Best Land Loans

Choose Carefully!

There are many different types of land loans available to investors and this article is going to examine each one individually to facilitate your decision on which one to pursue.
First there are vacant land loans. These are designed specifically for the need of purchasing land that is currently undeveloped.  In this case, even though the property is undeveloped, plans for development can be made since utility lines should be fairly easy to establish.

Secondly there are improved land loans. These are loans designed for land that has been partially improved and is in some kind of construction process. Improved property loans are sure to be much more preferable to lenders than any other type since they can be much more confident that development will take place in this land so their risk of not recouping the loan plus the accrued interest rate is much lower. Such improvements can include already established access to lines of utility, finished or even partially constructed structures or connection to a road network.

The next type of loans we will consider is raw land loans. These are loans designed specifically for land that has no trace of improvements at all. This means for example that there are no present utility lines like water or electricity, or furthermore that access to them is difficult. This type of loan is much harder to secure than the rest as the purchaser has a much lower stake than in other cases as the land is completely undeveloped. This on the other hand increases the risk for the lender which in turn means that he will probably require a higher down-payment and request much more information about plans for development such as access to utilities or building plans.

Even though it is not a type of land loan, it would be wise to include construction loans in this article. This is due to the fact that it will be in most cases associated with the above types of loans if the land is destined for any kind of development. This type of loan may not make sense for someone who has bought land with no plans for commercial development or for personal use but it most certainly does make sense if someone intends for example to build a lot of residential structures on his land. The way to secure such a loan is to provide adequate information about the type of construction you are planning to do.  Every type of loan above can be used in order to acquire property for residential or any other kind of commercial development. If that’s the case, then a construction loan is the way to go but always bear in mind that adequate information about your plans must be presented in order to secure one.