Investing in Land for Building a House

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

My brother/sister in law purchased some land about 2 years ago before he had to go to Iraq. Their goal was to start making payments on the land and build some equity so that when they were ready to put a house on the land it would be easier. They will be back (now from Germany) in early 2006, and I bet they will be able to put a nice house on that land. Is this a common practice? What does someone need to know before buying a peice of land? What about buying land purely as an investment?

chow · Posted: Fri Mar 11, 2005 12:32 am Post subject:

Makes sense, If you bought some property that had potential to go commercial it would really make sense just to buy raw land.

If you buy property to build on later-always a good idea. Many banks and lenders give you your credit for the equity to assist with costs of the end loan.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

I can only speak from my company's perspective on this one, but the land is included as part of the equity when you go to get your loans completed. As far as purchasing the land basically we lend at 75%, and it depends on the amount of land (if you're looking at acreage or just a lot makes a difference.)

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

And yes people do do that, and yes it can be quite an investment. As all investments though, it depends on what you buy, where you buy it, and when you buy it.

As far as what they need to know, it's always a good idea to have an idea of why you are purchasing that specific piece of property. Is it going to appreciate? Is it way out in the boondocks and you're thinking about building a house out there (with your well and bucket septic!) or are you thinking that in the next few years the city is going to expand and there could be a huge need for this specific land and suddenly you're sitting on a gold mine? Or...are you literally sitting on a gold mine!

Other than that you'll want to have a down payment because as far as I know, it's unlikely you'll get 100% loan on a lot. (Maybe a hard money lender, but I don't know about that =D)

chow · Posted: Fri Mar 11, 2005 7:07 pm Post subject:

It is a "hap hazzard quess" :wink:

but some land is better than NO land at all!

Agreed? :wink: