Land development represents the foundation of real estate value creation, transforming raw or underutilized land into buildable parcels ready for construction. This process requires significant capital investment over extended timelines, with returns realized only after successful completion of entitlements, infrastructure installation, and lot sales or building construction. Hard money loans provide land developers with acquisition and development financing that recognizes the unique risks and rewards of ground-up development projects.
The Scottsdale area presents diverse land development opportunities, from infill lots in established neighborhoods to larger parcels on the metropolitan fringe. Each development project moves through distinct phases, land acquisition, entitlement and permitting, infrastructure installation, and final platting, each with specific capital requirements and risk profiles. Hard money lenders experienced in development financing understand these phases and structure loans that align capital availability with project milestones. For developers, this phased approach matches financing costs with value creation, improving project economics and supporting successful completion.
How We Help Land Development Projects
Hard money land loans support developers across the full spectrum of development activities. Land acquisition financing enables developers to secure entitled or unentitled parcels without the immediate cash requirements of all-cash purchases. This leverage allows developers to pursue larger projects, maintain liquidity for other investments, and compete effectively against well-capitalized buyers. Loan terms recognize the development timeline, with structures that accommodate the extended periods often required to complete entitlement and infrastructure work.
Entitlement financing covers the costs of obtaining necessary approvals for development, including zoning changes, platting, environmental clearances, and permit fees. These soft costs can represent substantial investment before any physical improvements begin, and many traditional lenders are unwilling to finance this preliminary phase. Hard money fills this gap, providing capital that allows developers to advance projects through the often lengthy and expensive entitlement process.
Infrastructure development loans fund the installation of roads, utilities, drainage, and other improvements necessary to create buildable lots. These horizontal construction projects require specialized financing that recognizes the different risk profile of infrastructure work versus vertical construction. Hard money lenders structure these loans with draw schedules tied to infrastructure completion milestones, ensuring funds are available as contractors complete grading, utility installation, paving, and other improvement work.
Land banking and speculative land acquisition also benefit from hard money financing. Developers identifying parcels with future development potential can secure options or purchase properties before full entitlement, positioning for future projects when market conditions or infrastructure availability improves. Hard money provides the holding period financing that makes land banking strategies viable.
Challenges We Solve
Land developers face financing challenges that reflect the extended timelines and regulatory uncertainties inherent in development projects. Traditional lenders rarely provide acquisition financing for unentitled land, requiring developers to tie up substantial capital before any revenue generation begins. The entitlement process can extend months or years with uncertain outcomes, making it difficult to secure financing that accommodates these timelines. Infrastructure construction requires capital disbursement before lot sales generate revenue, creating cash flow challenges throughout the development period.
Regulatory risks create additional financing obstacles. Zoning changes may be denied, environmental issues may emerge, or infrastructure capacity may prove insufficient, all potentially derailing projects after significant investment. Market conditions may shift during the development period, affecting lot values and absorption rates. Traditional lenders often impose strict requirements for pre-sales, commitments from builders, or other risk mitigation measures that limit development flexibility. The specialized nature of land development means many lenders lack the expertise to evaluate development projects effectively.
Our Approach
Our land development lending is built on deep understanding of the development process from initial acquisition through final lot sales. We evaluate projects based on market demand, location fundamentals, entitlement probability, and your track record with similar developments. We recognize that successful development requires patience, flexibility, and the ability to navigate complex regulatory environments.
We structure development loans with phase-based funding that aligns capital availability with project milestones and value creation. This approach minimizes interest costs during preliminary phases while ensuring adequate funding for infrastructure construction. We maintain regular communication throughout the development period, understanding that market conditions, regulatory requirements, and project details may evolve. Our goal is supporting successful project completion rather than imposing rigid requirements that don't reflect development realities.
Local Market Expertise
Scottsdale's development market includes infill opportunities in built-out areas as well as peripheral land in surrounding communities. The city's mature development pattern creates value-add opportunities through redevelopment and densification, while areas to the north and east offer greenfield development potential. Municipalities throughout the Phoenix metro area, including Phoenix, Mesa, Chandler, and Gilbert, each present distinct development regulations and opportunities.
Frequently Asked Questions
Do you finance raw land without entitlements?
Yes, we provide financing for unentitled land, though terms typically require more significant equity investment than entitled parcels. We evaluate the property's zoning potential, surrounding land uses, and development trends to assess entitlement probability. These loans work best for experienced developers with demonstrated success obtaining entitlements in similar markets.
How long are the loan terms for land development projects?
Development loan terms typically range from 12 to 36 months, depending on the project scope and timeline. Single-lot infill projects may complete within a year, while larger subdivisions with full infrastructure may require two to three years. We structure terms to accommodate realistic project timelines with appropriate extension options for entitlement or construction delays.
What loan-to-value ratios do you offer for land acquisition?
Loan-to-value ratios for land depend on entitlement status, location, and your development experience. Entitled land in strong locations may qualify for up to 60% loan-to-value, while unentitled or more speculative land typically requires 40-50% equity. Larger equity requirements reflect the higher risk and extended timelines of land development compared to improved properties.
Can I get a single loan for land acquisition and infrastructure development?
Yes, we can structure integrated loans covering both land acquisition and horizontal construction. These loans typically include acquisition funding at closing followed by construction draws as infrastructure work progresses. This consolidation simplifies financing and reduces overall transaction costs compared to separate acquisition and construction loans.
What happens if entitlements are denied or delayed?
We evaluate entitlement risk during our initial underwriting and require realistic contingency planning. If entitlements are delayed, we work with you to extend loan terms as appropriate. If entitlements are denied, we evaluate alternative exit strategies such as resale at a lower value or different use. Communication throughout the entitlement process helps us address issues proactively.