1. Depends on how much the bank force sell value is. If the land owner wants to sell his land for RM 1mil. And you are interested to buy. The bank force sell value is RM 800k. And normally the bank only finance 60-70% (lets us assume 70%) of the land value (depends on your land valuation). That means the bank can only loan you  RM560k, and you have to come up the rest with cash.

2. No. It depends on what you are going to do with the land. If you are going to plant oil palm on the land, the interest is around 10%. If you are going to plant vegetables on the land, then the interest is around 4%. 

3. Yes you can, if the town planning dept. approve your conversion of residential land to commercial usage. Car park is under commercial usage.

4. The land that you see are before a big piece of land lets say 1 acre. Then the land owner subdivide the land into 4 pieces with each land 1/4 acres. Then he sold it for a premium price whereby the price is most reasonably build for bungalow.

Can you imagine a 1/4 acre land selling RM 500k, and use to build terrace house?

A rules of thumb for 1 acre land builds around 8 terrace house. 1/4 acre? Build around 2 terrace house? A terrace house with land cost RM 250k, how much would your construction cost be? How much can the general joe&jane afford for a terrace house?

My opinion slightly differs. But let's discuss.

1. Actually banks normally uses OMV (open market value) rather than FSV. It really depends on the class of land. If it is bungalow land, then the LTV would be higher. But if it is unplanted agricultural land, you will be lucky if you get LTV 50%.

2. The most expensive loan I have for my palm oil is at BLR+2.5% (Maybank). The lowest is BLR+0% (XXX Bank). For other government approved agricultural scheme, the rates are quite special. Like the 4% one you have quoted. In fact for some palm oil, if you are a small holder, you might be eligible for the scheme, especially if it is for replanting or some capital.

3. Agree with you on this one but if the car park is not for commercial purposes (ie. you are not collecting money for it), then I believe no one will kacau you if you level up the place.

4. Actually 1 acre can build more than 8 terrace houses. If a terrace house is around 20x70, then your area would be 1,400 sq ft. You can build more than 20 terrace houses in 1 acre depending on your town planner.

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Added on March 14, 2011, 2:55 pm

At current BLR, if your friend interests is as high as 10%+, it would probably mean he has a vacant land, yet to be planted and in the middle of some virgin jungle. These are reasonably high risks and hence the high interests rate.

I don't think the interest rate is dictate by the profitability of a plant. It is just different loan scheme the government has. Eg. for SME, there are SMIDEC loans. These are very low interests loan.