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Should I Buy or Lease Land in Hidalgo County?

Posted by admin on August 16, 2021
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If you’re ready to become a landowner, there’s no doubt that you’ve been looking around at properties in your area. When considering your options, you may wonder if you should buy or lease your land.

With over 25 years of experience in helping clients become landowners, Santa Cruz Properties can assist you in finding the right piece of land for your needs.

To begin, let’s define what a land lease is to see whether or not it’s a viable option for you.

Is a Land Lease Worth Your Investment?

Investing in property is a goal that many Americans aspire towards. As a potential landowner, it’s important to have a clear understanding of the options available to you before you make any major decisions.

Also known as a ground lease, a land lease agreement is a situation where a landowner leases the property they own to another party, who will own any improvements made to the land. There are two types of land leases: subordinated and unsubordinated.

In a subordinated land lease, a landowner rents out the land to a tenant for use. This type of land lease is risky because the land becomes collateral when the tenant makes improvements to the property. The construction lender has superior rights to the land over both the landowner and tenant, meaning that they can claim the property in the event that the tenant defaults on their loan.

In an unsubordinated land lease, the landowner retains superior rights to the land as opposed to the lender. In this situation, the landowner retains ownership of the land even if the tenant defaults. Because this option is riskier for lenders, it’s usually more difficult to get financing for an unsubordinated land lease.

If these options don’t sound very appealing to you, then you should consider owner-financed land.

The Benefits of Owner-Financed Land

When compared to a mortgage or bank lending, there are several advantages to owner-financed land. These include:

  • More Flexibility – In an owner-financed land contract, you deal with the owner/seller of the land rather than a bank. The landowner grants you a loan and you can make payments directly to them. Additionally, you have the flexibility to negotiate. This can be beneficial if the down payment for the land is higher than you’re comfortable paying.
  • Bad Credit? No Problem – Buyers who wouldn’t normally qualify for a loan can rest knowing that most owner-finance contracts do not require credit checks. Either way, make sure to verify beforehand whether or not you will be subject to a credit check.
  • Don’t Worry About Bank Fees – As mentioned previously, when you owner-finance land, you avoid having to deal with banks. This means you don’t have to worry about loan arrangement fees, closing fees, broker fees and other hidden costs.
  • Immediate Land Access – In most cases, you can access/use the land right after you’ve signed the contract and paid the initial deposit.

Overall, owner-financing is a popular option for both borrowers and sellers since it gives both parties the ability to work on their own terms.

Are You Interested in Owning Land in Hidalgo County?

Owner-financing is a fantastic option for potential land buyers who don’t qualify for conventional financing.

If you’re ready to make the big move and invest in land, Santa Cruz Properties is here to help you find the perfect plot of land in Edinburg. Our owner-financing options can make it possible for you to build your dreams on the property you choose.

Contact Santa Cruz Properties

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