There isn’t much funding currently available for land loans—there are still some lenders out there, but they are few and far between, as potential borrowers very well know. Why? From the lenders’ perspective, it’s the risk associated with start-ups of any kind, and raw land can be considered a “start-up,” and one with no current income. Banks in particular, in the current market, aren’t interested in getting involved with land for that reason.
With no income, there’s a much greater risk for a loan default, and it is incumbent upon borrowers to prove they have the resources, or “a plan,” to avoid that. At the end of the day, lenders don’t want to own land now simply because in the current real estate market, there’s not much one can do with a defaulted property except hold onto it until the market turns around.
A potential borrower has to look at the asset on its own merit and convey that message. Look at whether an asset—land, an apartment building, or a shopping center—truly has value for the short and long term. Understand the repercussions with the various types of properties to prevent possible foreclosure or some other action. Indeed, there is a higher default rate on land because of the fact that there is typically no income from these properties.
The bottom line: As a borrower, be very careful with the decision to invest in land. Make sure you are going to be able to make that payment back, and make sure you can support the debt until you are able to generate income and a stable cash flow. Work with your lender to make it happen.
Both projects seem to fit within our general lending parameters of 50% Loan to Value. Our loans range from raw land loans to income producing assets such as office buildings, shopping centers, retail space, etc. If you would like to discuss further please feel free to give us a call. Thank you.
Two Land Bridge loans
1-$9 MILLION AGAINST A $36 MILLION DOLLAR VALUE. Three phase. Borrower is ready for building Permits on Phase One. So the Bridge loan will be paid down in three increments.
2- $7 million against a $14 million dollar value. Ultimate use is a very large Wind Farm. Already has Purchase Power Agreements, etc. Close to Perm funding commitment from a knowledgeable lender. This is a debt consolidation loan to take advantage of discounts from various contract sellers and a lender.
Washington State. Great locations. Strong Borrowers (800 scores nice net worth)
We are actively providing financing for land loans and would be happy to facilitate funding for this project. Currently we are lending anywhere between 50-55% LTV for this type of asset. Thanks.
I have a client looking to build a 85 bed Senior rehab and assisted living center in Illinois and is in contract for about $ 2 million .he needs a loan to aquire the land and then will take you out with a construction loan to build the facility.He owns and manages over a dozen such facilities that he has build thru the years.Can you do this loan and if so at what LTV and rate and terms.I can also be reached at 718-652-2700 ext #14.Thank you.