vacant land as collateral

Financing, Hard Money Lenders, Private Money
1

I am trying to think of ways to better leverage my money to purchase an investment property. I have gotten my credit back in shape… I am in the 740’s now without owning any real estate. I have money in a 401k available and I have about $5000 cash. Is it possible or even advisable to use that $5000 to purchase vacant land that would appraise for say $10,000 and use the land as collateral/down payment? Secondly. would lenders look at the tax assessment or an appraisal to determine the value? Thirdly, would the lender take 100% of the value as collateral?

2

Hi,

I have actually written about this topic once or twice before.

Land as either down payment or cross collaterolization will be valued for less than 50% of actual value as if someone excepts it they will have to pay cost’s to keep, maintain, pay taxes and insurance and pay a realtor to sell. The bank will only loan or credit 50% or less as collaterol or down payment.

Absolutely and you pay for that appraisal, tax assessments mean nothing to me or the bank. Less than 50% of value if you could convince someone to take it!

             GR
3

Thanks GR.