What are potential risks to lending the equity from my land to another investor? Prof

[sandrakayinc]

An investor has come to me asking to use the equity from land I own. I own this land free and clear and the investor is going to get a 12-24 month construction loan. At the end of this time frame the lien is removed from my land and I will be paid a fee for lending the equity.

What are the potential risks of losing this land if something falls through with his construction loan?
I am new to development, Is this a common practice in larger developments?

[disneysteve]

If I understand what you're saying, this investor wants you to put up your property as collateral for his loan. That sounds to me like the equivalent of you co-signing. If he doesn't pay, you're on the hook for the money and the lender can come after your property to get their money back.

Why would you possibly want to do that?

[Petunia 100]

Why would you want to risk your property? I'd say "no thanks" to this deal.

[mrpaseo]

They both pretty much it the nail on the head, someone else is asking you to take their risk. Not worth it (Even if they are family).

[MaraJadeC]

An investor has come to me asking to use the equity from land I own. I own this land free and clear and the investor is going to get a 12-24 month construction loan. At the end of this time frame the lien is removed from my land and I will be paid a fee for lending the equity.

What are the potential risks of losing this land if something falls through with his construction loan?
I am new to development, Is this a common practice in larger developments?

Hello, you may already know by now that the fee you'll get out from this arrangement is definitely not worth the risk. It is best you hold on to your property.