Timber value in LTV

[Justine Johnson]

Will private/hard money lenders include timber value in the LTV when making a decision?

[Bill Gulley]

You're talking about two different types of loans, RE and crop or agricultural. RE financing doesn't secure the "fruits" of the land but can in a commercial ag loan.

You'll need to find an ag commercial lender, you'll need an MAI appraisal and probably bids from a timber broker. If you aren't in the timber business it will be tough to justify your plan on a purchase, but if you have standing bids that will change the loan aspects. You can contract to provide the timber subject to your RE purchase, the contract is then assigned to the lender. The loan is funded, buy the property and begin the harvest, payments assigned can be on a split, amortized to repay the loan over the timber contract period.

A timber broker can help you. You can obtain insurance but that's only required in large transactions, saying 1/2 M and up. You'll still need skin in the game, other assets may be pledged to cover part or even all of the deal, other underwriting aspects still applicable. See an ag bank lender. :)