Key Takeaways
- Essential land contract contingencies: environmental, geotechnical, utility, zoning, and title — with 60-120 day due diligence periods.
- Option agreements limit capital at risk to the option fee (2-5%) while pursuing entitlements and due diligence.
- Keep land financing below 50% LTV and maintain 24 months of carrying cost reserves.
- Risk sharing through partnerships, JVs, and land funds distributes risk across multiple parties.
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Test Your Knowledge
1.What is the recommended maximum LTV for land financing?
2.How many months of carrying cost reserves should a land investor maintain?
3.What is the typical cost range for an option fee on a land purchase?