Financing Land, Is That Feasible?
A friend asked me this and I think I know the answer but wanted to run the scenario by you all first.
Is it possible to finance property without getting liens or 3rd parties involved. Basically, having someone give you an unsecured debt on a $400,000 piece of land. Is that feasible?
Best Regards,
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Christian Beebe [ Edited by NC_Yank on Date 02/02/2004 ]
Anything is possible. But not probable. I find it very hard to get someone to give me money to purchase land without some form of security. However, the great god of Real Estate was aware that you would ask this question, so he has empowered me to supply you with an alternate plan.
It is called the Subordination.
You buy a piece of real estate. You have now spent the small amount you did have on the downpayments. You then ask the nice Seller, if he will take back a mortgage/trustdeed for the balance. He looks you over and finaly says yes. You then disclose to him that you intend to build a really lovely building on this land that will make things worth much more then it did when it just layed there sprouting weeds and funny bugs. He compliments you on your excellent judgement and you then ask him, if he would be willing to Subordinate his Mortgage/TrustDeed to a new Mortgage/Trust Deed for the necessary funds with which to construct this ediface which of course you promise to name after him. He hems and haws and if he is greedy, now adds on an additional sum or a small change in interest rate in exchange for this agreement. He agrees. Right on.
The property is the same as free and clear and the new bank lender now lends you the money to build this Taj Mahal.
It is hoped for the good of all parties that you do just that, build an ediface that will be proud to have engraved over its front door the name of the Nice man who sold you the property and became even nicer when he gave you a full subordination.
Is this what you wanted to do??? Lucius
I also have a undeveloped land financing question.
I made an offer yesterday on a 3 acre parcel for $94k. I have $30k in cash and $20k in HELOC(that I would rather not use and save for emergency funds). I have 45 days to find financing for the remainder. My plan was to have it paid off in 3 years and then build.
First:
Is there any sites like ****Must Reach Freshman Investor status before posting URL's*** that will show competetive rates for raw land? I am finding little options on getting financed.
Second:
What is the minimum I would need to have on the property inorder to qualify for a mortgage instead of raw land. What if i'm the rustic type and like to live in a tree house? Can I just build a detached garage with minimum utilities? Move a camper trailer onto the property?
Let me know if more information is needed.
Thank you.
Gary
As a general rule of thumb, you can get financing on this - it's called a lot loan. LTV's, as a rule, are in the 75-80% range with decent credit scores. Find a good mortgage broker in Washington to find the best program for your particular scenario. Maybe there's a local or regional lender who will finance higher.