Most banks have gotten out of lending on land in California. There are a few Lenders that will still finance land, but the parameters are very narrow. Often, it is a Seller carry back financing of a few years, if anything. This makes for a slowdown in land sales and refinances. Yet, there remains a need to refinance cash out, and perhaps an opportunity to buy land at a fire sale type discount. Typically, both require mortgages.
Owning land in California was a dream that use to be broadcasted incessantly on late night infomercials. However, with the market slowdown in the mid 2000’s and the escalating building and lot costs, buying land and building that dream home or tract project is neither very affordable nor profitable anymore. This, and the issue of bank’s dropping their programs to finance land (and often construction financing), has caused land to devalue. And, while they are not building anymore land, there seems to be less appeal for that California dream.
At Cushner Capital, we realize that certain projects do not get built if not for a private party stepping up and lending money to a builder. Sometimes builders need some interim financing. Banks have a litany of requirements and parameters. Not all builders or owner-builders meet these criteria. Yet, many of those that do not qualify at the bank are awesome borrowers that deserve financing. We recognize this and offer an alternative to the conventional construction lender.
Private Land loans are shorter in term and cost more than home or apartment loans. One major reason is that homes and apartments yield rental income every month; land, typically yields none. There are instances where a working grove or vehicle parking yields income on land, but this is not often the case. Most land loans are 1-2 years in length and require an exit strategy – an explanation as to how the borrower will pay off the loan by the end of the term.
While we prefer lots in metropolitan areas of California with utilities, we will consider lots outside of town. The percentage of value we loan upon – the LTV (loan to value) – will get lower as we get more remote. The call is free. Call us to see if a California Land Loan from a California Land Lender using a hard money can solve your dirt issue!
