09 Feb How To Get A Land Development Loan In Utah
With all the opportunities available in the real estate market today, land development can be a very attractive prospect. And when you’re looking into land development, there are a few things that you need to know. Utah is one of the top places in the nation for land development right now. You can look right in our backyard at the city of Vineyard. You can see just how successful land developers have been. Getting a land development loan in Utah is the first step for many who want to take part in this massive growth.
However, one of the major components that keep individuals from jumping into the world of land development is capital. Learning how to get land development loans could really change this situation for you. Once you have learned how to secure the funding for developing land, you could be well on your way. Here you will learn just how to get started in getting the money that you need.
Understand the difference between land and construction loans
When you are learning how to get land development loans, you have to look at the different loans that are available. The first thing you need to realize is the difference between land loans and construction loans. This is something that most developers overlook. For example, there are land development loans that can be bundled with the acquisition of land that already has structures on it. This is different from raw land development loans where there are no structures currently on the land. While there are loans that can be combined, this is usually pretty rare.
Usually, it is easier to get a land development loan right off the bat. You don’t need all of your suppliers and contractors ready to go for this loan. This is a great place to start with our lending professionals. While the cost of your build is going to be important in the process of securing what is called a lot loan, it is important to first focus on acquiring the land. Working with a lending professional will help you determine what type of land development loan is right for the project that you have in mind.
Develop a track record in land development
It can be quite difficult to get a land development loan when you don’t have a track record in land development. However, you can build this track record relatively quickly. Consider working with other land developers on deals before you try to break out all on your own. You can also take courses and get certifications that will help you appear more professional to lenders. If you have the ability to, you should use your own money first to create a profitable deal before going to lenders. Once you have developed a great track record, it will be much easier to get a land development loan.
Consider starting a partnership
When you don’t have much of a track record, a business partnership might be what you need to get a land development loan in Utah. When looking for a business partner in land development, make sure that you are looking for someone who has had successful land development deals in the past. There are wide selections of land development professionals in Utah that you could choose from for business partnerships. You might want to look at your warm market as well. You may have friends or family members that would be great to go into business with. This could be an organic partnership that could be very profitable for both of you.
Work with lending professionals
When you are dealing with any kind of lending, it is important to work with lending professionals. Our lending professionals are here to help people just like you. When trying to find the right loans, it’s nearly impossible to get the job done without the help of a lending professional. Our friendly lending professionals will be able to help you understand the ins and outs of obtaining a loan of this magnitude. During our many years in the lending industry, we have learned the ins and outs that can help us help you find a great land development loan in Utah. We will be more than happy to find the right options for you in our lending department. With our experience, it is second nature to find the right funding for just about any type of land development project out there.
Operate under a business instead of an individual
Most if not all lenders who issue land development loans are not willing to loan to an individual. With loans of this magnitude, there are more legalities involved. Operating under a business, usually a special purpose LLC, will give you and the lender the protection that is needed to move forward with a loan of this magnitude. Our lending professionals can help show you the way to easily and affordably file for business incorporation. This will drastically raise your chances of finding a land development loan to help bring your project to life.
Take a good look at your credit
It is important to take a good look at your credit when you are trying to get a loan. However, this is even more important when you are trying to get a land development loan. If your credit history and current score are less than desirable, it is a good idea to work on raising that score. There are many different credit restoration firms out there that can help you rebuild your score. There are also many things that you can do that will really help you better your score. This way you won’t have anything holding you back from getting a land development loan.
Understand the higher interest rates
One thing that you are going to have to deal with when getting a land development loan in Utah is higher interest rates. It is important to not get too hung up on this. It is just something that you will have put into the cost of getting this money. There is the option of working with private lenders or angel investors in order to get lower interest rates. Our team of lending professionals will be able to help you find the best interest rates in the industry.
Have a strong development plan
The more solid your development plan is, the easier it will be for you to get a land development loan in Utah. Lenders want to see that you have a firm plan for making a profit off of your deal. It is much harder to approach a lender with just a vague general idea of how you will make money off your land development. Learning how to create business plans, prospective profit statements, and general development plans will help you greatly get a land development loan in Utah.
Try to develop land in a prime location
It is always important to think of location when you are doing anything in the real estate market. This couldn’t be more true than when you are trying to develop land. Make sure that you are developing land in a prime location that is going to get great results. For example, if you are trying to develop land out in the middle of the desert, the chances of getting approved decreases versus developing land right on the outskirts of an established town. Our lending professionals can help you look at a map of Utah and show you just where the right places to develop will be.
Determine your building costs
When you determine your building costs, lenders can really see the bigger picture. You will really have to do your legwork on this. With the supply chain issues caused by COVID-19, building costs have drastically changed. You may also find yourself on waiting lists as well. It is important to get all of your building costs and timelines in place in order to present them to the lenders. Your lenders are going to want to know if you will be able to keep up with deadlines and make a reasonable profit.
Have a solid plan of repayment
When trying to secure a loan of this magnitude, a solid plan of repayment is going to be essential. Most lenders won’t even sit down to talk with you about a land development loan if you do not have a solid plan of repayment. With how fast the real estate market is moving nowadays, it won’t be too difficult to create a reasonable repayment plan that you are able to stick to.
Consider joining a nonprofit
There are nonprofits like Habitat For Humanity that can help you when you are developing land in Utah. If you are helping the community by offering homes to those who aren’t usually able to get them or trying to better a neighborhood by bringing in new homes, they can greatly help with your building costs. There are many different nonprofit options in Utah that can help you with your land development needs. This could be just what you needed to finally get the money you needed for your real estate development.
Make sure you are not damaging the local wildlife or environment
A big concern when developing land is the environmental impact. This is especially true in Utah. You need to make sure that you are not damaging the local wildlife or environment. While you may need to hire an environmental scientist to help you with this, it is well worth the cost. You may end up with some trouble down the road. Whether you are hit with fines, or bad press, these are both going to cause a slow down or even an eventual halt in your development.
Pay attention to zoning and restrictions
Zoning and restrictions are also very important. You are going to have to pay close attention to the restrictions in neighborhoods especially. Utah is notorious for its zoning laws. With these zoning laws come many restrictions. Make sure you take a trip down to your city offices to work with a city planner. These professionals will be willing to help you learn more about zoning in your city. It is also a great idea to learn more about building close to industrial and commercial areas. Building too close to or too far away from these areas make a difference in the profits.
Here at Nelson Funding, we love seeing dreams become a reality. We understand that one of the biggest parts of those dreams becoming a reality is capital. This is where we come into play. When you are looking to develop land, you are going to come to a serious roadblock if you aren’t able to fund the project. Our lending professionals are ready to help you move forward with your land development project today. Give us a call or reach out to us online and to get the ball rolling on finding a land development loan that will work best for you.