Advice on using land equity for development down payment?
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[{"id": "g86oztq", "text": "short answer, yes", "replies": [{"id": "g86purk", "text": "Yep", "replies": [], "depth": 2}], "depth": 1}, {"id": "g86p4x6", "text": "I will get appraisals on them certifying the values. I will get it from two different appraisers.", "replies": [{"id": "g8735t8", "text": "I mean this is good for your own peace of mind. But no lender is going to lend based on your appraisals, and no buyer is going to buy based on your appraisals.", "replies": [], "depth": 2}], "depth": 1}, {"id": "g86pxb1", "text": "You should just take it to market as a ground lease. Get a broker to shop it around and see what gas station QT, Racetrack, whoever will pay the most. Once you strike up a deal they will build the improvements and begin paying you a monthly rent.", "replies": [{"id": "g86r2yf", "text": "This is the answer.\n\nMuch easier and worry free for this type of thing to just set it up as a very long term ground lease.", "replies": [], "depth": 2}, {"id": "g87h8vq", "text": "Agreed. I would have 100% shop these for ground leases...Granted the national operators are going to ask for LL to do site work and utilities to be brought, you have the entitlements already so that should def help their overall timeline to opening.\n\n I personally would finance site work if needed before I built a whole station on spec and then tried to lease to an operator", "replies": [], "depth": 2}], "depth": 1}, {"id": "g873dqz", "text": "Developing can get messy and expensive specially without experience. No bank lender would lend to someone with no experience to build this type of product. Unless it is a small bank too hungry for its own good or where your uncle knows the higher ups.  \n\nYou said he has several plots, can he afford to finance the building of just one on his own? If he can then he can finance the first one after it is done and has cash flow to get some money for the next one. Plus doing one on his own coin is going to teach him a lot about the process.", "replies": [], "depth": 1}, {"id": "g87gs3w", "text": "Yep. No matter how you slice it. It\u2019ll be a joint venture partnership deal. He can bend in his equity. Just be sure he\u2019s lawyered up", "replies": [], "depth": 1}, {"id": "g87knaw", "text": "There are programs like the SBA 504 loan that will use an as is appraisal of land to count as the equity injection to the deal. the rates on the 504 are insane right now, 2.55% fixed for 25 years. The problem is the SBA requires the properties are owner occupied so your uncle would need to plan to operated them when talking to the bank.", "replies": [], "depth": 1}, {"id": "g88xch3", "text": "What state is he in?", "replies": [], "depth": 1}, {"id": "g88zmhb", "text": "That\u2019s what usually happens with construction loans. The owner comes to the table with the land as equity. Hopefully the land is worth a nice chunk of change, like in the case of your Uncle. Everything else is paid out of the construction loan.", "replies": [], "depth": 1}]