65% Lender, 50% Owner Carry Question...

Financing, Hard Money Lenders, Private Money
1

Ok, this is my first post and somone probably already covered this… but here it goes… Thanks for ANY help in advanced.

I am in the process of purchasing raw land in California to fix up, add a home, etc etc… A friend of mine is a loan officer and he informed me that banks only loan up to 65% sometime 85% on raw land. Now the owner is willing to carry whatever is left over after getting a loan. My question is: Is it a good idea/legal to have the owner carry 50% and get a loan for 65% or more therefore having a surplus of funds to be able to do improvements to the land?

I am still trying to get a grasp on this whole financing and how the process works. Ive been reading these forums for sometime now and I appreciate any of your wise advice.

Thanks

Ed

2

As long as the lender will allow the combined loan-to-value it’s not a problem.

3

Oh, I see. Do lenders usually allow this though? I read in a diff post that lenders dont like to give more money than is needed.

Ed

4

At 65% LTV and 95% CLTV there are a number that will not mind as long as it looks like you can service the debt.

5

Why not go for financing on the whole project at once… land acquisition, development and construction. You are likely to receive more funding when structured that way…

6

What type of loan would that be? I was told that for raw land all you can get is at best 85% LTV… I have no equity anywhere as this is my first buy.

Give me the 411 Zach. 8)

Ed

7

It would be a loan based off the total cost of you’re project as opposed to a loan based off just a raw piece of land. I don’t have enough detail though. Im not sure if this is for investment purposes and how you’re financials are…

8

Ah i see, so its presented to the lender as a project. So it would be like a loan for the construction of the house, land included.