OPM for a land purchase

I’ve been looking at a prime waterfront parcel of land for some time now.

I’ve got a fairly good idea of what the seller would want for it.

It’s in a commercial zone that would require commerical usage on the first floor of any building to built…with 2nd/3rd floors then being allowable as residential space.

The way I see it…the upper level floors would have to be condos because property taxes would never generate cash flow on rentals and there are new dollar construction costs.

Anyways…this type of scenario is pretty long and drawn out, (having a building designed, built, etc.), and I’m wondering if and how anyone has gone about obtaining OPM for the initial land purchase so that payments are drawn out over time.

My initial experience with banks is that they don’t lend on “just” land.

It’s a valuable enough piece of property that I’m willing to take the risk on holding out for the long run and pay installments for the land purchase while the glitches get worked out on the financing of the structure.

I’m sure one alternative is to approach seller with him carrying the note for the land, but I’m too sure that will fly.

Was just wondering if anyone has had 3rd party luck with this type of deal, (OPM financing for initial land purchase, then subsequent for structure).



You are correct that it can be difficult to get a loan for vacant land. As an investment, vacant land is very risky because there is a negative cash flow from day one. Therefore, if you want to do this project, I’d suggest putting together the entire package and getting a loan for the entire thing. It will not only be easier to get a loan for the entire construction project, but will start making you money in the minimum time.


Hi Mike,


As always…your thoughts are most appreciated.


I would raise the question of whether this project upon being built would be cash flow positive? My experience is that propery on very expensive land (such as waterfront) coupled with your high operating cost (tax & insurnace &maintancne) that it would be a real challenge to get the numbers to work.