Why Interest Rate Isn’t Everything on Vacant Land Deals

Land investors obsess over interest rates. But if a slightly lower rate means weeks of delays, extra junk fees, or losing the deal entirely, that “better” rate can cost you more than it saves.

Here’s a simple way to think about rate vs. reality when you’re financing land.

The 8% vs. 10% Problem

Imagine two options on a $150,000 land deal:

• Lender A: 8% rate, bank underwriting, 45–60 days to close, strict conditions

• Lender B: 10% rate, land-focused lender, can close in 10–14 days, simpler approval

On paper, 8% looks better. But in the real world:

• Your seller may not wait 45–60 days.

• You might lose the deal to a buyer who can close faster.

• Extra third-party fees and hoops add both time and cost.

If a 2% lower rate makes you miss the opportunity, that’s not cheaper—it’s just more expensive in a different way.

What Really Drives Your Return on a Land Deal

Instead of fixating only on the rate, look at:

• Can I actually close with this lender?

• How fast can I close?

• What’s my total cost of capital? (rate + fees + points)

• What’s my expected profit on the deal?

If a slightly higher rate lets you:

• Lock up the deal

• Create a larger spread on resale or future note sale

• Avoid wasting months chasing “perfect” bank terms

…your actual ROI may be far better.

When a Lower Rate Does Matter

You shouldn’t ignore rate entirely.

It matters more when:

• You plan to hold the property or note long term

• You’re tight on monthly cash flow

• The deal is already skinny on profit

In those cases, getting the rate down is worth some extra effort—just not at the cost of losing the deal altogether.

How Damen Capital Approaches Interest Rates

Damen Capital focuses on:

• Being clear about total cost (rate + fees, in plain English)

• Structuring terms that fit the expected hold period of the deal

• Moving alongside your contract timelines so you can actually close

In many cases, investors use us as a bridge to get the deal done, then refinance later once the property is improved, subdivided, or stabilized.

Already have a quote from another lender? We can break down the real-world cost side by side and see whether a simpler, faster structure makes more sense. Get a transparent comparison quote →

The Takeaway

• Don’t lose a great land deal chasing a slightly lower interest rate.

• Focus on the whole picture: speed, certainty, total cost, and profit.

• Use flexible capital to win deals first—then worry about optimizing rate once the land is under your control.