Ok so you’re ready to get serious and try to figure out how you’re going to buy some land. So what are the options you have to pay for it? There’s more than you think there are and they’re better options than you probably thought. Let’s get at it …
1) CASH !: alright so this isn’t exactly financing but it might be an option for you. These days I would estimate 75% of my customers are cash buyers. If you have it use it. At the end of the day nothing beats cash. When it comes to negotiating a deal nothing will help your case more than cash.
2) Bank Financing: ” banks don’t finance land” … ever heard that one? Well don’t believe it because it isn’t true. Maybe your bank won’t finance land but who cares? Banks up here DO finance land and they’re a lot more competitive than you might have previously thought. I have 2 local lenders here I refer customers to on a regular basis and have not heard 1 single complaint from anyone. Interest rates on bare land will always be higher than financing a house but that’s to be expected. Still the rates on land are pretty good , much better than the “old days”. When I started in this business people were paying 16-17% interest on land loans! Today it’s half that or better. When the time comes I can give you all the contact info you need to talk with these lenders and see if this is an option for you. Believe me when I say banks are a great option and are eager to loan on land deals. In the meantime find some land ! http://www.mooseriverland.com
3) Home Equity: Old Reliable ! We use home equity loans for everything these days and land purchases are no different. You’ll get the benefit of a better interest rate than a straight forward land loan from a bank and will probably have more long term options for paying back. If you have equity available this might be the 1st place you should look.
4) Owner Finance: I mentioned this in a previous post on this blog and owner financing is an option to consider IF the terms are safe. By that I mean NO LAND CONTRACTS. I don’t believe land contracts ever favor the buyer and shouldn’t be considered. If a seller will do a standard “note” type agreement then this is something to consider. This will transfer the deed/title to you at close and you will have a note between you and the seller. IF the seller wants to keep title in their name until the note is satisfied I don’t think this is a wise move for the buyer. I look at it this way – you either own it or you don’t. If the seller holds title you’re doing nothing more than renting to buy and that’s not a good move for anyone. Get a lawyer , get educated and pay close attn. before you ever agree to anything that doesn’t put the title in your name. In the right situation owner financing can be the absolute best option out there. The wrong agreement can haunt you so be careful.
5) Land Company Financing: What the hell is this? If you’re looking at land with a “land company” they will often times offer financing through a lender they’re in business with. This is not lousy financing by any means , it’s also not the best option out there. I personally don’t offer that financing because as a business owner it’s a horrible deal for me. The terms between the land company and lender are loan shark terms that I have no interest in. I look at it this way : if it isn’t good for my business it isn’t good for my customer. If you go this route you will find the interest rates higher than a bank and the term of the loan will be shorter than a bank. Typically these lenders are pretty flexible about who they loan to mostly because they have no risk. The agreement they have with the land company more or less removes the lenders risk if ya know what I mean. If your credit is shaky and you can produce the down payment this might be the only option you have. Still it’s an option so it’s better than nothing.
Well there ya have my 2 cents on financing. Hopefully you can see there are options out there and it’s easier than you may have previously thought. Most of us grew up being told there were no legitimate ways to finance land. Nothing could be further from the truth. There are several ways to do it , most importantly safe ways to do it. Share your thoughts, share this post and please sign up to follow my blog ! In the meantime if you want to start prowling around to see what land is available these days check out my website at http://www.mooseriverland.com and let the fun begin. Thanks for stopping by , I can’t express how appreciative I am of all the people who are coming here everyday. I started this thing about 3 weeks ago with no idea what was going to happen ,if anything. My blog is bringing in literally hundreds of people a day and I have no idea why! Probably best I don’t know.