Charlotte, NC · Member since 2016 · 35 posts · 7 votes
Hi BiggerPockets Community,
I’m looking for lenders or financing solutions specifically tailored for land acquisition and horizontal construction. My projects are focused on developing lots with infrastructure like roads, utilities, and drainage, but we don’t plan to move forward with vertical construction. We will sell to builders to exit after horizontal construction is completed.
Does anyone here have experience with lenders who specialize in or are open to funding this type of project? Alternatively, if you've faced similar challenges, I’d love to hear about the creative solutions you’ve used to secure financing.
I appreciate any recommendations, advice, or connections!
You will not find a lender for acquisition and horizontal development.
You will either need cash or bring on an equity partner. Way too much risk for a lender to loan on this.
Hey Chris, If you don’t mind sharing, I am interested to know what makes it higher risk than other real estate investment models? I was hoping to do something somewhat similar. And if there are risks that I have not considered then I certainly want to be aware of them. I’m not doubting your statement that it would be too risky for a lender to fund. I just don’t personally see how you could lose if you did your homework and found the right piece of property, in an area with the right demand. My intention is not to be argumentative, but to be educated and learn why it is too risky.
You will not find a lender for acquisition and horizontal development.
You will either need cash or bring on an equity partner. Way too much risk for a lender to loan on this.
Hey Chris, If you don’t mind sharing, I am interested to know what makes it higher risk than other real estate investment models? I was hoping to do something somewhat similar. And if there are risks that I have not considered then I certainly want to be aware of them. I’m not doubting your statement that it would be too risky for a lender to fund. I just don’t personally see how you could lose if you did your homework and found the right piece of property, in an area with the right demand. My intention is not to be argumentative, but to be educated and learn why it is too risky.
Best regards, Ben
What happens in the case of default? For ground up atleast something is being built that can be completed and sold. Only doing horizontal work to a site adds value of course to the site but it will leave the lender helpless as there would be very few people they could lend too. This is why most lenders do not touch this and even when its a new development many lenders do not allow for funding to occur until the project is close to or ready to go vertical.