Land Development in Dewey Beach, DE
Financing for raw land, subdivision projects, and land with development potential.
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Financing for Land Development
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Frequently Asked Questions
What is the difference between entitled and unentitled land?
Entitled land has received all necessary government approvals for development, including zoning, subdivision plats, utility connections, and building permits. This land is ready for immediate construction. Unentitled land requires one or more approval processes before development can begin. Entitled land qualifies for higher loan-to-value ratios (50-60%) and better terms than unentitled land (40-50% LTV) due to reduced entitlement risk and faster path to revenue generation.
How long does land development financing typically last?
Land development loans typically range from 12 to 36 months, depending on project scope and entitlement complexity. Simple entitled land acquisitions may require only 12-18 months for infrastructure completion and initial lot sales. Complex projects involving extensive entitlement, environmental mitigation, or multi-phase development may need 24-36 months. Extensions are often available when projects show continued progress toward completion.
What happens if lot sales are slower than projected?
Land development loans typically include interest reserves to cover debt service during extended marketing periods. If sales fall significantly below projections, lenders work with developers to evaluate options including extending the loan term, modifying pricing strategies, or arranging alternative exit strategies such as bulk sales to homebuilders. Clear communication and proactive planning help navigate absorption challenges.
Can hard money finance infrastructure costs before home construction?
Yes, hard money loans frequently finance infrastructure installation including roads, utilities, drainage, and amenities before vertical construction begins. These infrastructure loans are typically repaid through lot sales to homebuilders or advances from construction loans as builders purchase developed lots. Infrastructure financing is milestone-based, with disbursements tied to completion of specific improvements.
What due diligence is required for land development loans?
Land development due diligence includes title examination for easements and access rights, environmental assessments for wetlands or contamination, zoning verification and development capacity analysis, soil testing and perc tests for septic systems, infrastructure availability confirmation for water, sewer, and utilities, and market studies for absorption projections. Developers should also provide detailed budgets, timelines, and equity contribution verification.
Other Property Types
Residential Real Estate
Hard money loans for single-family homes, condos, and residential investment properties.
Commercial Real Estate
Financing for office buildings, retail spaces, industrial properties, and commercial investments.
Investment Properties
Loans for rental properties, income-producing assets, and portfolio-building investments.