Do you offer land financing programs for developers in foreign countries?
Sovereign Capital's funding sources offer land financing programs for developers located in the United States. All land developments must be located within the United States to be considered for owner financing programs.
What kind of land financing programs do you offer for domestic land developers?
Sovereign Capital offers land financing programs for land developers who use owner financing to market and sell land to end consumers. These developers just sell land. They do not build anything on the land--no houses, apartments, commercial buildings, etc.--they only sell land.
Land developers can use owner financing to sell land they own and currently hold in inventory. These developers subdivide vacant, rural or recreational parcels of land, and then sell lots, tracts, acreage, etc. to individual end consumers.
All kinds of real estate can be sold with owner financing, including; lake lots, mobile home and subdivision lots, golf course property, mountain and coastal property, hunting tracts, ranches, etc.
Why do land developers prefer to use owner financing to sell land?
Owner financing is often the best way to market and sell land to the end consumer.
When an individual wants to purchase a lot, tract of land, mountain acreage, lake property, etc., he often finds that obtaining bank financing for the property is a problem. Since there is no house or building on the property, banks and other traditional financial institutions view the land as a risky loan, and will often lend the borrower only 50% of the purchase price. This means the borrower must come up with the other 50% in cash for a down payment. This unpleasant situation will often kill a potential land sale, forcing the developer to start all over with another prospect, who may also run into the same kind of financing problem.
The good news is that owner financing can often spare the land developer, and the end consumer, the difficulty of dealing with banks and other traditional financing sources.
If a land developer uses the land financing programs offered by Sovereign Capital's funding sources, he can sell land with owner financing with as little as 5% down. Furthur, the developer will retain control of the financing process by closing all sales right in his own office. There will be no need to watch potential land buyers go out the door, never to be seen again because of problems with bank financing.
Credit approvals are made within 24 hours and closings are done quickly. Funding is completed within 48 hours of submission of documentation.
How does a land developer make money with owner financing and how does he get paid?
A land developer can use owner financing to sell land with 5% down, and finance 95% of the purchase price. The developer keeps the down payment.
When the loan is funded, there is a 15% reserve withheld (reserve is paid back quarterly based on principal reduction of the loan), and a 1% fee is deducted.
At closing, the developer keeps 86% of the sales price. He then receives a refund of the 15% reserve, which is paid back quarterly. The developer's total return is a full 99% of the sales price of the property.
There is no discounting if new loans are written at the minimum buy rate. No appraisals are necessary, and the funding source will service receivables and handle collections for the developer.
The developer has the benefit of using an easy financing program that will provide him with an ongoing source of land financing for future projects.
Click for examples of selling land with owner financing.
What kind of rates and terms are offered for your owner financing programs?
Current rates are prime + 4% + 1% with a floor of 10%.
Terms ave available up to 360 months.
Can a land developer obtain financing for consumers with bad credit?
The owner financing offered under the purchase facility program is for people with A or B credit. This program affords such people the opportunity to purchase land with a small down payment.
Loans can be closed quickly in the developer's own sales office without having to deal with banks or other traditional financing sources.
Must a land developer who uses owner financing to sell land, sell his land receivables at closing?
A land developer who sells land with owner financing may be able to keep his receivables instead of sellng them, if he qualifies for a developer credit line.
A developer credit line will allow a developer to hold his land receivables in inventory.
Credit lines are available for $500,000 to $5,000,000 for qualifying developers.
No appraisals are necessary.
Does a land developer have to use Sovereign Capital's funding sources, exclusively, to finance his land sales?
A land developer can use more than one land financing source to offer financing to end consumers.
For example, a developer might already use a bank or other traditional financial institution to finance his land sales. However, he can add the owner financing program, and use it for those people who do not qualify for bank financing because of the large down payment requirement.
Does a land developer need a finished project in order to qualify for the owner financing programs?
A development does not have to have paved streets, water, sewer, electricity, etc. to qualify for the owner financing programs.
However, the developer must have ownership of the land, and all property must have been surveyed, cut up into lots and at a minimum must have unpaved roads.
Do you offer funding for land acquisition and development?
No. The kind of financing used to purchase land for development is not available to new developers.
However, sometimes funding is offered to qualifying, seasoned land developers for the acquisition and development of new land. These approved developers have already established a working relationship with the funding source, by having sold land with owner financing through the Purchase Facility Program.
Acquisition and development funding is offered to qualifying land developers, to help them create an inventory of land receivables that will eventually be sold, or pledged, exclusively to the funding source.
Under the Land Acquisition and Development section, information is given on hard money financing for commercial land development; however, this financing in not available for retail land sales.
Do you purchase existing portfolios of land receivables?
Yes. Sovereign Capital's funding sources will consider purchasing portfolios of land receivables, that have been created through the sale of land with owner financing.
Portfolios of deeds of trust, mortgages, land contracts and contracts for deed will be considered for purchase.
Selling entity must have clear title.
A minimum portfolio balance of $750,000 is usually required, with a 5% minimum paid in equity.
No seasoning is required, and no appraisals are necessary.