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Real Estate: Financial Considerations $$$
Raw land as opposed to improved property is much more difficult to finance through traditional lenders. The main reasons are that it generates very little income, development costs can be expensive, there are no buildings or improvements that can be used as collateral, and it is often considered speculative. For those reasons mentioned we find that sellers are often our first choice regarding financing. It is typical for a seller of raw land to accept 10 percent down and the rest to be paid over time at a specified (below market) interest rate. This would be an example of an installment land contract. Other forms are contract for deed, mortgage and note and purchase money mortgages. In these cases, a real estate attorney usually drafts these contracts and a bank will act as an escrow agent to facilitate verifiable records of payments received. The seller often retains the deed until the property is paid for in full. If you want to investigate bank financing, then you may start out by offering 30 percent down with a seven-year mortgage, with the bank getting an extra percentage point over and above the current interest rates for standard loans. This may not be accepted, but it does give you a starting point to see just what they may be willing to do. If you plan on building on your land, then having a development plan with an appraised set of blue prints for the project will help the lender in justifying your loan. If you can use equity from other property, then paying substantial down payments may also be an option. Final words of caution here are to know values and don't overpay. Always offer less when possible and research recent sales of comparable properties. The larger a parcel is, the cheaper it tends to get per acre. Ask an agent what an acre of land tends to go for in the area that you are considering; try to buy more than one acre. When buying residential lots, builders try to keep raw land costs down to 10 percent of the overall value of the project. If streets and utilities are already in place, then they will use 25 percent as their guideline. If you can combine or assemble parcels or achieve zoning changes with property, you have a good chance of immediately increasing its value. Always physically inspect the property and do your research before obligating yourself to buy it. And try using contracts with contingencies put in to protect yourself. In essence, these are really options that let you control the deal while you investigate and research the land's potential to satisfy your objectives. Happy Hunting and buy the high grounds! About The Author By Dan Auito, mailto:magicbullets@alaska.com, a real estate investor for the past fifteen years & has bought, sold, and rented seventeen properties to date, totaling more than $1.3 million - all on a blue-collar salary before the age of forty. Grab your free tip sheets & more at: http://www.magicbullets.com/home.php
MORE RESOURCES: B.C. dad's estate missing millions from real estate, stocks, Swiss accounts: Lawsuit - Vancouver Sun Trump's war on ‘wokeness’ could impact housing and real estate Real Estate News LA real estate agent reveals No. 1 reason why Pacific Palisades residents won’t return Fox Business Tides shifted in Summit’s 2024 real estate market, experts say. Here’s what changed. Summit Daily New lawsuit sweeps up 8 brokerages and MLSs Real Estate News Recent real estate transactions 1/28/25 BizTimes Milwaukee Metairie-based+commercial+real+estate+firm+expands+into+residential+market New Orleans CityBusiness REAL ESTATE BRIEFS JAN. 25 Las Vegas Business Press Northeast Indiana Real Estate Guide Oct/Nov 2024 KPCnews.com FCT Acquires Majority Interest in Fintracker to Modernize Identity Verification in the Canadian Real Estate Industry Business Wire Los Angeles wildfires: Second California real estate agent charged with price gouging victims Fox News Global Commercial Real Estate Brand SVN® Appoints John Bunch as Industrial Product Council Co-Chair citybiz Covid’s effect and impact on real estate, then and now The Mid Island Times Remembering Norine Shima-Fojt, editor and real estate agent who loved and fought fiercely Berkeleyside I started having boozy brunches when I moved to Dubai. I drink less now — I'm fitter and better at my job but still have fun. Business Insider NRO: This Real Estate Fund Is Worth Considering, But Don't Ignore The Risks (NYSE:NRO) Seeking Alpha What 2025 means for East Bay real estate East Bay Express Blue Zones Certification Boosts Real Estate Values Miami's Community Newspapers Real Estate Update: December Figures Show Uptick At End Of Sluggish Year Huntsville Business Journal Midtown South Rezoning Begins Public Review - Real Estate - United States Mondaq News Alerts Calare Properties Announces Promotions of Four, Expands Executive Team Boston Real Estate Times BPDA Approves Six New Development Projects in Boston Boston Real Estate Times Radio Real Estate 1/25/25 My Bellingham Now Is Julia Fox Getting Into New Jersey Real Estate? Realtors Fall for Fake Billboard Hollywood Reporter News | Real estate investment firm expands workforce housing portfolio with Chicago acquisition CoStar Group EquityProtect Partners With Pacific Coast Title to Offer California Wildfire Victims Free Protection From Real Estate Fraud Business Wire BBJ: Skanska Details First Phase of Longwood labs, Residential Project Boston Real Estate Times New year, same story for warehouse owners as industrial market tightens Crain's Chicago Business Real estate market in uncharted territory The Anna Maria Island Sun Newspaper Northeast Indiana Real Estate Guide 2025 KPCnews.com R.W. Holmes Secures 46,815 SF in Lease Renewals in Billerica Boston Real Estate Times Northeast Indiana Real Estate Guide 2024-2025 KPCnews.com Best Real Estate Deals of 2024: Announcing this year's honorees The Business Journals Island Real Estate: Hatteras Island home sales and trends for January Island Free Press Real Estate Transfers (January 20-24) Times Bulletin Real Estate Expert Dominique Pryor-Anderson Tapped to Lead Community Investment at TREC CandysDirt.com Investor looks to cash out of big block of units at luxury Skokie development Crain's Chicago Business Aging Homeowners: How Does the New Generation Perceive Real Estate? Rockland County Times Gibson, Dunn & Crutcher’s Krystyna Blakeslee: Insights on 2025 Commercial Real Estate Financing Commercial Observer Another Real Estate Agent Charged with Price Gouging MyNewsLA.com Local expert calls out real estate website’s false claim that 71% of ABQ home sales in October were ‘all cash’ Albuquerque Journal Allie Beth Allman’s URBAN Team Welcomes Commercial Real Estate Powerhouse Grant Gold CandysDirt.com Check out NYREJ's Semi-Annual Commercial Real Estate Guide! New York Real Estate Journal Online Taurus enters Twin Cities with 16-property acquisition The Business Journals South Bay office building flops into default as market woes widen The Mercury News Top real estate CEO says California is now battling a ‘triple threat’ no one has seen before Fortune Year kicks off with $13.5M sale Las Vegas Business Press Attorney General Bonta Files Charges Against a Southern California Real Estate Agent for Price Gouging Eaton Fire Victims California Department of Justice |
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