This section is from the book "Practical Real Estate Methods For Broker, Operator & Owner", by Thirty Experts. Also available from Amazon: Practical Real Estate Methods for Broker, Operator, Owner.
First, where land is owned by an operator and sold by him to a builder at a more or less material profit. To induce the builder to pay this profit a loan is made to him liberal enough very often to allow him, with little or no capital, to carry through a substantial operation. The methods of making a loan of this character are similar to those described below under Plan II. Under this first plan, the loans are generally more liberal. Moreover, when finally a permanent loan has been secured on the completed building, the operator is usually willing or obliged to take a second mortgage unless the permanent loan is sufficient to pay off his building loan mortgage claim. The amount of loan, and its terms, made by an operator is therefore governed materially by the profit he makes on the sale of his land, and cannot be compared to the loans made by building loan companies to builders who own their land.