Options for land loans?

[oldoak2000]

Originally Posted by dreaminofvickery

Hi All!

We are looking to buy a vacant lot in Dallas and then build a "custom" home later down the road (maybe 2-3 years). We have never gone this route, our first home was a all in one deal, so we are charting unfamiliar waters here. I have "heard" that getting land loans with big banks (like Wells Fargo, BofA, etc.) is very difficult or has undesirable rates and that you should go through smaller local banks. Is that true? If so, can anyone recommend a bank?

Any other thoughts, comments or suggestions would be very helpful if you have been through this process before or know info from someone who has!

Thanks!

Hope you're not thinking of doing this to 'save money' . . .

Expect to pay 40% +/- down and 8 to10% interest (LAND only loan).
Usually can't get loan to build till land is fully PAID OFF.
Construction loan (to build) is gonna be like 8% ++ (will convert to 'mortgage/4%' once completed).
Build cost high - $150/sq ft + for basic (can double for 'fancy') - can't compete with new home builders who utilize 'economy of scale' . Any 'problems' along the way, and guess who get to pay?

[dreaminofvickery]

I just wanted to come back and report for other people who may later want real information, not guesses from people who are just assuming.

There ARE lots, both vacant and with tear down houses. It is incorrect for people on the forum to say otherwise. Are they less frequently for sale or being watched by developers, yes, but that doesn't mean they don't exist.

The loan options for land are there but are shorter terms with higher rates but do not believe you need 40-50% down, this simply isn't true. The lot loan available to us is 20% down, 15 year term at 5.75% interest with a 5 year balloon payment (which can be refinanced at year 5).

With regards to the "you'll never make money" person. One, people may not be in it ONLY to make money. For us it was about buying in a stable area that maintains it's value and is closer for commuting. Based on the lot price and the quote from multiple builders though we could absolutely still flip it almost instantly for a profit.

Anyone that has any questions is welcome to DM but I wanted to put this information out there to provide real answers to the questions I originally asked. A good portion of internet posts are by people who only think they know what they are talking about.