Buying land to get a lower interest rate.....for other investment.

A friend of mine told me about his plan to purchase some land around $12,000 - not much but he is starting out. He does not want to use his cash directly into the investment but wants to use the instant $12,000 in equity he will have when he buys the land with his cash, to fund another investment. His theory is the interest rate will be much lower than what he can get (with any other financial product) and it will make his other investment “pay for itself”. I suggested he just borrow against his own cash if he did not want to loose his cash if the investment failed…he wants to keep some assets as a cushion for investment failure.
Is he off the wall? Why is this good?



Your friend may be taking a face plant as he's talking about cross collaterolization however no one will except a piece of $12,000 dollar land for a down payment (In lieu of cash) for 20% down on a $60k property as land is much harder to sell if your friend defaults and loses the investment (Loan) and his cross collaterolized down payment property!

Remember “No Risk - No Reward”


I was not sure about this method, thank you for your reply.

  • “Taking a face plant as hes…” - lol

Gold River said it best. It’s kind of a silly idea of your friend’s, as most banks won’t even give loans on land easily - more or less let you use supposed equity in one as a down payment on another property