Land Auctions

While the value of stocks rise and fall like the mercury in a thermometer, there’s one particular constant whose value generally stays high: land. While we intuitively know that land is valuable, buying can be another thing altogether. Here are some tips to fund a land purchase:

1. Brace yourself for high interest rates.

Why would getting a loan for land be any higher than for constructing a building on the land? Well, that’s actually a key matter! Lenders know that you’ll likely do some building on the land, and that will probably require taking out another loan. So the double-whammy loan payments that you’ll probably experience means that repaying the property loan will likely be as hard as nails. Ergo, a higher risk results in higher interest rates.

2. Determine the future function of the land.

Before a bank lends you money, you’ll need to create a plan that states specifically what you’ll use the land for. Since you’re asking them to make an investment in you, they’ll need to know how profitable the land will be. In turn, that could greatly influence how soon you could repay a loan. This doesn’t mean you won’t get a loan if you don’t use the land for business-but you’ll still need to create a clear and concise plan.

3. Do some research about zoning.

This is a critical step, as zoning laws could impact on the construction of a building. In fact, strict zoning codes could prevent you from creating a home or building with the exact specifications you want.

4. Apply for loans at a community bank.

If you’re planning to buy an empty lot, then it’s advisable that you apply for a loan at a local bank, rather than at a large bank chain. The former is typically more apt than the latter to give a loan for an empty lot.

5. Remember the mantra: location, location, location.

The location of the lot will have a huge, enormous, and gargantuan impact on the cost-and how much you’ll need to borrow. Of course, there’s the obvious fact that land in cities and suburbs will typically cost more than land in the country. However, don’t overlook the fact that a lot in a remote location could ultimately be much costlier than the actual cost of the land. That’s because you’ll likely need to run lines for electricity, water, telephone, and for the most crucial purpose-cable TV!

6. Visit the property.

This will help to determine whether you still want to purchase the lot. You may discover that some logistical matters would make it impossible to sustain a structure on the property.

7. Look for the lowest interest rate.

One of the keys to taking out any type of loan, is to get the lowest rate. That also holds true with land purchases. It’s advisable that you look for a fixed rate, so you won’t have to worry about the rise and fall of variable loan rates. It also helps to make a large down-payment. That will certainly help to keep the interest rate lower.

Land still remains one of the top investments you can make. Consider these tips to help get the funding that you need for your own plot of Earth!