If you are in the market for purchasing some land, but you don’t have the cash, there are several other ways in which you can still make your purchase.
Buying land is usually a bit more complicated than buying a property with a home already on it. And, if you don’t have the cash to secure the deal, your challenges will be greater. That said, there are still ways the deal can be made and the land can be yours.
To buy land without cash, you have a number of options:
- find land that can be owner-financed
- secure a loan from your local bank
- find an asset you own that you can sell
- take out a home equity loan
- find a specialized lender
Anyone who has gone through the process of buying a home or lot of land knows the process can be fraught with complications and surprises. When you are trying to make a purchase with little to no money down, it is even more of a process, as everyone involved will want to know that you are going to be able to make the payments, which will be larger if you have no cash to put down in the beginning. Securing the land is going to take more creativity on your part, but it can be done, and shouldn’t deter you from making your purchase.
Learning all I can about real estate and land ownership is a passion of mine. Land is finite and there is only so much of it left. I enjoy helping others find a way to land ownership and showing them how this dream can be theirs, even if their resources are limited.
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How Can I Buy Land Without Cash: No Money! No Problem!
Whether you are wanting to buy land to build a home or just as an investment vehicle, for now, land is an investment that is wise and will prove to be profitable in the long run.
Not only is land a finite resource, but it is also a tangible one. Unlike a stock or bond, land will not disappear. It is yours until you decide to do something else with it.
Once you’ve found the land you are interested in purchasing, figuring out how to make that purchase is the next step. Though cash will always be the easiest way to do this, there are plenty of other options available to you.
1. Find Land That Can be Owner-Financed
One of the most popular and straightforward ways to buy a piece of property without cash is to look into land where owner-financing is an option.
Owner financing is exactly what it sounds like. The person (or company) from whom you are going to buy the property offers you a loan and will guarantee you a certain rate at which you can borrow the money and a set time in which you have to pay it back.
Owner Financing is a very common way that land is purchased in the United States. Often it’s hard to secure a loan for land that is not developed (as banks see this as a higher risk for default) so owners have become quite used to being the ones to loan the buyer the cash to buy their lot of land.
Of course, receiving this kind of financing doesn’t come without its consequences. An owner who is loaning you the money to buy their land is taking a risk, just as a bank would, so they will charge you interest on the loan, plus will have paperwork written that explains what will happen if you default on the loan.
Just make sure that anything you agree to is in writing and that both you and the seller are fully aware of all the terms. You may want to do a title search and consider having a real estate agent or attorney involved to make sure all considerations have been covered.
2. Secure a Loan From Your Local Bank
If owner financing sounds a bit risky to you, or the owner of the property you are interested in is not interested in helping you finance it, you can go the more traditional route of securing a bank loan for your land purchase.
Loans with traditional banks can be harder to secure for raw land than they will be for a piece of property that already has a home or structure on it. This is because banks are more nervous about lending money when you have less collateral, and they see an empty plot of land as being something that you are not as invested in.
That said, if you do your research, you can usually find a lender that will help you secure a bank loan, though it may take more creativity on your part.
Start with your local bank, especially if you already have an established relationship with them. Explain your situation and be prepared to be asked a lot of questions, from what your intent is with the land to what forms of collateral you may have.
If your local bank can’t help you, consider talking to a credit union or the company through which you have a mortgage, car loan, or personal loan. If you can show you’ve been a good customer in the past and have a history of regular payments, you may find a current (or past) lender willing to work with you.
3. Find an Asset You Own That You Can Sell
You may not have the cash to buy land at the moment, but do you have something else that holds some value that is no longer serving your needs?
It’s easy for us to overlook asset options when trying to purchase something new. We may have completely forgotten about the Certificate of Deposit (CD) we purchased a few years ago, or an old bank account that still has a bit of cash in it that we haven’t checked in a while.
Or, what about something that you can sell? Do you have some jewelry you have held onto but have no use for anymore? Perhaps there’s a second car that no one is using or even another piece of real estate that is less important to you than this piece of land you are trying to buy.
Get creative and think about what assets you may have that would either offset the price of the land or at least gain you enough to have a decent down payment, which may then allow you to secure some financing for the rest of the purchase price.
4. Take Out a Home Equity Loan
Another area where you may be able to look for help is in the property you have already.
Instead of selling off a real estate asset, like I suggested earlier, another option would be to borrow against equity you have gained in a current home.
A home equity loan is a loan that a bank will give you, using the equity in your current home. Your equity is defined as the amount of money you have paid off in your home, versus how much you still owe the bank.
Depending on the current economy and interest rates, how much you will be charged to borrow against your home will depend on the market today.
Home equity loans can be a great way to purchase another good asset, like land. Just be aware, though, that defaulting on a home equity loan could put your home at risk, just like defaulting on your mortgage. Be vigilant when borrowing against the equity in your home and make sure you can cover the new cost of both your mortgage, equity loan, and other expenses that come with home ownership.
5. Find a Specialized Lender
Finally, if you are in a situation where you don’t have a seller who is interested in owner financing, and you don’t have any assets or home equity to access to buy land, a final option would be to find a specialized lender who is willing to loan you the money for your land purchase.
Specialized lenders have fewer constraints around them than traditional lenders do. They may be able to better understand your situation, and work with you to devise a plan that will allow you to purchase the land you want while securing their investments.
Borrowing from a specialized lender would be a good idea if you are looking to purchase certain types of land, or have a unique idea for the property that would make a traditional lender more hesitant to risk loaning their money to attempt.
For example, if you are interested in land conservation, creating a solar or wind farm, or using your land to raise cattle or other farm animals, a specialized lender is going to be more apt to work with you than a regular bank or credit union. They can see your vision differently.
Spend some time researching these types of lenders in your area, and maybe ask other landowners who are doing something similar if they can suggest who to use. Thinking outside the box will result in you being able to buy your land with no money down if you get creative and are patient with the process.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down because of COVID-19. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling