Buying raw land is not as complicated as you might think. It is much, much cheaper than buying a home, and probably the biggest step towards an independent future that you can make. Even in a place as settled as the U.S. good property is still to be found, especially in rural areas, that is quite reasonably priced – 3k to 5k an acre on a small parcel, and less if you buy more.
In most of cases, there are no improvements like utilities, structures, sewers found with raw land and its development may take numbers of years. These loans are generally offered to businesses so that they can build commercial properties on raw land. With finance available easy, purchasing raw land at right location and right price has become possible. This also helps businesses and individuals in saving some money.
You can obtain a raw land loan through a bank or through the Small Business Administration (SBA). The SBA guarantees up to $750,000 of a loan which enables small business to get approved without having large amounts of collateral. Getting approved for financing can be difficult if you have not established any business credit scores. If you were to get a mortgage for a house or a car loan you would need to have established personal credit. The same concept works for your business, but many business owners tend to overlook this vital aspect to getting financing.
You can start establishing business credit by setting up a 1-3-5. This means you get 1 small bank loan, 3 business credit cards, and 5 vendor lines of credit. When going after these loans make sure they report your payment history to the Small Business Financial Exchange (SBFE). This is how you will build your credit. It is important that you separate all personal credit from business credit. You also should not have to use a social security number to secure a business credit card.
Raw land loans may attract higher down payments. This is because of the fact that chances of development on raw land remain low and due to depreciation or due to application of interest many times, outstanding loan amount may become higher than the value of raw land. There are some lenders that offer raw land loans with down payment requirements as higher as 50%. Local lenders offer raw land loans with low down payments requirements, say 20%, as they are familiar with the real estate in the area and can understand the future appreciation.
While taking raw land loans, individuals must take care that they shall be able to get all the services in future that are necessary. Making improvements without these services may not be sufficient. Raw land loan must have good access from the main road. Access to raw land is one of important factors that affects the terms and conditions of raw land loan. Lenders invariably ask for the warranty deed and title insurance for ensuring that property has a clear title and there would be not difficulty faced in future in selling the same if borrower defaults in making payment. Getting loan for improved raw land is easy as compared to unimproved piece of land. If a person has immediate construction or improvement plans, lenders may offer raw land loan in convenient manner.
Raw land loan can help a person in diversifying the investment portfolios but many experts feel that such investment can be risky too. Certain aspects must be known before buying raw land or getting raw land loans. A person must know about his need or requirement. Success of investment always rests with requirement and planning. Borrower must be clear about the location in which he needs raw land, use for which it would be put and the time period for which investment would remain idle, that is, there would be no improvements on the land. Large down payments are generally asked for piece of land that has no added improvements like sewers, streets. Like other loans, shopping extensively for the raw land loan can help a person in getting the best deal around. Search should include credit unions, banks, mortgage lending institutions, & online lenders. All the lenders would like to know about the reason for purchase of raw land loan and thus, these should be satisfied about the same. Also interest rates applied can be high. It is better if a person approaches a local lender for getting pre-approved. Complete survey of land must be carried out before purchasing raw land. A staked survey report can be obtained by making nominal payment. If there are no plans of improvement in a particular area, such area may be left out.
There are some lenders that offer raw land loans for commercial properties or use only. For example, Connor Resources is one center that offers only commercial loans. Down payment requirements vary from 20-30%. Services are offered across United States. Minimum loan size is $800000 and maximum loan amount offered is $4000000. This lender can be called at 317-604-1054.
Barclay Associates also offer raw land loans. Loans are offered for land meant for industrial or commercial purposes. Minimum loan amount offered under raw land loans is $800000. If loan has been referred by a broker, minimum loan amount is $1000000. Loan is secured by the land purchases out of loan.
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