Im in contract on several parcels of raw land which I intent to build over 300 homes on…Ive run intop some problems with financing. Financing from JPMorgan Chace is going to take about 3 month. What should I do in the interim? Bridge loan? or would it be cheaper to buy an extension of time? Ive never gone with hard money financing before is this something that I have to turn to now?
In most cases, it’s cheaper to negotiate and pay for an extension of time with the seller.
Do you already have an appraisal of the land ?
Do you have a market / feasibility study for the project ?
Yes Ive done my homework…Its has been difficult to secure a loan for just the land acquisition…any suggestions you may have would be helpful and appreciated
If you don’t mind, some more questions:
- How much cash will it take to close on the land ?
- What is the appraised value of the land, as is ?
- What is the loan to loan-to-value (LTV) ratio that you are looking for ?
- What is the loan-to-cost (LTC) ratio that you are looking for ?
- Do you have pre-development money available to do engineering, permitting, platting, etc., or do you need that as well ?
- Do you have a land use plan ?
- What is the appraised value of the project, as developed ?
- Do you plan to develop the residential lots in phases ?
- What is the estimated absorption period for the sale of the lots ?
- Are there any commercial components or potential pad sites in the project that you could sell quickly ?
- Have you talked with any homebuilders about buying lots and building homes in the project, or are you planning to build the homes yourself ?
- With most land development projects / master-planned communities, a significant amount of pre-development equity and development equity is required. Have you considered bringing in a joint venture / equity partner ?
Depending on the answers to these questions, you may want to talk with Lone Star Land Bank or one of its affiliated banks around the state. Or you may want to talk with a good real estate investment banker about some private equity.
You can get the financing, but not from the traditional bankin. Some reqire a 65% Ltv. If you can afford it. Financing for land depends on how many acres as well. If I know how many acres, I would be able to advice more.
You should contact a mortgage professional.
How much time do you have left?