Is land standing in the way of your Commercial Real Estate idea?

Why does land make so many bankers head for the hills?

Land, after all, seems like pretty straightforward. It’s the part of a property that wasn’t designed by architects or created by a team of builders. But when it comes to commercial real estate loans, land is anything but simple. The fact is, land can tangle up real estate transactions. The main issue for banks is cash flow. Or the lack of it. Land may be valuable ‘someday’ but until it’s improved a bank may not see the value. And seemingly out of thin air, land can create costs to the owners that they may not expect. Real estate taxes and environment clean up costs are just two reasons why a loan to improve a great location may not be forthcoming.

These are just some of the reasons many savvy real estate investors turn to lenders like Kennedy Funding President and CEO Kevin Wolfer. “What many people don’t understand about banks is that they’re not in the business of seeing what you see in a property,” Wolfer says. “Their business model may not work with yours and there are other ways to get your project to fruition. That’s where bridge loans can prove very useful.”

Wolfer says land is only one of the reasons people have turned to Kennedy Funding but it’s becoming a bigger part of the business. “We tend to thrive in the areas banks fear to tread.”