Property Development Loan: Capital for Land Development

2007-03-08 10:33:40

( Financial )



LAND OWNER

A property development loan is a special type of funding source for those who want to develop a piece of land for commercial or residential purposes.

If you have a significant area of idle land and you do not know what to do about it, you can tie up with real estate companies who are experts in property development and marketing. Usually, real estate companies have long-standing relationships with banks and other lending institutions which make it easier for them to apply for a property development loan.

You can also opt to apply for a property development loan by yourself, but it may be more difficult than if you had a real estate developer partner. This is especially true if this is your first time to venture into property development and no related experience yet.

CREDIT LINE

Property development loans are very flexible in the sense that the loan acts more like a credit line that you can draw upon as more capital is needed. Usually, the property development loan is given on a staggered basis, and is released when you have achieved a certain property development objective.

The terms of property development loans depend on whether you are developing an area for commercial or residential purposes. The bank or lending institution will usually scout the property and base your loan-able amount on the viability and potential of the project to earn over the long term.

Property development requires a big amount of capital. But the potential earnings can be very big as well, especially over the long term. Any property is certain to increase in value after a period of time. This is why property developers must be forward thinking and very patient because the return of investment can be very slow. But for those who are willing to wait, property development can be worth it.


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