One may ask, “What exactly is raw land?” While there are many types of raw land, raw land is basically undeveloped, unimproved, and unused land. Before purchasing raw land, one should consider what their future plans are with the land. Another question is whether the land will be used to build a home, purchase a lot for retirement, an investment, or an acreage for farming or subdivision. These questions are important to think about to determine whether the raw land will be deemed residential, commercial, recreational, or agricultural.

Land consists of soil, geology, water, and climate. Therefore, it is vital to consider if the land has access to electricity, sewage disposal, trash removal, water, and clean air. Electricity is an important factor to consider, with the presence of a power plant in a reasonable distance from the site of the land. If this is not possible, then extra money will be required to fund cables connected to the power plant across the land for access to electricity. Sewage disposal is another factor to consider as access to public utilities requires a well and septic system. Most land do not have capabilities to support a well and septic system. The distance to the nearest landfill and a collection service for solid waste and trash disposal are also important factors. Another vital component to contemplate on is water availability. Not only is clean water necessary for bathing, cleaning, cooking, toilet usage, and washing, but lakes, rivers, and streams are useful for recreation. Lastly, clean air from dusty roads, foul smells from landfills, smog, free of noise from traffic, airports, and neighboring residences must be considered. The necessities for everyday living, such as telephone service, mail delivery, shopping, police, fire station, hospital and medical services should also be local and accessible as well. All of these factors play a considerable role in obtaining financing for raw land.

Before constructing or purchasing raw land, one should analyze and determine the estimated value of the raw land. Some important points to consider are the site’s size and shape (indicated by width and depth), visibility and accessibility, assembly of parcels, topography, environment (defined by climate, landscape, and air quality), utilities, and improvements to the site. Usually, land with barren rocks are more expensive in costs than flat land to develop. Because of the larger costs and uncertainty involved with the development of raw land and that it produces little income (with little or no buildings to be used as collateral), raw land is more difficult to obtain financing from conventional lenders. Because of this, it is normal for to have a development plan readily available with a set of approved set of blue prints for the lender to justify the loan. For more information on acquiring financing for raw land, please visit our website at: http://www.commercialhardmoneyopc.com.

Mark Hasegawa is a manager at Ocean Pacific Capital, a 30 year old commercial real estate finance company, specializing in hard money financing. You can find out more about Ocean Pacific Capital at http://www.oceanpacificcapital.com.

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