Residential Development Loans by Tom Markel
That plot of land for sale up in the mountains or by that remote lake looks really attractive, but why exactly do you think the price they're asking for it is so low? If it's never been developed before, there are some costs involved just to make the property viable for building. You'll need utilities such as water and electricity, a sewage system or septic tank, and access roads so you can easily get construction equipment in there. Building and construction loans don't cover these things. Residential development loans do. You'll need to apply for one of those before you can get building financing.
Building a dream home is something that everyone wants to do at some time in their lives. Many people see that scenic property with the panoramic view and low price tag and think they've somehow stumbled on something that is meant to be. That may very well be the case, but you'll have to pay a price if you want that dream to become a reality. If it was just a simple matter of building the house, don't you think the previous owners would have done so? They could have been nature lovers, or they could have found out that the cost of developing that land was prohibitive.
Do your homework. You can use a residential development loan to purchase the property and do the prep work to get it ready for construction. That involves creating a business plan with some accurate price projections on it, something you should do anyway before you buy the property. Here at iBank, we've published some information on how to create a business plan and we can shop your request around to different lenders who will be willing to help you get your project started. Most of these lenders also do construction finance, so they'll stick with you through the entire project.
Provided the proper financing, you can build that dream home no matter where you want to put it. That remote patch of land will almost certainly increase in value over time, more so if there's a home built on it. Banks and lenders take that into account, so your rates and terms should be fairly good. At iBank, we shop your request to enough lenders that you'll be able to find exactly what you're looking for. Start with a development loan, then come back to shop for a construction loan.