Land Investment Loans


Qualifying for a land investment loan is not as straightforward as a home loan. However, it is possible with the right knowledge. Find out more here.

Land Investment Loans

Investing in land can be a great investment choice among the property market. The investment in a piece of land means any land without existing buildings. Therefore, if you purchase land with the help of a loan and build properties to sell, or live in and build equity, then it can result in substantial profit.

However, attaining a land investment loan isn’t always easy. Banks are often not interested in speculative investments. Discover more about land investments and how to qualify for a land investment loan here.

The benefits of investing in land can be quite substantial if you know what you are doing.

In comparison to other investments, investing in land often doesn’t require much involvement. You can be as involved as you want. It is possible to purchase vacant land for cheap that hasn’t been rezoned by the government, which will make for tremendous profit. Or, purchase rezoned land for more and sell it to developers.

The most successful stories from land investments are among those that know what they are doing.

Land investments lack competition, as not everyone has tremendous success stories. Therefore, it makes for a great investment option for those with land investors’ knowledge and experience.

It is possible to purchase small areas of land with personal cash. Some investors might be able to afford to pay for their entire price alone. Yet, some investors require extra help, which is where land investment loans come in.

It is possible for wealthy individuals or groups to purchase land with their own money. This could be for personal use or investment purposes.

However, not everyone who wishes to invest in the land is wealthy enough to cover the payment alone. Therefore, is it useful to know about the 10 general categories of potential land investments:

Residential and commercial development land

Residential development land is among the most popular investment choice, which is because of being an easy entryway into land investing. Residential land, as well as commercial land, offers unlimited opportunities. Both of which, can be realigned to meet an investors financial position or time restrictions.

Smaller investors often choose the real estate investment trust (REIT) route as it is typically less expensive and properties can be sold and bought in real-time.

Residential and commercial land development expose investment opportunities into many industries, from residential properties to offices, retail, healthcare, and more. Therefore, there are many more options for investors to choose from when investing in residential or commerical land.

Both residential and commercial land opportunities are not ideal for those who want true land ownership. This is because these investments are often for the land to be purchased and then enjoyed or taken over by others, especially when invested for commercial use.

Row crop and livestock-raising land

Investing in raw land for row crop or farming purposes offer the investor to enjoy the undeveloped land for personal purposes as well as to generate an income.

Owning raw land for faming operations does come with some risks and issues, especially for smaller investors. Raw land for row crop or livestock needs to be heavily financially backed. Small investments will not suffice a large farming operation. Should a small investor want to invest in row crop land, they will need a large upfront capital outlay. Thereafter, fixed costs will likely need to be loaned if the investor does not have enough funds.

To make a row crop land investment financially successful, it is best for those who are wealthy and able to keep up the fixed costs.


Investing in raw land that produces timber is another option, which is often best for those who have great financial backing.

The aim is to protect timber and utilise the raw land for timber production, which can then be sold for business purposes.

Again, this type of land investment does not offer the investor much personal use as it will be used for financial gain.

Other types of raw land investment opportunities for small farming businesses include:

  • -Mineral production land
  • – Vegetable farmland
  • – Vineyards
  • – Orchards
  • – Recreational land

These land investments are ideal for agricultural endevours. They are great investment choices for those with a lot of financial security. Yet, they can be feasible for smaller investors who know what they are doing.

Understanding the costs involved, aside from buying raw land, means to acknowledge there are frequent fixed payments for production, maintenance costs, management, and more. These types of small farming land investments are great for anyone who has an interest in farming operations for profit.

Buying land and owning land is the first step for this type of investment. Yet, there will be other costs involved to make the investment profitable and sustainable.

Whether a land investor wants to buy vacant land for personal use, attain capital growth and financial freedom, or build commercial property, it all boils down to whether or not you qualify for an investment loan. Without a loan, the dream might not be attainable. Before you buy land, you will need to find out if you qualify.

It can be tough to qualify for a land investment loan. However, here is what you need to know about the typical lending criteria:

Understand the deposit requirements

The first step is understanding the deposit requirements. With many banks reducing their loan to value ratio (LVR) to 80%, it means investors will need to a 20% deposit to meet the banks criteria. Without the right deposit, you will need a guarantor. This could make things a lot trickier and may result in not being able to find financial help.

Have genuine savings

Genuine savings equate to savings that have been sitting in a bank account for at least three months. Of the amount you wish to borrow, you will need at least 5% savings. Some banks require at least 10% savings.


For any investors who wishes to borrow 90% or more of loan to value ratio, then you will need to prove you have equity in another residential property to be eligible for a land investment loan.

A good credit history

Having a good credit history is key for hitting the criteria. Having an above average credit score will increase your chances of being approved.

Stable employment

A stable income will increase your eligibility for a land investment loan. It will help you get a good deal from the bank to, as it will prove that you will be able to make repayments.

Before investing in raw land, there are some particular things to look out for.

  • Location and zones – land that is inside of cities and towns are often easier to finance. This is because these zones and the land appreciates quicker. If the land you wish to invest in has a postcode restriction, then it might not be possible to attain a loan.
  • Size and shape – the bigger the land is, the longer it takes to sell. Therefore, banks often prefer smaller pieces of land. Likewise, areas of land in poor condition might take a while to appreciate in value.
  • Infrastructure – easy accessibility and good infrastructure of the land makes it a good choice for land investment.
  • Property history – checking on a piece of land’s history will ensure that you are making a good investment. A cheap piece of land is not always a good investment as it might have environmental issues, which will cost you more money.

How much a person can borrow will depend on various aspects. Those who wish to purchase land and do not want to develop the vacant land can borrow the following:

  • – 60% LVR for commercial farms.
  • – 70% LVR for land blocks over 60 hectares.
  • – 80% LVR for land blocks up to 60 hectares (can be difficult to achieve this).
  • – 95% LVR for land blocks up to 11 hectares (most lenders will not offer more than 80%).

For anyone that wishes to build on the land, they will need to take out a cost plus construction loan. If this is approved, the investor can borrow up to 80% of the land value and cost of construction.

Overall, before deciding to invest in land it is important to know what type of land you desire to buy and sell. Or, you will need to make a sustainable decision if it is for personal property use.

There are some crucial criteria requirements to meet in order to be eligible for a loan. Ensuring that you have a stable income, good credit history, and the right deposit/savings will maximise your chances of getting financial help from a bank. With land investments being speculative for most banks, meeting and/or exceeding the criteria will better your chances of being able to invest in land.

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In addition to your deposit, there will be other upfront fees and charges. Calculate your stamp duty using our simple calculator.

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