Buying Land For Development With No Money Down By Khoo BT At Isnare.com Ezine Articles

There are many books in the market and many websites in the cyberspace that advocate the purchase of property with no money down. While it is possible to purchase property with no money down in many countries, it is rather difficult to do so in Malaysia as the maximum margin of financing offered by the financial institution for the purchase of residential property is 95% of the purchase price and the maximum margin of financing for purchase of land for development is only in the region of 60% to 80% depending on whether the borrower has track record or has good relationship and good standing with the financial institution.

Most often than not, those who intend to purchase a piece of land for development purposes need to fork out substantial amount of cash as down payment let alone to purchase with no money down.

However the developer can always strike a deal with land owner to jointly develop the land in a joint-venture deal where the land owner provide the land for development and the developer bear all other expenses in connection with the development of the land. Upon completion of development, the land owner is then compensated by the developer a certain percentage of the completed units which can range from 20% to 50% depending on the value of the land. In such a joint-venture development, the land owner is normally compensated a value higher than the amount that the land owner will get if he were to sell his land, thereby effectively sharing the profit of the developer.

The developer in effect sacrifice part of their profit to compensate the land owner but the developer is spared from forking out a lot of cash for down payment of the land as well as spared from paying holding cost of the land. As the units are only distributed to the land owner upon completion of the development, the developer effectively only pays the land owner upon completion of development. Therefore effectively buying land for development with no money down.

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