Banks may be saying ‘fold’ on raw land deals but that’s doesn’t mean they’re completely off the table. Many banks in the current financial climate consider land deals too risky. After all, raw land isn’t known for producing cash flow. The risk of default is judged to be greater and there’s often no clear road map as far as when a defaulted property could be sold and for how much.
The key to closing raw land deals in this environment are the right partners. Hiring a lawyer with experience in closing raw land deals is critical. “Your college buddy who mainly practices family law won’t cut it,” according to Kennedy Funding CEO and President Kevin Wolfer. He additionally says the right lending partner is also key. “There’s no substitute for experience in making raw land loans happen, period.”
An experienced partner like Kennedy Funding can make the process not only possible but fast. “With all the documentation including titles and deeds clearly provided and the needed environmental surveys and assessments up to date, deals can be closed in under two weeks. But only if the lender is prepared,” he says.
But Wolfer also cautions borrowers to be careful with the decision to invest in land. Payment and debt levels have to be analyzed to make sure the property can generate income and a stable cash flow. Bankers may still say “no deal” to land loans. But a little hard work and experience means they can still happen.