Real Estate Investor · Bloomington, IN · Member since 2008 · 119 posts · 8 votes
The 6 acre wooded lot behind my house is for sale. Lots of details I could relate, but the point is I would need to finance the purchase somehow. My thoughts are that I could wrap it up into my current mortgage, get a private loan or maybe even find a bank that would lend to me. I'm meeting with one of my bankers today.
Thoughts on creative strategies for financing a land purchase would be appreciated. I'm in the dark here!
I would create a well thought-out offer to purchase for your neighbor's adjoining 6 acres!
1. How much are you willing give as a down payment?
2. Are you willing to pay your neighbor's full asking price?
If you feel that offering full price for this adjoining parcel of land, plus a reasonable down payment would create an owner financing possibility;
Try this:
Dear Neighbor,
I own the house in front of your land. I would be willing to pay your full asking price for your 6 acres.
I you are interested, please contact me, as I'd love to discuss buying your land with you, as soon as possible. Feel free to call me or stop by anytime!
Sincerely,
Joel K,
Your Neighbor
Keep your "cards close to your vest" until you talk with the owner. Many times a "warm and fuzzy" direct conversation with your neighboring land owner, can open the door to a great owner financing situation. Especially in our economic environment. Knowing that a homeowner right "next door" wants to by my land (at full price!) would make me very motivated to speak with you! If the landowners live out of the area, get their mailing address from the "county records" and write them a nice letter, introducing yourself as their "neighbor, next door", telling them your situation. (If this parcel is listed with a real estate agent, make sure you let the agent know that you will make sure that they will get the full real estate commission, and it will be paid directly from your down payment. That makes the agent motivated to see the deal get done!!!).
Owner financing deals are fairly common with land. And the fact you own the adjoining house and live there, is a huge plus for you!
Good luck to you!
Bob Dobbs,
Managing-Director
Land Rescue League, LLC
In my area finding conventional financing for land purchases is very difficult. I know that some are doing it with seller financing and many more with all cash.
As Charles mentioned, seller financing may be an option. You could also provide a note on your equity in lieu of a down payment.
Another option is to refinance your home if you have sufficient equity and since the property is adjacent, you may be able tofinance the whole thing under one loan, if that size of a lot is common for the area. Good luck
I have not heard of any bank doing more than 50% LTV on land for more than 20 years, if that helps you save time. It should be CLTV, combined loan-to-value, so 20% down and 30% seller second would give you a 50% CLTV. Better to work it in with the home if you can.
With good credit and a good relationship with your banker, you can get a 50% LTV around these parts. We bought a couple of lots adjacent to our home a few years ago and discovered that even though the property is a separately platted lot, if it is adjacent to your homestead, then in Texas it is considered a part of your homestead. We had a potential lender turn us down because of this. The next bank didn't bring up the subject.
I would create a well thought-out offer to purchase for your neighbor's adjoining 6 acres!
1. How much are you willing give as a down payment?
2. Are you willing to pay your neighbor's full asking price?
If you feel that offering full price for this adjoining parcel of land, plus a reasonable down payment would create an owner financing possibility;
Try this:
Dear Neighbor,
I own the house in front of your land. I would be willing to pay your full asking price for your 6 acres.
I you are interested, please contact me, as I'd love to discuss buying your land with you, as soon as possible. Feel free to call me or stop by anytime!
Sincerely,
Joel K,
Your Neighbor
Keep your "cards close to your vest" until you talk with the owner. Many times a "warm and fuzzy" direct conversation with your neighboring land owner, can open the door to a great owner financing situation. Especially in our economic environment. Knowing that a homeowner right "next door" wants to by my land (at full price!) would make me very motivated to speak with you! If the landowners live out of the area, get their mailing address from the "county records" and write them a nice letter, introducing yourself as their "neighbor, next door", telling them your situation. (If this parcel is listed with a real estate agent, make sure you let the agent know that you will make sure that they will get the full real estate commission, and it will be paid directly from your down payment. That makes the agent motivated to see the deal get done!!!).
Owner financing deals are fairly common with land. And the fact you own the adjoining house and live there, is a huge plus for you!
Good luck to you!
Bob Dobbs,
Managing-Director
Land Rescue League, LLC