Borrowing against land

Board Topic: Borrowing Money Against the land
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Borrowing Money Against the land

Posted by: Ceci Dec 8 2004, 06:45 PM
I have a home in SF Ca and just refinance my home in july. I am know at my next stage either to sell or rebuild. This is an old home that needs lots of repairs. This is a single family home, I have thought of making two flats and renting one and living in the other. I wanted to know more information on borrowing the money agaisnt the land and how it works. My home is worth 500thousand and I owe 200thousand I do have some equity. Can you give me more information on borrowing the money against the land?
I have consulted with and architect that is will start working with the city to see if demo will be allowed. He mentions rebuilding will be much easier.

Posted by: loanuniverse Dec 9 2004, 01:49 PM

A couple of things:

1. You mentioned that the house is worth $500M, do you know how much of this is because of the land?

2. How much would the two “flats” be worth once they are finished?

3. How much would it cost you to build them?

4. Your best bet would be to contact a local lender and discuss a residential construction loan. This is not just a land loan that you need if you want to go with the new “flats”, you also need a construction loan.

5. If the land is worth $400M the moment you demolish the existing improvement, you lose $100M in net worth that will only return if you are successful in the development and selling of the “flats”

Good luck


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