Getting a loan based on the assessed value

[Jason Allen]

So here’s a scenario.

Say you want to buy a property worth $3,000,000. It has no existing structure and is not entitled. Your goal is to buy the property with the intention of developing it into a subdivision. This is obviously going to require you to obtain entitlements.

So you want to move forward with the project. You get the property under contract and say you get the entitlements during this time. Now it is time to close and get a loan. After getting the necessary permits, the value of the property increases. As the developer, can you get a loan for this new value and pay yourself the difference of the purchase price and the increased value?