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Land has no value
This title isn't complete in its thought. Land has no value to hard money lenders would be the way to finish it. Savvy hard money lenders tend to stay away from funding based only on land because new construction has a very limited exit strategy compared to a standing flip. What this means is if a loan is placed on land for new construction, the lender is in a risky position. If the borrower gets hit by a bus the day after closing, the lender has to deal with the land itself and the only people buying land are other developers and people that are doing new construction. There are not nearly as many people doing new construction as there are people flipping already standing properties. The exit for an already existing fix and flip from a lenders perspective is much easier and cleaner than dealing with land. There is a place for land in lending but it usually involves a borrower using cross collateral in order to make a deal make sense.
Ian Walsh
215.839.3271
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