Land Loans: What Is a Bridge Loan?

You may want to sell your property and use that money to purchase new property. While that’s a logical plan, it doesn’t always work out that way.

The sale of your previous property may not go through in time, causing you to have to wait for the money for your new purchase. Instead of stalling your plans, you could potentially borrow the funds through a bridge loan.

Here, we’ll discuss what a bridge loan is, how it works, and its requirements. Read on to learn more about this financing option to see if it’s right for you. 

What Is a Bridge Loan? 

This short-term loan, also known as interim financing, gap financing, or a swing loan, can help provide the cash flow you need to purchase a new piece of land while selling another property. Typically used in real estate deals, bridge loans can have relatively high interest rates and risks. And not everyone that applies for one is qualified to receive it. Despite these drawbacks, a bridge loan can still be an essential funding source for land buyers in need of financing. 

How Does a Bridge Loan Work?

You can apply for this short-term financing loan through a lender, but the loan terms may vary. Borrowers generally use the funds to cover the closing costs of a new property. For land buyers, it’s common to borrow a maximum of 75% of the value of your current and new properties.

Bridge Loan Requirements

To apply for a bridge loan, you must meet the following requirements. Lenders will look at potential borrowers’:

An excellent credit score, a low debt-to-asset ratio, a low debt-to-income ratio and decent property equity can qualify you and fast-track your application for the loan. 

How Do You Repay a Bridge Loan?

Your loan term usually lasts about 12 months before you have to make repayments. The purpose of a bridge loan is to give you the necessary time to acquire more permanent funding. So if the sale of your current property is finalized during the interim of your loan, you can use that money to repay the loan. 

Even though most bridge loans do not have repayment penalties, it’s best to go through the terms with your lender to know exactly when you’re expected to pay the loan back in full. You want to ensure you fully understand the repayment process to avoid paying too much in interest.  

Pros and Cons of Bridge Loans

The advantage of bridge loans is they provide quick and convenient financing. With faster approval than traditional mortgages, you can cover your expenses while waiting for the property sale or other expected funding. 

On the other hand, these loans are short-term with higher interest rates. And in the case of waiting to sell real estate that still has a mortgage, you will have to make two loan payments. Also, it can be challenging to gain approval for a bridge loan if you do not meet the lender’s conditions.  We hope this article has helped you determine if a bridge loan is the best option for your financial needs. Get in touch with Land Line Lending for more information about our land loan products and how you can qualify. 

Land for Auction: How an Auction Works for Land Property

Quick, convenient, and hassle-free – those aren’t words usually associated with buying property, but in the world of auctions, buying property can be all of those things. 

That applies to land auctions too. Your next farm, ranch, or even timber land can be purchased at an auction.

But before you get started, you need to understand the benefits of land auctions, know the importance of land loans, and understand the general auction process. 

If that sounds like a lot, don’t worry, we’ve got you covered. Keep reading to understand how a land auction works and how what to expect.

Benefits of Buying Land at Auction

In a land auction, competition for the auction property is level. All buyers are bidding at the same time and are given the same information about the land. There are also no negotiations, which is good news for those that can’t (or hate to) negotiate. 

Overall, buying land at auction makes acquiring property a much faster experience. You can do your research ahead of time on the sale and know the exact date of the sale.

Important Terminology

When looking for land for auction, there are a few terms you should familiarize yourself with:

  • Minimum bid – sellers often set a minimum bid price to ensure costs are covered 
  • Absolute auction – auction in which the seller agrees to accept the highest bid, regardless of how low it may be
  • Selling with reserve – the seller has the right to reject any bids on the property
  • Sealed bid – usually done online, bidders send their bid prices to the seller by a certain date and the highest bidder is announced

Knowing these basic definitions will provide you with the knowledge necessary to make a successful bid. 

The Auction Process

If you’ve been to a real estate auction before, then a land auction will seem familiar. An auctioneer will lead the auction. Bidding will continue until no one else has outbid the highest bid. Each bid may be required to be in increments, such as thousand-dollar increments. This is done to weed out negligible bids. 

The auctioneer or auction house should have already completed necessary closing paperwork like title searches, deed research, surveys and appraisals to speed up the closing process. Upon winning at auction, a formal contract for the land will be signed by all parties and a good faith deposit will be required. This contract will give the winning bidder a set time period, usually 30 days, to close on the property. This closing window is very important to understand before placing bids. The buyer will need to make sure that they can pay for the loan down payment and closing fees at closing. The good faith deposit will go towards this amount. Closing fees often consist of, but are not limited to, taxes, document fees, and commissions.

Be Prepared

You need to make sure you have the funds available to buy the property. Before an auction, get pre-approved for a loan. Our pre-approval application takes only 5 minutes, and we can review your application within 1 business day. The last thing you want is to find the perfect property for purchase – only to miss out because you don’t have the funds, and didn’t plan in advance.

It’s important to know about the land you are buying. Make sure to research the property zoning and land uses, utilities available, topography, and access. Contact the auction company to get a better idea of the closing timeframe and how much money the winner will need to pay on the day of the auction for a good faith deposit.

Once that’s done, start looking for auctions. Newspapers, websites, and classified ads are all great places to start. Contact your local real estate company, auctioneer or auction company to see what they have scheduled. Bank or government options can be the easiest to find since these are often advertised publicly. 

Don’t Forget Your Land Loans

Auctions for land properties are fairly straightforward. If you’ve been to a real estate auction before, a land auction isn’t too different. Do your research and understand what type of land you’re looking for and how the auction works. 

Most importantly, don’t forget our land loans. Our pre-approval process is easy, and our payment calculator can help you determine your payment amount. Simply input your desired loan amount, the number of payments, and a few other details, and hit the calculate button – it’s that simple!

Still, got questions about financing? Send us a message or give us a call at 855-700-7270

The Importance of Property Access: A Buyer, Seller and Lender Perspective

Legal property access is an important part of owning a property. Obtaining a piece of landlocked property can be a cost-effective option when buying land. As a buyer you may not mind the lack of access; however, when it comes time to sell, that’s when the issues might become visible. On the other hand, you also need to know what rules are created by an easement when purchasing a property with an easement on it. We’ll take a closer look at access easements and what buyers and lenders look for when trying to sell.

What does “landlocked” mean?

Landlocked property does not have a direct access road to it. The only way to access a landlocked property would be by travelling through a property owned by someone else. In some states, a person without property access is given the right to pass over private land surrounding their property; however, they may not disrupt the property they are using to pass in any way. In other states, you must file for legal access in the form of an easement. The property granting access is called the servient tenement while the property benefiting from the easement is called the dominant tenement.

Easement types

There are many types of easements but the two most common are easement by necessity and easement by prescription. An Easement by Prescription is one that is created through continued use and implication. The length of time in use is set by state law but can range from ten to twenty years in most states; the access must be continual and with the owner’s knowledge. For instance, if you owned a landlocked property and used a dirt access road that your neighbor gave you permission to use for 20 years, a new servient owner could not take away that easement since you now have an easement by prescription. An Easement by Necessity is an easement granted by the court because there is no other way to gain access to the dominant property, except through the servient tenement. A Party Easement is a written agreement between both parties for use of common boundaries or access points.

It is also important to note that there are two different easement classifications. An “appurtenant” easement is deeded and can be found by a simple title search. An “in gross” easement will likely not be found in a title search. With these easements the servient property cannot transfer rights to the easement during a sale. These are easements such as those held by utility companies.

Why do easements matter?

For Lenders: Lenders look for legal, transferrable access to a property. Since they are making the loan, they want to know that access will be available in the event that a property has to be foreclosed on. Lenders will not finance a loan without legal access; this can end contracts and create smaller buyer pools. Now let’s look at how this can effect both buyers and sellers.

For Sellers: It’s tempting not to fix an access issue before selling because it can create extra work for the seller.  Some sellers hope to simply reduce the price of the property so they do not have to fix any access issues themselves. However, fixing access issues before the sale of your property can not only fetch a considerably higher price, but it also creates a larger buyer pool. Since lenders will not finance a land loan on land without legal access, a buyer will only be able to purchase if they are able to pay cash or owner financing is available. If an owner is unwilling, or unable, to owner finance then the buyer pool will be reduced to only cash buyers.

For Buyers: The land you want may be a deal if it does not have legal access but since lenders will not approve a land loan on properties without legal access, you may not be able to purchase the property at all. You’ll need to figure out if owner financing is available or look at how much cash you can afford to spend to purchase the property outright. If you want to continue with financing the property through a lender, the access will have to be legally granted before the closing can take place. This could be a short process or take years to fix. It is also important to know what easements are on the property you want to purchase. You’ll need to understand what rules are involved in those easements, if they will transfer with the sale of the land, and where they are located. If the location of a legal easement interferes with your plans for the property you may need to find another suitable spot for those plans.

If you are unsure whether a property has legal access make sure to ask your agent and the individual preparing title for your sale. Access is something that is searched during the title process. When you are ready to purchase land, make sure to contact Land Line Lending to learn more about current rates, terms and to get pre-approved for a land loan.

Rural Living for New Homeowners: How to Coexist With Wildlife

Have you ever thought about abandoning the city or suburb you know so well to connect with nature? You’re not alone. According to the latest census data, 60 million people in the US are living the rural life.

Well, rural living comes with rural wildlife, and that’s not a downside if you know what you’re doing. Let’s talk about the challenges of rural living and how to keep your property safe!

What Is Rural Living?

Rural living is coexisting with nature, away from the city, in a more naturalized location.

Most people who choose to live rurally do so because they love being in nature. If that’s the case, treat nature fairly and it will do the same for you. You are on the animals’ land, not the other way around. 

If you love wildlife, then you need to allow them to be what they are; wild. Coexisting does not mean domesticating.

That means you should not intentionally feed wildlife, no matter how cute they are, as this will eventually attract predators to your property. A birdfeeder is fine, as long as it’s high enough to prevent bears and away from your glass doors.

Protect What Needs Protecting

Land investments can cost a lot of money, and you’ll likely put even more into your property for homesteading or gardening. If you have egg-layers, small children, or small, outdoor pets, then they need protection. However, they need the right kind of protection.

Safe, preventative measures are always better for everybody. Proper fencing, food storage, livestock security, and more are critical for everybody’s safety.

If you are worried about wildlife eating your garden, then put up some fencing and be diligent to seal the cracks. Rabbits, groundhogs, and more can get through smaller holes than you think. A layer of cement below the fence will cost a little extra, but it will prevent any creatures from burrowing underneath, protecting your hard work. Deer love plants that we consider to be great for lawns, such as Hostas, Daylilies and English Ivy. Try netting the plants you wish to keep aways from deer or planting deer resistant plants like fountain grasses, Marigolds, Snapdragons, Sweet Williams or Moonflower.

Also, keep pet food inside, regardless of your pets’ outdoor status. Bears, coyotes, foxes, and other predators love pet food, and will gladly come by and check it out.

Picking food before it’s overripe is also a good idea. Leaving fruit on the trees past ripening will alert bears from miles away, so pick things on time and don’t leave them to rot on the ground.

Educate Your Family

Living rural life means that you and your family will take hiking or biking trails for your recreation, walk on the open road, or hang out by a body of water. Well, this is predator territory.

In the event that your children, spouse, or other family members encounter a dangerous animal, strong muscles won’t do too much, but knowledge will.

Make sure that everybody knows what to do upon an encounter with each animal. That means not running away, trying to pick a fight, or approaching their young.

Stay Safe

Now that you know how to stay safe while rural living, put these tips to good use and learn to coexist with the beautiful nature around you.

Staying safe also means protecting your investment. If you’re ready to start living the country life, then you’ll need a land loan to help you get started!

How to Determine Your Buying Power for a Land Loan

Debt to Asset ratio is commonly used by land lenders to determine a consumers’ buying power for a vacant land loan. This leverage ratio is a way for lenders to calculate the percentage of your assets that are financed by your debts. When a ratio is higher, this indicates more financial risk. Let’s explore the lending process for vacant land.

The Debt to Asset ratio

The debt to asset ratio can show a lender how much of your assets are leveraged by your debts, the ability you have to repay your debts and the risk associated with lending money to you.  Land lenders primarily look at debt to asset ratios while residential lenders usually look at debt to income. This means that you could easily be approved for a home; however, a land lender might turn you down for a vacant land loan because it is considered a risker loan.

Why is land considered a risky loan?

Some traditional lenders consider land to be a risker loan because they do not understand the resale value. With a smaller market for land, and no home to see or touch, traditional banks get worried that they will not be able to sell the property as quickly if a buyer were to default. Additionally, if a buyer is hit by financial hardships, they are much more likely to default on a piece of land than they are on their home. Therefore, many traditional banks will not lend for raw land properties.

While interest rates for land will vary based on available lenders, often you will find that loans for land are 1%-1.5% higher than current home mortgage rates. In addition to higher interest rates, you may also find that land loans require higher down payments as well. On the bright side, land lenders know the product and have specialized experience in land. This experience will often make the closing go more smoothly while allowing for less delays and surprises.

How to calculate your buying power

When preparing to apply for a loan make a list of all your debts and assets. Assets refer to all properties, possessions, bank account totals, businesses, automobiles, equipment, investments, and other items that have an associated cash value.  Debts refer to short-term and long-term payments that you are making. These can include home loans, student loans, automobile payments, medical bills, credit card totals, and personal loan.

Your debt to asset ratio will be calculated as your total liabilities divided by your total assets. A high ratio is considered to be .60 or higher, which makes it much more difficult to borrow money. You will want to determine your debt to asset ratio before, and after, adding in the debt from a new property. Try this formula to determine your debt to asset ratio before a loan.

For example, if you have assets of $250,000 and liabilities of $100,000, your before-loan debt to asset ratio would be .40. To calculate your after-loan ratio let’s assume you want to borrow $120,000 on a property with a contract price of $160,000 and $40,000 in down payment. Using the above formula your after-loan debt to asset ratio would be .59.

How to improve your Debt to Asset ratio

The best way to improve your debt to asset ratio is to pay off debt. There are several ways to tackle this. Using the debt avalanche method, you’ll be able to pay less interest and get out of debt faster than other potential methods. Other methods of paying off debt include the snowball method, balance transfers and personal loans. It is important to find the method that is right for your situation.

Contact Land Line Lending when you’re ready

By now, you should understand how to determine your buying power for land. When you know it’s time to begin investing in property, get in touch with Land Line Lending to get started.

The Pre-approval Process for Land Loans: What Is It and How Does It Help With Offers?

Have you ever found yourself wondering: can I finance land?

Luckily, you can. Land loans make this exact goal a reality, especially with purchases of larger acreages.

This land can be used for a variety of purposes. Whether it be for recreation, farming, hunting, timber, or just as an investment–buying 15 acres or greater can be financed with this option.

In today’s market many sellers want a pre-approval to come in with all offers. This allows sellers to see that you are a serious buyer and able to pay for the property that you are taking off a hot market. For agents, a pre-approval letter signals that they are investing their time into a search that is legitimate, especially with so many potential buyers in the market and limited time in the day.

For more information on land loans, how to finance your purchased land, and the pre-approval process, read on below!

Pre-approval Process for Buying Land

Generally speaking, the approval process for land loans is pretty similar to that of a traditional mortgage. However, there are stricter requirements in many cases as it is a riskier investment than a home purchase. There are many factors that go into land financing.

One example of this is the debt to asset ratio, which plays a heavy hand in determining your buying power in this purchase. Generally speaking, this should be 40% to 50% or lower.

Borrowers will also need excellent credit for a successful application. Consistent income is also a must.

It’s important to consider these factors in locating the right loan, as well as the lender when comparing options for land loans. You should look to a trusted source to ensure you can receive fair and favorable terms, with the trust and confidence you need in a financial institution for this type of transaction.

What Does the Process Look Like?

The pre-approval process is a simple process and typically does not require any verification documents. After filling out more information about yourself and what kind of loan you are looking for, you’ll consent to your credit history being pulled. You’ll also need to submit accurate totals of your assets and liabilities.

Pre-approvals can be calculated fairly quickly. If approved, you’ll receive a letter good for 30-60 days, depending on the lender. This letter can be used on any offers you wish to place.

This will make your agent and the sellers you are negotiating with feel more secure about the offer you are presenting.

Comparing Your Options for Land Loans

With this brief guide into land loans and the pre-approval process, you can start to get your feet wet.

When it’s time to take the next step in financing your land purchase. There are dedicated Client Care Coordinators waiting to answer your questions and provide the first steps in the pre-approval process.

To learn more and find out if land loans are right for you–contact us today!


5 Tips to Save for a Down Payment on Land

The total land surface in the US occupies about 2.3 billion acres. Corporations and private individuals own about 60% of this land, covering about 1.4 billion acres. The federal government owns about 29% of this land, while tribal reservations sit on 2%.

If you’re dream is to own land, you’ll join the list of landowners. But before that, you’ll need a down payment, typically a percentage of the parcel’s value. Land loans can present a challenge since down payments are typically higher than a traditional home loan.

It takes discipline and patience to save as you also fund other expenses such as student loans and 401(K) deductions. Fortunately, there are several creative ways of saving for a down payment. Here is a quick guide.

Avoid High-Interest Debt Rates

When saving for a down payment, you should maximize the amount of money ending in your accounts. Start by paying off any high-interest debt rates, whether it’s a credit card or loan from a financial institution.

Once you pay the debt, don’t take any soft loans. If your business relies on credit cards for mid-month restocking, go for options with the lowest interest rates.

A Side Gig Can Help You Raise the Down Payment

Sacrifice is what stands between living in a rental and building your own home. It’s not uncommon for Americans to work two jobs a day. However, you can go a little harder and get a side gig during weekends.

Weekend gigs tend to pay better than weekday side hustles. You can turn your car into an Uber cab or rental vehicle.

You can also turn your hobby, such as gymnastics, into side income. If you’re an expert in any field, many people would love to consult you at a small fee. Whether online or in person, this extra income can go directly to your property down payment savings account.

Live By Your Standards

Living by your standards simply translates to freezing unnecessary spending habits. You can afford it, but again, you have a bigger goal of owning land. You can start by adjusting shopping habits. For instance, if you visit Starbucks every day and order a Grande, you’ll spend $4.10 on average. That translates to just under $1,500 per year and almost $7,500 in five years. It may not seem like a lot of money but combing through your finances to see what can be cut out will help you save more than you think!

Alternatively, you can make major changes like moving to a more affordable home or paying off automobile debt in order to save. An expensive house will likely consume the lion’s share of your earnings, which isn’t a priority when saving for a down payment.

Liquidate Some of Your Investments

Liquidating investments to save for property down payment doesn’t make you lose anything. It’s like transferring cash to another asset with better investment returns. Remember, land is a rare asset in that does not depreciate. As demand for land grows, the supply will always stay the same!

Owning Land Is A Huge Achievement

As you save for property down payment, look for a reputable lender with a better understanding of the current land loan rates. The lender should also have resourceful information such as future rate forecasts in the area you’re planning to buy-in.

Owning land is a dream many people wish they can realize sooner. Now that you know how to save for a down payment, don’t look back. Open a savings account and automate fixed deposits every month.

When you’re ready, Land Line Lending is ready to get your pre-approved and financed!  Contact us to discuss your land loan needs.

How to Improve Your Credit to Buy a Property

 

Have you been trying to buy a piece of property only to realize that your credit isn’t good enough to make the purchase?
If you’ve just started looking at real estate, chances are you have a lot of questions about what you need to do. But one thing you know for sure is that you need a high credit score to buy land.

First, take a free look at your current credit score to see where you are. Improving credit can be a 30-90 day process or longer. What can you do to improve your credit if you find yourself stuck? That’s what this article will attempt to answer. Keep reading to learn how to improve credit to buy property.

Get Your Finances Under Control

Some people use credit repair services when they realize they need to improve their credit. That’s not a bad idea, but before you do anything, it’s best to focus on improving your finances in general.

Payment history, how much credit you utilize, credit history length, type of credit, new credit or debt, and the amount of lender inquiries all factor into your overall credit score.

You don’t just want a temporary boost for your credit score. You want to change your financial future for the better. Start by organizing your finances.

Catch Up on Delinquent Accounts

If you have a history of missed payments, it could be difficult to get a loan for your new property. Go through your subscription services, utility bills, and credit card accounts, and make sure you’re current on all of them.

As long as you have good self-control, using credit cards can help improve your credit because it improves your debt-to-credit ratio. But first, you need to make sure you aren’t leaving any existing bills unpaid.

Dispute Any Credit Report Errors

You might find this surprising, but credit report mistakes are not uncommon. Because we base so much of our financial lives on our credit, this is a disturbing realization for many people.

Fortunately, disputing errors on your credit report isn’t hard to do. Creditors will usually allow consumers to dispute errors online, and the review process is fast and simple. To find and dispute errors on your credit report, you can get started with a credit management service like Experian.

Pay Down Debt to Improve Your Credit

Paying off debt isn’t exciting, but it may be the single most reliable way to improve your credit, especially if you’re interested in long-term results. There are many methods you can use to begin paying down debt. Most financial experts recommend that you start by paying off the account with the highest interest rate, then work down to your line of credit with the lowest interest. This method lets you pay off debt as efficiently as possible.

Contact Land Line Lending When You’re Ready

By now, you should understand how to improve your credit to buy a property. But your buying journey won’t end when you’ve boosted your credit score. When you know it’s time to begin investing in property, get in touch with Land Line Lending to get started.

How Can Refinancing Help You Save Money?

 

Depending on where you’re at in the life of your land loan, there might be a few things that you can do to save money in the long run.

The first thing you should do, which is the idea we’ll explore today, is to look at your refinancing land loan options. Refinancing your loan might be an excellent way to put a little extra money in your pocket for the short term and reduce the amount of interest you pay over the life of the loan.

Let’s take a look at some of the basic considerations that can help you make the right decision in this process.

Refinancing Land Loan: Is It The Right Choice?

The most important factor that you should look at is the interest rate you might be able to acquire after refinancing.

If that rate is lower than your current rate, you might be in a good position to refinance and put yourself in a better financial situation. The factors that contribute to this rate are the market, the value of your land, and your current credit in relation to the credit you had when you took out the loan.

If your credit score is looking a lot better than it was when you took out your land loan, you might be able to get a significantly lower interest rate after you refinance. Depending on the size and life of your loan, that difference could be tens of thousands of dollars.

Getting the Cash Difference

Another key part of the refinancing is that you have the ability to get the difference of the appreciated value of your land and the value of your old mortgage in cash.

If your mortgage has a remaining balance, and your property is now worth more than what you paid for it, you can do a cash-out refinance to put cash in your pocket. For example, let’s say that you have a remaining mortgage balance of $300,000 and your land is now worth $450,000, after taking into account your loan-to-value amount and any closing costs, your new loan would give you a substantial amount of cash at closing.

Now, that money could be used for whatever you like. At the same time, pitching that remainder back into the principal value of the loan can reduce your expenses drastically over time.

Not only will your principal payments be lower each month, but the fact that there is less value in the principal amount to be paid back means that your interest won’t accumulate nearly as much over the life of the loan.

Another popular scenario is to borrow on land has been paid off. You can borrow a percentage of the land value to make improvements, which in turn, will add a tremedous amount of value to your property.

Speak with a Financial Advisor

While it may seem like an objectively good idea to pull the trigger on refinancing your land, it’s always best to talk with someone in your area who understands the market and can give you their take on how the decision might affect you.

There’s nothing wrong with taking a step back and asking for a little guidance, especially when it comes to matters dealing with significant amounts of money.

Need a Little Help with Your Loan?

Looking at your refinancing land loan options might be a little complicated at times. We’re here to help you with any questions you might have throughout the process.

Explore our site for more insight and ideas into refinancing, financial advice, and more.

Property Income: Making Income on Your Land While You Aren’t Using It


If you have a piece of land that you aren’t currently using, you may want to look for ways to make some extra income from it. While a “buy and hold” strategy is a common option, there are other ways to make money with your land without selling it. Some of these options can allow you to make passive income on a continual basis.

Fortunately, we’re here to help. Below we’ll tell you about a few of the best ways that you can make money with vacant land.

1. AGRICULTURAL LEASING
Farmers are always looking for additional land for crop production. If a farmer is looking to expand their production, but does not have the ability to purchase additional land, they often look at leasing land for farming from other property owners.

If you have open land with little weeds, many farmers will lease your land for their livestock or hay production. Crop-share leases can also be a popular way to lease for agriculture.

2. RECREATIONAL USE
Another way that you can use vacant land to make money is by using it for recreational purposes. For example, you could rent out your land to tent or RV campers on a daily, weekly, or monthly basis.

As an alternative, you could also allow hunters to use the land. If there is plenty of deer on your property, many hunters would be willing to pay to gain access to it.

3. TIMBER PRODUCTION
If you aren’t planning to use your property on a long-term basis you may want to consider growing timber. Other than initial start up costs for planting the timber and the occasional management of the trees, this can provide a nice profit when you sale the wood to a saw mill later.

You could also consider purchasing a piece of land with more mature timber which would minimize the growing time you incur and could be converted after harvest for your needs.

4. HOSTING FESTIVALS AND EVENTS
Depending on the size of your land, you could also rent it out for festivals or events. There are festivals of all types and sizes and they need land to operate on, so you may want to consider offering them a venue.

You can also host other types of events on your land as well. You may be able to rent your land out for sports games, weddings, or other events.

5. LEASING TO A COMPANY
Another way that you can make money from vacant land is to make it into a solar energy farm. Leasing your land to a power company can be a great idea and can allow you to put your land to work for you, allowing you to build income in a passive way.

Similarly, you may also want to offer your land up for wind energy installations or cell phone towers.

6. SELLING BILLBOARD SPACE
If you want to make passive income with your land, another great option is to install a billboard on it. This works especially well if your land is on a busy highway or if a lot of people pass by it regularly.

Selling advertising space on your property can be a very passive way to make a bit of extra income, so it’s well worth exploring if you have some land that is in a great location.

UNDERSTAND THE COSTS OF INVESTING IN VACANT LAND
If you want to make money with vacant land, you need to make sure that you’re exploring all of the options that are out there. Make sure that you consider the ideas above if you want to make your land work for you while not in use.

Need help with land financing? Contact us today to learn to get pre-approved!

Speeding up Land Closings

 

There is no doubt that this market is hot. On the upside, land buyers are seeing some of the lowest interest rates this industry has ever seen. On the downside, so many buyers in the market lead to slower closing times.

​​Why is that?


The industry has seen a tremendous number of sales in the last year. There are a few things that can contribute to these delays. With each financed sale, title work must be performed. Often, surveys must also be performed to verify property boundaries or create new ones if subdivision is the case. Finally, for each financed closing, an appraisal must be performed. In the land industry, the appraisal can get very detailed. These appraisals are often done by specialized appraisers that produce 50-100 page reports, depending on the details of the property. If the property includes timber, a timber cruise will need to be performed by a licensed forester as part of the appraisal. In most areas, these appraisals are taking 6-8 weeks, if not more. With a large backlog of clients and fewer licensed professionals to complete the work, it creates yet another shortage in our economy.

So what can be done to help with this situation?


On many properties, a valuation can be performed to avoid  long appraisal times. In order to qualify for a valuation, a property must not have a home and must be less than $500,000. A valuation ​​​is an estimation of the property’s worth based on comparable sales in the area. To complete a valuation, an expert looks for similar properties, also known as comparable sales, that have sold in the same area within a set period of time. These properties must have similar characteristics as well. For instance, if the property being sold, also known as the subject property, has a significant portion that is located within a flood plain, then the expert would find comparable sales that also had a significant amount of flood plain. These properties are compared and averaged to determine the value of the property for the valuation. In situations where appraisals and surveys are required, many lenders have been opting to cast a wider net for more bids at an earlier point in the loan approval process; this has helped lenders engage licensed professionals quickly when the loans are approved. 

When you are ready to begin your land loan journey, contact us. We are happy to explain more about the land lending process and walk you through your next steps. Continue to follow our blog for more helpful information on land and financing.​

 

How Buying Land is Different from Buying a Home

Land lending can be a hard nut to crack. Buying a house is relatively simple. Banks lend readily for homes because individuals and families need places to live. It’s a primary mortgage and the mortgage will be paid off first in the event that the borrower defaults. Buying land isn’t a necessity. Sure it’s a great, low-risk investment. Of course, you can get enjoyment out of it while building memories with your family. Not to mention, it can be income-producing. Big banks just don’t seem to understand it. It’s a secondary loan, meaning that it falls lower on the totem pole than a home. This leads many banks to reject the idea of lending for land. Occasionally you’ll find a bank to lend on acreage but your interest rate will be higher or you borrow on an equity line using your home as collateral. It’s not entirely the fault of these banks. They just aren’t familiar with how land works. They can’t touch it like a house so it seems less marketable if they need to foreclose.

To help with this problem, Land Line Lending was created to simplify the process of lending for land buyers. We wanted fewer hoops and lower interest rates. Some stipulations are still in place, however. For instance, there is a minimum of 15 acres and $100,000 for a loan just as you might find with a traditional bank. The property can not have a home or building on the land unless that structure accounts for less than 50% of the value of the property. Land Line Lending wants to focus on the land being purchased. That’s our passion and where our understanding lies.

In closing, stick with a lending company that knows the product. This will save time and money in the long-run. Banks and mortgage brokers are great for homes because they understand them. Land Line Lending knows land!