Most land investors look at a deal from one side: what can I buy it for, and what can I sell it for. A lender looks at the same deal from the other side. What is the land actually worth, how does this loan get paid back, and if it does not, can the land be sold?
If you learn to see a deal the way I do, you will know what you can borrow before you sign a contract, and you will stop chasing deals no lender will touch. Here are the six checks every loan goes through.
What Is the Land Worth?
We run our own valuation, not an appraisal, and that number drives everything else.
The price you agreed to pay and the land's value are two different numbers. A lender only cares about the value, because the land is what backs the loan. A good buy is the best thing you can bring to a lender: when you buy below value, the loan can cover more of the price.
How Much Will a Lender Lend?
On a purchase, up to 65% of value, and never more than 80% of the price you pay.
Both limits apply, and the lower one wins. In slower markets loans are typically closer to 50% of value. On a cash out refinance, we lend 50% of the lower of the value or what you paid. Right now we are only accepting loans up to $250,000.
Here is a real one. An investor bought 18 acres in Tennessee for $112,000 to split into three lots. The loan was $89,600, which is 80% of the price, the most we lend. For 65% of value to reach that number, our valuation had to come in around $138,000 or more. The good buy is what made the high loan possible. See the Tennessee case study for the full deal.
| Deal | Amount |
|---|---|
| Purchase price | $112,000 |
| 80% of price cap | $89,600 |
| Loan | $89,600 |
| Cash the investor put in | $22,400 plus closing costs |
Buying land?
Up to 65% of value, 16% interest only, no appraisal. Written quote in 24 hours, close in as little as 7 days.
Get a Free QuoteLand Loan CalculatorHow Will You Pay the Loan Back?
Every loan needs an exit: a resale, a split and sell, or a refinance, inside the 24 month term.
Our loans are interest only for 24 months, and extensions are offered after that. Nobody pays a land loan off from a paycheck. It gets paid off when the land sells. So the question I ask is simple: who buys this land from you, and how fast? The Tennessee borrower split the parcel and sold all three lots with seller financing in 11 months. The four common exits are in land loan exit strategies.
Can the Land Be Sold if the Plan Fails?
It needs legal access, 2 acres or more, and to be land a normal buyer would want.
Plans change. Markets slow down. A lender has to know the land can be sold to someone else if your exit does not work. That means legal access, at least 2 acres, no serious flood or wetland problems, and a shape and slope people can use. We fund the land purchase itself, not construction, entitlements, or site work, and we do not lend on buildings or commercial property. We also do not lend in California, Arizona, Nevada, New York, New Jersey, North Dakota, South Dakota, Montana, Hawaii, or Vermont.
Who Is Borrowing?
A company, for a business purpose, with a signed purchase contract.
We lend to LLCs and corporations, not individuals or trusts, and only for investment, not land you plan to live on. On a purchase you apply once you have a signed contract. There is no hard minimum credit score on purchase loans, though a lower score may reduce how much we lend. Cash out refinances need a 620 minimum. The full list is in land loan requirements for investors.
What Does the Loan Cost?
16% interest only, a 2% exit fee, $600 to close, and $25 a month for servicing.
There is a 5 month minimum interest, paid monthly starting 30 days after closing, with any unpaid months through month 5 collected at payoff. No points at closing. On the Tennessee loan, the borrower held for 11 months:
| Cost | Amount |
|---|---|
| Interest ($1,195 a month for 11 months) | $13,145 |
| Closing | $600 |
| Exit fee (2%) | $1,792 |
| Servicing ($25 for 11 months) | $275 |
| Total cost of the money | $15,812 |
Run that cost against your profit before you sign the contract, not after. The land loan calculator does the monthly payment and total cost for any loan amount.
How Do I Find Out What You Would Lend?
Get a written quote in 24 hours, and close in as little as 7 days once you apply.
Send the property, the price, and your plan. If the six checks line up, you get a written quote, and you never pay us anything before closing. If you are buying to flip, see how we fund land flips.
Want to know what we would lend on your deal?
Get a Free Quote →Frequently Asked Questions
How much will a land lender lend on a purchase?
We lend up to 65% of our own valuation of the land, and never more than 80% of the purchase price. In slower markets loans are typically closer to 50% of value. Right now we are only accepting loans up to $250,000.
Do you need an appraisal to value the land?
No. We run our own valuation on every deal instead of ordering an appraisal. That is part of why a loan can close in as little as 7 days.
What credit score do I need for a land loan?
There is no hard minimum credit score on purchase loans, though a lower score may reduce how much we lend. Cash out refinances need a 620 minimum.
Why does the lender care how I plan to pay the loan off?
Because the loan is interest only with a 24 month term, so it gets paid off when you sell, refinance, or split and sell the land. A clear exit plan is what tells us the loan will come back on time.