Using Vacant Land to Your Advantage

[Benjamin Seibert]

I recently finished my first non-owner occupied rental property investment deal in Hagerstown, MD (I will post about that later). I just wanted to follow-up with a strategy I used to pull equity out of a vacant lot I own. 

Graduating from college, I had high hopes to get into real estate investing. After analyzing a ton of deals I quickly realized I didn't have the cash for a down payment (like a lot of new investors). However, I did have a vacant lot ~1.1 acres in a nearby town. I went into search mode to find a bank that would lend to me on the vacant lot I owned free and clear. This ended up being harder than I thought and only found two banks (out of the dozen or so I contacted) that would lend on this. The best gave me 60% LTV on the lot which I used for the down payment and rehab costs (currently sitting in escrow) for my rental property. I hope to then BRRR my current deal and use the funds on another property down the road.

I figured I'd share a potentially unusual way around the lack of liquidity which plagues many new investors. Let me know if you have any questions about it.

[Benjamin Seibert]

@Don Konipol thank you for your feedback. I was putting this out there for people who possibly hadn't thought of it before, not necessarily you. I do agree it's not a mind blowing new strategy, but it is a different start than most take. However, it looks like you've been around and on BiggerPockets for a while, so I doubt much would be news to you.

Also, not sure what area you are from, but in my area it wasn't easy finding a lender to loan on a vacant piece of land. As you move more into the city of Baltimore this becomes non-existent, so it's all relative. After finding a potential lender, some of the ways I had to work on constructing the loan with them definitely turned into out of the box solutions (since they had stringent policies - which would've been answered had the question been posed).