How Can I Finance Vacant Land?

Lot 25 Decatur Shores – $59,500

 

I remember the first piece of vacant land that I bought. It was 30 years ago and the price was $21,000 (a lot in those days) and we asked the seller to finance it for us with a Deed of Trust. Back then, interest rates were hovering around 15% and I think we got a “killer deal” at 12%….

I’ll never forget the feeling I got when all the papers were signed and I realized I owned a piece of property that I could go to for a picnic, work party or whatever I wanted to do. It’s an amazing feeling to own trees, dirt and wildflowers and maybe even a view. I’ve always seen buying land for myself as a forced savings account  and I’ve bought a number of properties since then, and when the financial crisis of 2008 hit, I was sure glad I had them. I don’t know how I would’ve made it without having properties to sell.

So how do you finance vacant land? Right now, many sellers are offering financing with 20-25% down payment and interest rates around 6%. This could be a possible scenario for your purchase:

PURCHASE PRICE:    $59,500

DOWN PAYMENT:   $15,000

MONTHLY PAYMENT: $494  (principal balance amortized for 10 years at 6%)

Another option is conventional financing. Islanders Bank is offering a couple different loan options for vacant land. In most cases, you are going to be looking at an adjustable rate mortgage with a 20 year term. This can be a good option if you are wanting smaller monthly payments. If the property has utilities, you will need a 25% down payment or 50% down payment for a parcel without utilities. If a seller is insisting on an “all cash” offer, this could be a way you could still buy it. They also have land loans that can convert to construction loans when you’re ready to start building.

If you would love to own a piece of property, give me a call and let me help you brainstorm the best way for you to do it….you’ll be glad you did!

 Vacant Land Listings on Decatur and Center Islands

Posted on May 9, 2019 at 4:24 pm
Sarah Jones | Category: Uncategorized

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