Land Financing 101
Mark Strauss, Managing Director with Cohen Financial, discusses the nuances of land loans. Due to its illiquid nature and lack of cashflow, lenders are generally hesitant to lend on land assets. If they do, there is a preference for infill versus greenfield and entitled land where the borrower is implementing a business plan that entails build-out of the asset. LTVs tend to stay low – in the 50% to 60% range – with banks charging 4% to 6% interest rates and private money lenders charging 8% to 14%.
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