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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: Real estate transactions top $4M for Jan. 9-15 Steamboat Pilot & Today Aspen Real Estate Snapshot Jan. 20, 2025 Aspen Daily News Real Estate Transactions, Jan. 20 edition Hopkinton Independent These 8 charts show what bubble-spotter Ivy Zelman thinks will happen in the US real-estate market after the least affordable year since 1984 Business Insider Barron Trump business partner clarifies future of luxury real estate venture: 'Will not be relaunched' Fox Business The U.S. Government Has a Landlord, and Trump Isn’t a Fan The Wall Street Journal 1-21-25 *INTERVIEW* The Denver Area Real Estate Market Expectations for 2025 with Ed Prather iHeartRadio New report predicts rough 2025 for Las Vegas Valley residential real estate Las Vegas Review-Journal RioCan Real Estate Investment Trust Announces Offering of $550 Million of Senior Unsecured Debentures Business Wire Barron Trump following in dad Donald's footsteps as he prepares to launch luxury real estate venture Hindustan Times In addition to its new Delano office, this firm is now opening on the west side, too - Wichita Eagle Decoded: The ‘behind-the-scenes demands’ over Clear Cooperation Real Estate News Real Estate Transactions | 1-15-25 The Republic-Times The Next Big Thing: Market Trends 2025 to explore the future of Southwest Florida’s real estate market on March 20 Priority Marketing Real Estate Property Sales filed filed Jan. 8-12, 2025 Fauquier Times Barron Trump reportedly following in father's footsteps, launching his own luxury real estate venture Fox Business Anywhere Real Estate’s Charlotte Simonelli on navigating 2025 with financial discipline and the help of AI HousingWire Accurately analyzing the local real estate market Bitterroot Star Kirkley offers 2024 DeSoto County real estate market trends and 2025 outlook DeSoto County News Canadian Real Estate Firm Opens Devenir Construction to Local Self-Storage Developers, Owners Inside Self-Storage Enterprise Community Development Names Zachary Marks as EVP, Head of Real Estate Development citybiz APCO's Camarco Handles Bain's Real Estate Deal O'Dwyer's PR News How Northeastern students are redefining real estate with purpose and perspective The Huntington News Brown & Riding names Lally real estate practice leader Re-Insurance.com Revolve Real Estate, for all your real estate needs PAHomePage.com FINE PRINT Real Estate Brown County Democrat Chicago real estate brokers accused of discriminating against housing voucher holders Crain's Chicago Business Central Texas real estate agent shares insight on the 4,000+ homes sold in Bell County in 2024 25 News KXXV and KRHD Real Estate Transfers Fairburyjournalnews Radio Real Estate 1/18/25 My Bellingham Now Energy Value: A New Imperative in Assessing C&I Real Estate Microgrid Knowledge Americans Can Easily Buy Real Estate in These 8 Countries House Beautiful A horse-lover's haven in Middleburgh - Real Estate Roundup The Daily Gazette Barron Trump launches real estate company as father Donald reclaims US presidency The Times of India Texas Permanent School Fund adds to $250m real estate IPE Real Assets Real estate transactions recorded from January 0-13 Americus Times-Recorder Redfin Welcomes December Agent Hires Redfin News Drake Lists Beverly Hills Estate for $250K a Month While Expanding Luxury Real Estate Empire The Source Magazine January 14-16 Gulfport Real Estate Sales The Gabber Newspaper LA fires spark a call for real estate ‘unity’ Real Estate News West coast real estate firm acquires first Valley property in Tempe Daily Independent Hernandez Development, XSITE Real Estate close on site for future Deer Park self-storage facility REjournals.com These Trump executive orders could impact real estate The Real Deal Undercover sting exposes rampant housing discrimination across Chicago area, watchdog group says WBEZ Chicago Lange Real Estate expands residential development with new teams, office The Business Journals Pinellas Beaches Real Estate January 14-17 The Gabber Newspaper Barron Trump's luxury real estate business 'teased with five word statement' from friend The Mirror US Inside the Gaza Deal: How a New York Real Estate Developer Took on Netanyahu and Hamas The Wall Street Journal 10 Years In Prison For Former Real-Estate Attorney Jersey Shore Online 'It's going to hurt': Real estate expert discusses how Trump's deportation plans could affect housing Yahoo Finance Bill Ackman Offers $1B For Real Estate Giant Howard Hughes To Emulate Berkshire Hathaway Yahoo Finance Resilient California Housing Market Defies Challenges in 2024 Norada Real Estate Investments Barron Tower? Trump’s Youngest Son Follows Father’s Footsteps, Set To Relaunch Real Estate Company Hindustan Times Top Real Estate Agent in Kirkland, WA, Honored for Advocacy and Leadership at Annual Realtors Gala openPR How the Fires Will SEVERELY Impact L.A. Real Estate, According to Celebrity Agents - House Beautiful FGE says no protection for Dispossession Cartel that illegally seize real estate - Riviera Maya News 6 Sacramento-area real estate projects to watch in 2025 - Sacramento Business Journal The Business Journals |
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