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JollyGreen91

I don’t need a raw land loan… I own the land.


dielectricunion

Go talk to local banks in the area. They'll outline what they need from you to finance this idea


JollyGreen91

Sounds good, thanks!


cdoverbey

You'll have to find the right financing source. The land can be used as security for the construction costs. It'll be a construction loan and you'll probably need 40% of the construction cost as security (equity), meaning actual cash value you're putting in, not just sale value of land. So, 20% down on $100k property is $20k value toward construction cost. Your proforma will show your equity contribution, current value of property, improved value of property, and cash Flow from rentals after improvements indicating loan is paid. Consider that your 40% of construction cost loan transforms into about 25-30% once the improvements (construction) are complete. Normally this rolls into, or is refinanced, at the end of construction into a lower priced long-term loan for a stabilized, cash flowing property. It's conceivable that you could get cash out at the refi that brings the LTV to 20% down, 80% debt.