Is It possible to use my land as leverage?

New to Real Estate · Charlotte/Rockhill (Nc/Sc) · Member since 2024 · 18 posts · 6 votes

Hi, I am researching ways to potentially invest in real estate with the assets available to me. What are ways that I could use land that I own to help me secure financing on a project? Is this common?

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Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
2y
Elda,

You can use the land to build a home the land can be used as 'Equity" in the deal. You would have to build on the land you own. If you are trying to use it as collateral in replace of a down payment or as income thats not going to work. Unless the land had such a signifacant value like over $500K you might find a private lender to put a junior lien against it if you own it "free and clear".

I have seen some private lenders offer a higher LTV even 100% if the collateral is sufficient, but again land is tough to resell unless its commerically zoned in a great location.

If you want to build a Primary home or Second home you can use the value as equity to go towards the down payment.
[email protected]727-637-4289
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
2y
Quote from @Elda Asheley:

Hi, I am researching ways to potentially invest in real estate with the assets available to me. What are ways that I could use land that I own to help me secure financing on a project? Is this common?
Here’s an interesting technique taught to me 40+ years ago by Jimmy Napier. Find a property you’d want to own where the owner is willing to sell with owner financing or subject to an existing loan. Let’s say the owner wants $200,000 for the property, but it’s worth only 180k, however he insists on $200k with no takers. Let’s say you own a land lot worth in the market only $20k, but because land prices are all over the board, you have a legit appraisal at $50k. You offer him $200k made up of the $50k land lot in trade subject to the existing $150k mortgage.
Alternatively, you can offer the seller a $50k mortgage secured by your land subject to the $150k existing mortgage on the property you’re purchasing. Make sure the terms of the mortgage loan offered on your land are “soft”, something like 0 interest with payments of $500 monthly for 120 months and the. A balloon.
Private Mortgage Financing Partners, LLC
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Elda Asheley
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New to Real Estate · Charlotte/Rockhill (Nc/Sc) · Member since 2024 · 18 posts · 6 votes
2y
Quote from @Jason Wray:

Elda,

You can use the land to build a home the land can be used as 'Equity" in the deal. You would have to build on the land you own. If you are trying to use it as collateral in replace of a down payment or as income thats not going to work. Unless the land had such a signifacant value like over $500K you might find a private lender to put a junior lien against it if you own it "free and clear".

I have seen some private lenders offer a higher LTV even 100% if the collateral is sufficient, but again land is tough to resell unless its commerically zoned in a great location.

If you want to build a Primary home or Second home you can use the value as equity to go towards the down payment.

Okay thank you for you advice!
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Elda Asheley
OP
New to Real Estate · Charlotte/Rockhill (Nc/Sc) · Member since 2024 · 18 posts · 6 votes
2y
Quote from @Don Konipol:

Quote from @Elda Asheley:

Hi, I am researching ways to potentially invest in real estate with the assets available to me. What are ways that I could use land that I own to help me secure financing on a project? Is this common?
Here’s an interesting technique taught to me 40+ years ago by Jimmy Napier. Find a property you’d want to own where the owner is willing to sell with owner financing or subject to an existing loan. Let’s say the owner wants $200,000 for the property, but it’s worth only 180k, however he insists on $200k with no takers. Let’s say you own a land lot worth in the market only $20k, but because land prices are all over the board, you have a legit appraisal at $50k. You offer him $200k made up of the $50k land lot in trade subject to the existing $150k mortgage.
Alternatively, you can offer the seller a $50k mortgage secured by your land subject to the $150k existing mortgage on the property you’re purchasing. Make sure the terms of the mortgage loan offered on your land are “soft”, something like 0 interest with payments of $500 monthly for 120 months and the. A balloon.

Interesting.. I will be looking into this. Thanks for the advice!
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