No income, no easy comps
Raw and entitled land produce no cash flow, and comparable sales are often thin or dated. Lenders compensate with lower leverage and shorter terms, pricing the uncertainty into the deal.
Entitlement status drives everything
Raw ground, land under entitlement application, and fully platted and approved land are three different risk profiles to a lender, even at the same price.
- Raw/unentitled: lowest leverage, shortest terms, highest rate
- Entitlement in process: lender wants a realistic timeline and local knowledge
- Fully entitled/platted: closest to a 'financeable' asset, still not income-producing
The exit is the underwrite
Because land carries no income to service debt, lenders focus heavily on your exit: sale to a builder, vertical construction takeout, or lot sales. A vague exit is the number one reason land requests get declined.
Sponsor carry capacity
Lenders want to see that you (or your investors) can carry interest payments and taxes if the timeline slips, since land rarely throws off income to cover its own debt service.
How we position land deals
We build a feasibility narrative with the entitlement timeline, comps, and exit clearly laid out before approaching lenders — this alone moves many land requests from decline to approval.