pull out more than $150,000 to pay off his credit cards and personal debts, and he personally has done little to increase the property's value (he didn't help get the property up-zoned, for example), he will find great resistance from most land lenders today.


If you need a land loan right now, you can apply to over 500 land lenders in just four minutes for free by clicking here.

 


C-Loans.com® is sponsored by C-Loans, Inc. — For more information, contact Alicia Gandy
4811 Chippendale Drive, Suite 101, Sacramento, CA 95841 telephone: (916) 338-3232 * Fax: (916) 338-2328
Real Estate Broker -- California Department of Real Estate -- License Number 01330173
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