Land Entitlement Financing

About Land Entitlement Financing

Land entitlement financing can be complicated but worth it especially in real estate ventures. It may be complicated at first but once you’ve understand the different aspects involved, this complex matter can be simplified. Of course, there is no easy method to do this. You have to take some time researching, seek some words of wisdoms from experts and develop some strategies on how to bring out a land’s potential to acquire profit. You can even sell the land once it is entitled for a higher value depending on the market’s demand. And that is the purpose of this article. To help you understand in a simple manner the different details about land entitlement and how to apply for financial aid to immediately own a land property.

Land entitlement

In legal terms, land entitlement is a method to obtain rights and privileges to develop a certain land. Keep in mind that this is a legal agreement. Hence, there will be some limitations involved. Furthermore, there may be instances that a part of the land should be donated to the city to acquire utility entitlement. Typically, the land entitlement process would take 6 months to 2 years depending on the size of the land and projected purpose.

There are some considerations involved in land entitlement. By knowing these considerations, you can research ahead of time before applying for an entitlement. Typically, the local government will review the traffic situations and environmental risks of your project. Furthermore, what would the community say about your project? A detailed report and description of your project is a crucial part of the approval process. With that being said, you will need some professional help from engineers, architects, surveyors, lawyers and consultants. For this reason, you’ll definitely need land entitlement financing for faster approval and development.

Bridge Financing

Bridge financing is a temporary financial support used in various real estate activities. This is the most commonly used land entitlement financing. To fully define this type of financial aid, it can only be used for short period of time. For example, a public land auction has started. The problem is you don’t have enough funds for it. Your option would be to apply for both bridge financing and mortgage. Bridge financing would be easily approved. Once you’ve obtained your mortgage or loan, you have to repay it immediately. Typically, you only have 60 days to repay bridge financing.

This is a bit tricky and risky if you don’t know the mechanics involved. You may even end up with losses instead of profits. Thus, before engaging in this process, you should consult expert opinions. Through them, you will be able to assess the estimated time period needed for land entitlement and cash inflow.

Overview

As you can observe the success of your land entitlement venture would greatly depend on development experts which you will hire during the whole process. First timers you would find this complicated. But, as mentioned beforehand, once you’ve determined the right course of action, it would be a lot simpler. Always keep in mind that no matter what strategy you apply, this can still take some time and be very expensive. Nonetheless, financially speaking, you can always rely on land entitlement financing for down payment and develop the land’s potential to acquire profits.