How do you go about securing funding for a bit of the good earth?

A loan for what is termed ‘raw land’ (completely undeveloped) is difficult to obtain, particularly through conventional sources, such as banks and mortgage companies. Land can lose some of its value, but it doesn’t depreciate in the same way other items of value do. But be prepared to pay off this type of loan in a ten-year period. A construction-to-permanent loan or proof of building plans could extend the term further on out, however. If you have equity in your home or other property, a loan based on this could have a lower interest rate than a straight-out land buy. But the down payment could be as much as 50 percent.

If the borrower can put up that amount of their own personal funding, the private or Hard Money Lender can and do write mortgage loans since the borrower has what is termed ‘skin in the game’, although it is not the same as funding a house or apartment building. It can be done quickly, unlike traditional funding.

Is an Arizona Land Loan funded by hard money or a private investor also difficult to obtain? What qualifications do you have to meet?

Basically this type funding comes from other individuals than the traditional bank and mortgage companies; they typically set their loan on the property’s value combined with the borrower’s credit score with the amount determined by the loan-to value. To determine LtV, the loan amount’s ratio is divided by the value of your collateral property.

There is no guarantee of security with raw land—no profit yield can be offered here. The loan may be restricted to parcels that can be used for residential purposes only. Tax deductions are few if there are any. The LTV is generally lower, meaning a bigger down payment.

The type of land you are interested in purchasing makes all the difference here. “Raw’ land has no buildings, no fixtures—that being, this loan is the most difficult to obtain and will come with equally hard terms. “Lot’ property is partially developed, containing sewage, water piping, and other utility structuring. Those features make this type land easier to purchase via borrowed funding and repayment terms are more flexible. Construction parcels are not really considered an Arizona Land Loan if plans for immediate building are presented. Construction-to-permanent loans often include funding for both the property and the work to be performed.

Applications can be done online, saving you time and money–no waiting for hours in someone’s office and buying gas for numerous trips over town. Remember to take into consideration all the costs involved: title search, attorney’s fees, equipment rental, surveyors, permits, appraisal, insurance and related matters when you are filling out the forms.

The top companies require a credit score of around 620.

The repayment term at the longest can be 15 years –you may want to check into a personal loan that lets you do whatever want with the funding you receive if the structure seems overly tight. Interest rates can range from 5.99 to 35.88 percent. No collateral is required.

Like the people who use this funding, an Arizona Land Loan has individual facets that need to be considered before signing on that line at the bottom of the contract. Be certain you can handle this funding and its demands when you make the decision to work in this area.

What happens when you get your Arizona Land Loan approved and then problems occur? Tom Biggers found out that the unexpected can still happen even after the money’s in the bank.


Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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