Most land investors know to ask, "What's the interest rate?" Fewer ask, "What else are you charging me?"
Many private land loans look fine on the surface, but once you unpack the fees, the real cost of capital is much higher than it appears.
Common Hidden Fees in Land Loans
Here are some of the extra costs that like to hide in the fine print:
- Large origination points (3–5%+ of the loan amount)
- Processing or admin fees
- Doc prep fees charged by the lender, not the title company
- Underwriting, review, or "risk assessment" fees
- Extension fees if the deal takes longer than expected
- Prepayment penalties that keep you from exiting early
Any single fee might not kill the deal, but stacked together they can quietly turn a "good" loan into an expensive one.
How to Read a Term Sheet Like an Investor
When you receive a term sheet or LOI, look for:
- Interest Rate
- Points / Origination
- All one-time fees (itemized)
- Prepayment terms – penalties? minimum interest?
- Extensions – what happens if you need more time?
If you don't see a fee section, ask: "Are there any other lender fees, upfront or at closing, that aren't listed here?"
What "No Junk Fees" Actually Means
When Damen Capital says "no junk fees," it means:
- No surprise add-ons at closing
- No extra "review" or "processing" charges halfway through the deal
- Straightforward pricing you can actually model in a spreadsheet
You still pay normal third-party closing costs (title, recording, etc.), but the lender side is intentionally simple.
Already have a quote you're unsure about? We can walk through the term sheet line by line.
Get a Free, Transparent Loan Comparison →Example: The 10% Loan That's Really 15%+
The Real Numbers
On paper, you see 10%. In reality, if you exit in 12 months, your true cost of capital is much closer to 14–16%. This doesn't mean the loan is automatically bad — it just means you should calculate using all the numbers, not just the rate.
A Simple Checklist for Any Land Loan
- Do I know every lender fee in writing?
- Do I understand how long I'm likely to hold this loan?
- Have I calculated my total dollar cost, not just the rate?
- Can I exit early without a painful penalty?
- Have I compared at least two options?
If you can't confidently answer "yes" to each one, slow down and get clarity.