Private Money Land Loans
Below is a MRR and PLR article in category Finance -> subcategory Other.
Private Money Land Loans
Overview
Private money land loans have gained significant popularity among clients, and it's easy to see why. Traditional banks typically avoid raw land due to the complexity of evaluating such loans, which require a hands-on approach. Evaluating these loans involves extensive document reviews, discussions with local authorities, and decisions based on probabilities in the uncertain world of land development.
Why Private Money Loans Stand Out
In this niche, our main competitors are other private money and equity lenders. Interestingly, many of these lenders cap their loans at 50-55% Loan-to-Value (LTV) for raw land. In contrast, we offer loans at up to 75% LTV, providing us with a competitive edge. Here’s an example of how we operate:
Case Study: Eugene, Oregon Project
The Scenario:
We were approached by a developer seeking financing for a 40-acre plot just outside Eugene, Oregon. The borrower was applying for a zoning change to subdivide the land into four 10-acre lots, aiming for a substantial profit.
The Challenge:
The developer needed a loan based on 75% LTV of the future lot value, contingent on successful zoning changes and subdivision.
Our Approach:
We conducted a thorough site visit and examined comparable properties. We engaged with the borrower to understand his business plan and reviewed all relevant documentation, including correspondence with county officials and the zoning application. Our team invested over 30 hours researching the project and assessing its feasibility. We concluded that the developer's plans were sound with a high likelihood of success.
The Solution:
We secured a $375,000 loan at 75% LTV based on future value, with a three-year term and 13% annual interest. The loan included a construction holdback for development expenses and 18 months of pre-paid interest, ensuring the borrower had no cash commitments during the development phase.
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Jeff Chaney - VP, California Private Money Loan
[californiaprivatemoneyloan.com](http://www.californiaprivatemoneyloan.com)
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