Navigating Financing Options for Raw Land Purchases on the Big Island of Hawaii
If you've been eyeing a piece of raw land on the Big Island of Hawaii but find yourself short on the funds to make the entire purchase outright, you've come to the right place. This guide will help you better understand the ins and outs of land financing. Challenges of Financing Raw Land Purchasing raw land is a unique financial endeavor, one that differs significantly from securing a traditional mortgage. The hard truth is that raw land doesn't provide the same level of collateral as a house, making it a less secure investment for lenders. This translates to fewer financing options and usually involves higher down payments and interest rates, often coupled with shorter loan terms. High Down Payments and Interest RatesLenders typically demand at least a 30 to 40 percent down payment of the purchase price. Due to the perceived high risk involved in land loans, interest rates are also generally higher. Short Loan TermsWith land loans, expect terms of just two to three years, featuring interest-only payments. At the term's end, options include paying off the loan or refinancing it with a construction loan if building plans are in your future. Credit and Zoning RequirementsStrong credit is a must, with lenders expecting scores around 720 or higher, plus proof of stable income. Additionally, Hawaii's unique zoning laws, such as agricultural zoning, can further complicate financing efforts. Potential Financing Options Despite the challenges, several viable financing options exist for raw land purchases on the Big Island. Local Credit Unions and Banks Institutions like Big Island Federal Credit Union and First Hawaiian Bank may offer vacant land loans up to 90% of appraised value, often with interest-only payments. These loans can sometimes convert into construction loans, offering future flexibility. Agricultural Loans If purchasing agricultural property, consider lenders like American Ag Credit. They provide loans with terms reminiscent of typical mortgages but require the land to be used for actual farming activities. Construction Loans Planning to build right away? A construction loan might suit your needs. These loans involve interest-only payments during construction and eventually convert into traditional mortgages upon project completion. However, detailed plans, permits, and a licensed contractor are necessary, adding complexity. Seller Financing Occasionally, sellers offer to finance the purchase themselves. While this can be an option, expect substantial down payments, higher interest rates, and shorter loan terms. Creative Financing My special term, "creative financing," includes options like a home equity line of credit from property you already own, borrowing from friends or family, or drawing from retirement accounts to become a cash buyer. Conclusion Before diving into the financing process, consider your future plans for the land, whether immediate construction, future development, or another purpose. It's crucial to choose a financing method that aligns with your overall goals. While securing land in Hawaii presents unique challenges, it's certainly achievable with preparation and professional guidance. Whether you're opting for a local credit union loan, a construction loan, or exploring creative financing avenues, a suitable solution can likely be found. Remember, always conduct thorough research and consult with licensed professionals before making major financial decisions. If you have any questions about financing raw land on the Big Island of Hawaii, feel free to reach out to our team. Aloha!
Understanding SSPP Charges When Buying Land on the Big Island
Aloha folks! If you've been eyeing a piece of land to buy on the Big Island, you may have come across an unfamiliar term: SSPP, or Special Subdivision Project Provision. We will break down what SSPP is, why it matters, and how it could impact your property purchase. Let's dive in. What is SSPP? The SSPP program is managed by HELCO, the Hawaiian Electric Light Company. This program shares the cost of extending electrical infrastructure to new subdivisions. When HELCO extends power lines to areas without electricity—and there are a lot of really remote areas on this island—these costs are divided among the properties that benefit from the extension. Each property owner pays a fee known as an SSPP charge to help cover these expenses. Why Are SSPP Charges Important? Understanding SSPP charges is crucial when buying vacant land because these fees can significantly impact your budget. Before purchasing a property, you need to check if it falls under an SSPP area and, if so, how much the charge is. These charges are typically assigned when the subdivision is created and remain with the property until paid off, regardless of any ownership changes. Factors Affecting SSPP Charges: SSPP charges can vary widely depending on several factors: The complexity of the property. The cost of the project. The number of lots that are served. The distance from the lot to the power source. On the Big Island, particularly in areas like the Puna District on the east side, SSPP fees can range from $2,000 up to $8,000 or even $10,000 or more. Planning for SSPP Costs: It's essential to account for these costs early because you want to avoid any surprises down the line. To determine if a property has SSPP charges, you'll need the property's tax map key number or TMK number. With this information, you can contact HELCO or check through your local REALTOR. HELCO provides an online form to request power availability and SSPP information. Financing Options for SSPP Charges: HELCO even offers some financing options for these charges. If the total amount is under $2,000, it usually just needs to be paid in a lump sum. But for higher amounts, you can often arrange a payment plan, making it more manageable for you to cover these costs over time. Conclusion: When buying land on the Big Island, always inquire about SSPP charges. This due diligence ensures you understand all the costs involved and helps you make an informed decision. As always, working with a knowledgeable local agent will make navigating all these details a whole heck of a lot smoother. If you have any questions about SSPP, or buying on Big Island, reach out to our team. CONTACT US
Love and Real Estate: Market Update
2 Girls in the Market - Episode 14: Market Update Welcome back, everyone! Amber Haley and Rebekah Daniels are thrilled to kick off a second season of "2 Girls in the Market" podcast, where dating meets real estate. In this episode, they share amusing, insightful, and sometimes cringeworthy experiences as they navigate both markets. New Beginnings Amber spent her break balancing her personal life and house hunt, while Rebekah enjoyed outdoor adventures and family reunions. Their resilience shines as they rejoin the podcast world, aligning with their mission to empower women in real estate and life. First Impressions Matter Drawing parallels between real estate and dating profiles, both hosts highlight the importance of making a great first impression. Whether it's a captivating listing photo or an engaging profile picture, stopping the scroll is crucial. Insights from the Dating App World Amber shares fascinating dating app statistics, from gender ratios to swiping behaviors. For instance, Tinder men significantly outnumber women, creating unique matching dynamics. Rebekah adds her own experiences, emphasizing the need for authenticity and recent photos to avoid catfishing scenarios. Authentic Profiles and Self-Worth Whether in real estate or relationships, Amber and Rebekah stress the importance of being upfront about what you're looking for. Highlight personal interests, attract suitable matches, and always stay true to your values. They remind listeners that self-worth is paramount, encouraging them to walk away from situations that don’t serve them. Looking Ahead The upcoming episodes bring promises exciting topics, focusing on critical issues affecting women in real estate and life. Amber and Rebekah are committed to empowering their listeners, pushing important conversations, and having plenty of fun. Enjoyed the episode? We’d love to hear from you! Whether you're a real estate agent interested in connecting, or just a "Girl in the Market" that wants to share your own stories for our podcast, reach out to us. Contact Us: 2girlsinthemarket@gmail.com Listen to the Pod: https://2girlsinthemarket.buzzsprout.com 2GITM IG: https://www.instagram.com/2girlsinthemarket 2GITM TikTok: https://www.tiktok.com/@2girlsinthemarket 2GITM YouTube: https://www.youtube.com/@2GirlsintheMarket/ Amber's IG: https://www.instagram.com/amberhaley.hawaii Amber's TikTok: https://www.tiktok.com/@amberhaley.hawaii Till next time, love and laughter from 2GITM!
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