An email from Wayne Ristine wants to know: “Are there any lenders that understand lending or specialize in lending to purchase an airpark property?”
My response: I don’t know of any lender specializing in airpark properties, but there are firms that can help you. If you’ll share the general area you are looking at perhaps I can help you find a lender. Additionally, by pointing out the region you are looking at some lenders in that area as well as other airpark residents are very likely to come forward with additional information for you. If anyone has suggestions, please post them in the comments section below.
5 replies on “Question: Any lenders specializing in airpark property?”
Two difficulties to be overcome here.
1) Appraiser MUST be familiar with air park properties or you will get a uselessly low number. We just had one done and the appraiser (who is now by law appointed by the LENDER, you can’t pick someone yourself with the appropriate experience or brains) gave us an absurdly low number, saying “similar properties are available in subdivision (X) seven miles away at lower prices and there are a lot of short sale and foreclosure properties there”. What’s wrong here? Subdivision X isn’t an airport community, so it is in NO way comparable other than “there are houses there”, and there are not many airport properties that are in foreclosure/short sale either.
2) The bank will lend against the FMV number on the appraisal – and vacant land loans are now at a whopping 40% loan to value – if the airport lot of your dreams costs $100K, you’ll need $60K down. (LTV in Florida, YMMV). Our “construction cost” on the appraisal was TWICE the “fair market value”, and the bank used the FMV. Now let me ask you – would you spend $750,000 building something with a net FMV of only $350,000? Of course not, but remember, the appraiser and the bank only look at the raw numbers – the words “airport property” mean nothing to them, and don’t add value. (By the way, we turned the bank down and didn’t accept their “loan offer”.)
In my opinion as an ex-finance guy, this situation isn’t going to change until the general economy improves significantly. Eventually, the FMV of properties in general will recover, and then we’ll be able to get “decent” loans on our specialized airport properties. Banks and appraisers didn’t understand any of this when times were good, they don’t understand it now, and they are SCARED as well – financing of ANY kind is tough to get for ANYTHING, and on “unusual” properties, it is even tougher.
If you are buying a house that is already built, and can get 70% LTV, which will need to be on a *fully* documented loan (which includes a note from you mother, signed in blood), I’d say grab it – it will be VERY difficult to do better for the next two years or so.
Wish I could be more encouraging – I won’t say it is impossible, but it IS going to be tough. You might also consider seller financing – and make sure your lawyer is in the loop at the very start if you do this!
Best Regards,
Mike Arman (who was lucky enough to do this when times were good and things were MUCH easier)
My wife and I purchased a lot and built at Holley Mountain in Arkansas. The local banks were lined up to issue us a loan. That was two years ago, but the bank we went with tells me they are still loaning money for properties at Holley Mountain. Let me know if you need additional info.
Milton
Ditto what Mike said above. I am a real estate developer/pilot and I can’t get a lender to finance a Walgreens (with a signed, above market lease)on a major highway in Las Vegas. The big lender’s (BofA, Wells, etc) say it is too small for them. The snall lenders want me to pledge everything I, my kids and my grandkids own. The lending industry is upside down now. Be patient.
Any assistance in the southern California are, say Santa Paula?
We’ve sold a few lots in 2009 and all were finaced with Farm Credit of Tenn.
Contact we work with is Mike Reed (423-493-2196), he’s good to work with and understands the residental airpark business. He recently did a contruction loan and land purchase, which seems dificult these days.
Jeff – Pilot/Developer