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Real Estate Discussion: Getting financing for vacant unimproved rural land.

By Automan Empire follow Automan Empire   2018 Apr 19, 10:37am 2,550 views   9 comments   watch   nsfw   quote   share    


I recently purchased a rural acreage in an area I've always liked, and have become interested in another nearby parcel.

The one I bought was purchased with a low down and owner carry; he bought it in the tax lien sale probably for a song and is selling it to me. This is the best way to purchase land even with little down and poor credit! (Side note, my long term plan is to become this guy.)

The other parcel in question is being sold as part of an estate sale, and the family won't carry. My offers were not even responded to.

I'd like to shop it around to private investors at a generous interest rate and short amortization schedule. Right now I can put 25% on the table; I understand conventional lenders won't touch less than 50% down on vacant land. What kind of numbers would interest a private investor in this scenario? I've penciled it out at 10% on a 5 year mortgage which is totally doable on my end.
1   zzyzzx   ignore (2)   2018 Apr 19, 10:46am     ↓ dislike (0)   quote   flag      

Whatever happened to pay cash or fuck you???

What did banks and traditional lenders tell you? Why would getting a loan on unimproved land be any different from getting a loan on a lot with a house, except that I would think that there would be a LOT less paperwork on the unimproved lot? Having poor credit just means that you pay higher interest rates (for the most part). Put enough down % on the loan.
2   Automan Empire   ignore (2)   2018 Apr 19, 11:14am     ↓ dislike (0)   quote   flag      

zzyzzx says
Whatever happened to pay cash or fuck you???


Maybe in a hot market like the Bay Area, but this has sat on the market for 120+ days already. If I had money in fist, I wouldn't be asking.

I haven't asked about this specific deal, but in years past my traditional bank told me vacant land usually needs 50%LTV to even consider an application.
3   zzyzzx   ignore (2)   2018 Apr 19, 11:32am     ↓ dislike (0)   quote   flag      

Automan Empire says
in years past my traditional bank told me vacant land usually needs 50%LTV to even consider an application.


I was expecting that % to be lower than 50%, like maybe 25%. How many lenders have you asked?
4   SFace   ignore (0)   2018 Apr 19, 11:46am     ↓ dislike (0)   quote   flag      

"What kind of numbers would interest a private investor in this scenario?"

1) High returns
2) Low risks
3) Trust
4) Time for effort (100% return on 10K is just 10K and still a waste of time)
5   FortWayne   ignore (4)   2018 Apr 19, 12:12pm     ↓ dislike (0)   quote   flag      

What possible lender benefit is here? If you stop paying, they get worthless piece of land to pay taxes on. And if you pay, what do they make?

Soil reports, zoning...all important things to know.

Your best bet is to find someone with money burning their pocket at this point.

What loan amount you looking for? Ltv?
6   Automan Empire   ignore (2)   2018 Apr 19, 12:17pm     ↓ dislike (0)   quote   flag      

FortWayne says
What loan amount you looking for? Ltv?


About $36,000, 75% LTV

If savings accounts are paying ~1%, 10% sounds pretty good.
7   zzyzzx   ignore (2)   2018 Apr 19, 12:20pm     ↓ dislike (0)   quote   flag      

If you don't have 36K cash to spare, you shouldn't even be looking.
8   FortWayne   ignore (4)   2018 Apr 19, 12:23pm     ↓ dislike (0)   quote   flag      

You can probably try SBA. They do loans, but will ask for something more tangible to secure loan against. Like a lean on your other residence or similar asset. It’s worth a conversation.

SBA does loans for business, so you’ll need a business plan for it.

Automan Empire says
FortWayne says
What loan amount you looking for? Ltv?


About $36,000, 75% LTV
9   Strategist   ignore (2)   2018 Apr 19, 5:37pm     ↓ dislike (0)   quote   flag      

Automan Empire says
I'd like to shop it around to private investors at a generous interest rate and short amortization schedule. Right now I can put 25% on the table; I understand conventional lenders won't touch less than 50% down on vacant land. What kind of numbers would interest a private investor in this scenario? I've penciled it out at 10% on a 5 year mortgage which is totally doable on my end.


If it's rural and undeveloped, the conventional lenders and banks won't even do it for 50% down. A hard money lender might, but most likely they will only go 25% LTV. They will also charge ridiculous points, and a high interest rate.
Try and use a credit card with 0% APR for 15 months.

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