I work with banks on this stuff all day long as an appraiser and here are some facts. Banks don't like non-owner occupied properties. They have a higher default rate. Since your property does not have a home and apparently has little to no agricultural value and negligible income potential (if even legal) from renting the shop space, it would be very difficult to assign value beyond bare land to it. Basically, you're right, the shop won't add that much value (if any). Others are correct on the loan size being too small. Most my clients won't touch anything under $50,000. Private money is an option but you'll pay ridiculously high interest rates. I have mixed emotions about debt so I'll state my bias and situation up front. I'm self-employed with income that can vary between 40k and 180k so budgeting is difficult. For that reason debt makes me nervous. My wife and I spent the first 10 years of our marriage not eating out, not going to the movies, doing our own lawn and not buying new stuff. The reward was paying off a 30 year mortgage in under 10 years. Now, we just did a complete exterior remodel with the addition of a new 1800sf garage and we used a HELOC to finance about half of it. The reason is that with an after tax rate of about 3.25% it's very cheap money. Also this year my income is closer to the lower end of that range than the upper and labor is very cheap right now. I'd recommend a HELOC if you have property with equity. Since we had a 200k+ home with no debt, getting a line of credit took about 2 hours of time and there was no cost involved. The more stable your income is and the better your debt to income and equity ratio currently is the more enticing (and safer) financing your project is at these low rates.
