Before drafting blueprints and browsing fixtures, you need to know where your office will state (i.e., you’re going to have to own some land). Taking out a land loan for a commercial property is very different from financing the purchase of a tract of land. Here’s what you need to know to pursue your goal of owning land:

What are land loans?

An investor may make use of a land loan to finance a raw plot of land or an already vacant one with newer construction. This piece of land may either host a personal host or a commercial building. These loans are usually charged at a higher interest rate with stricter credit and down payment requirements to combat the risks to the lenders.

What does an investor need to know when buying land?

More often than not, the terms of the land loan depend on the type of loan sanctioned, your proposed plan for the land, and the lender you chose to work with. There are three types of lands that lenders consider financing most often – raw, unimproved, and improved.

What is raw land?

In simple words, undeveloped land is referred to as raw land where there’s no electricity, plumbing, or access to roads. It’s no surprise that raw land tends to be much cheaper than developed land, considering you’re going to have a blank slate to work with, but the cost of development could add up to a lot more in the long run.

Raw land loans are often viewed upon as a risky prospect by lenders, as borrowers are very likely to walk away, and a vacant plot isn’t quite an ideal collateral. For this reason, you may be charged higher interest rates and be subject to a higher down payment, especially if the purchase is speculative (for example, you’re only hoping for the property values to rise in the future).

How to get a raw land loan approved?

A solid down payment and a good credit score should help you get approval for a raw land loan, as is the case with most types of loans. To qualify for the best terms, have a clear, detailed plan on how you wish to make use of the land and begin development right away.

Which is the best private money lender for raw land loans in Atlanta?

Construction, development, or expansion start with the acquisition of new raw land. At Commercial Private Equity, we provide raw land loans to applicants seeking property for resale, development, or construction. Schedule a consultation with us today or apply online to get your application preapproved in 24 hours.

As private hard money lenders, we also specialize in commercial real estate and construction loans in Atlanta, GA.