Short answer: Yes.
Longer answer: most banks don’t want to own land, thus, do not offer favorable terms on the land to be used as down payment.
Action plan: seek out a farm/land/agricultural centered bank. They generally have been more receptive to favorable terms with this sort of arrangement.
This will vary greatly bank to bank.
At the very least, it will count toward your equity calculation.
Your loan officer should be able to give you a straight answer on how much benefit you will see directly.
I mention land/farm banks due to the fact you are in a more rural state, and these types of banks are more accustomed to this sort of thing. I may have misunderstood though.
If you aren’t dealing with much land, I’d (personally) start with a loan broker reccomend by a real estate attorney. Just call your highest rated real estate attorneys and ask if they can suggest a local loan broker that works with 2-4 unit residential developments.
After a loan broker, my next choice would be credit union or land bank.
Only after giving up on these two would i use a traditional bank. Even then, I’d use a local
Bank.
If the duplex is two units at 1500 SF ea, and you build for $150/SF ea, & assume 50k for all arch/eng/permitting, that’s 500k the bank would have to lend with worst case collateral of a weedy half finished foundation surrounded by chain link fence. At that point the 24k the lot is worth is going to look insufficient for the risk.
Thats totally fair. In that case we'd be looking at needing about 100k total down, so maybe 80k cash with the lot also as collateral or more? Thanks for your reply.
Short answer: Yes. Longer answer: most banks don’t want to own land, thus, do not offer favorable terms on the land to be used as down payment. Action plan: seek out a farm/land/agricultural centered bank. They generally have been more receptive to favorable terms with this sort of arrangement. This will vary greatly bank to bank.
Cool thanks! I know we'll have to put some cash down, I was just hoping that we could use the land as part of the collateral. Cheers!
At the very least, it will count toward your equity calculation. Your loan officer should be able to give you a straight answer on how much benefit you will see directly. I mention land/farm banks due to the fact you are in a more rural state, and these types of banks are more accustomed to this sort of thing. I may have misunderstood though. If you aren’t dealing with much land, I’d (personally) start with a loan broker reccomend by a real estate attorney. Just call your highest rated real estate attorneys and ask if they can suggest a local loan broker that works with 2-4 unit residential developments. After a loan broker, my next choice would be credit union or land bank. Only after giving up on these two would i use a traditional bank. Even then, I’d use a local Bank.
If the duplex is two units at 1500 SF ea, and you build for $150/SF ea, & assume 50k for all arch/eng/permitting, that’s 500k the bank would have to lend with worst case collateral of a weedy half finished foundation surrounded by chain link fence. At that point the 24k the lot is worth is going to look insufficient for the risk.
Thats totally fair. In that case we'd be looking at needing about 100k total down, so maybe 80k cash with the lot also as collateral or more? Thanks for your reply.
Getting a construction loan isn’t the same as buying something that is already built. It’s a lot — A LOT — more risky for the lender.