Buying some woods. How do I finance?

[MJR]

This is how I bought mine: My family had rights to hunt this farm and so did a second group. Our groups just butted heads. I had enough and went to the owners nicely and asked if they were interested in selling. Come to find out they were and wanted to hold the note. They wanted the steady monthly income. The rest is history. Don’t give up. Call your local Farm Service Agency, USDA, and Forester and ask if they know anyone thinking of selling. Good things can happen when people talk. Put an add in the local paper. Good luck.

 

[Taxmantoo]

Vacant land and investment property interest rates are always higher than principal residence rates.

If you have enough equity in your home to cover the land and still be 80% total loan to value, get a HEL. As an added bonus, you can deduct the interest on your taxes.

How does a 60 month loan at 3.99% sound?
https://www.penfed.org/productsAndRates/mortgages/homeEquity.asp#rates

 

[johnnylabguy]

Thanks for the input guys. Dinger, I looked up Greenstone and it looks like they only service Michigan and Wisconsin. I'm in Ohio. Have to make a phone call to be sure. Checked out PenFed too Taxman. I like those rates but it seems you have to have a military affiliation to sign up.

I'm still looking. I talked to the property owner on my way home tonight and he got the greenlight from his better half to sell. I just need the right down payment and interest rate to keep mine happy and find a way to get her kitchen remodel done too!(It does need done. The rest of the house is updated, but our kitchen is left. Full gut job with windows, new wiring and cabinets. That's the hold up in this deal!)

One more question for anyone living in the Central Ohio area(Mansfield). Is 2500 an acre sound like a fair price to you? Every other farmer I've talked to in my area was much higher(one factor is that it's already been logged recently I'm sure).

Thanks for the help all.

 

[dingeryote]

Thanks for the input guys. Dinger, I looked up Greenstone and it looks like they only service Michigan and Wisconsin. I'm in Ohio. Have to make a phone call to be sure. Checked out PenFed too Taxman. I like those rates but it seems you have to have a military affiliation to sign up.

I'm still looking. I talked to the property owner on my way home tonight and he got the greenlight from his better half to sell. I just need the right down payment and interest rate to keep mine happy and find a way to get her kitchen remodel done too!(It does need done. The rest of the house is updated, but our kitchen is left. Full gut job with windows, new wiring and cabinets. That's the hold up in this deal!)

One more question for anyone living in the Central Ohio area(Mansfield). Is 2500 an acre sound like a fair price to you? Every other farmer I've talked to in my area was much higher(one factor is that it's already been logged recently I'm sure).

Thanks for the help all.

Crap!

I was afraid of that. I thought Greenstone worked in Ohio as well. My bust.


Cleared, drained, and irrigated ground is going to be much higher than uncleared and wooded low ground.
At least untill you get it cleared and drained.

The value of Conservation programs is that they somewhat offset the losses.


Stay safe!
Dingeryote

 

[ryan_marine]

2500/ac in not bad in my book. Right now I am seeing prices in the 3K range for land with out any buildings depending on location. I am only 30mi south of mansfield. I would say grab it up.

Ray

 

[projectsho89]

Did you ask the owner if he would carry back the note with a suitable down payment (20% or so) with terms that make both of you happy?

This can be the easiest way of financing a difficult-to-finance purchase.

I bought my 5-acre building lot that way back in '03. Drove up to the old owner's house in my 00 Navigator with a 20% check in my pocket, a copy of my credit report, and a sales pitch. He bit so I got a local RE lawyer to draw up a purchase contract and we closed the deal in 30 days. Paid him off a year later when I got my construction loan to build my house. Of course, I had to get rid of that Navigator shortly afterward....

 

[johnnylabguy]

Ladies and Gentlemen, we have a breakthrough!

I called Farm Credit Services (who I talked to the other day) to get the number of the Ag Credit Services that handles the properties in the county I'm looking at(Left the number at work!). I was told by someone there the other day that If I bought land in Crawford County I would have to go thru Ag Credit Services. Well the receptionist girl asked why I needed their number and I tell her. She says do you live in Richland county(Yes,I do.) Well than we can help you out she says and then refers me to the man who shoots me these numbers:

15 yr. fixed loan at 5.65% interest rate with 25% down payment!

Woo Hoo! I'm IN!

He also further explained that depending on my credit score(very good) we could possibly go as low as 15% down payment. I'm shooting for 20 percent to keep my payment where I want it. Now I have a lot of details to hash out with the owner but this is starting to look like its going to happen!

The lovely wife has even agreed to postpone the kitchen remodel a bit! (I did let her take a quick nap while I cooked dinner for the kids first!)

Keepin my fingers crossed!

 

[Circle B MN]

Good deal...

I have a couple of "raw land" properties. Both were bought by contract for deed by the owner. My land in Virginia has done very well investment wise. It is near Charlottesville, and I bought it in '93 for $800 an acre. Tax value on it now is $8500 and acre. All hardwood old growth. One day I'll have to get back there.

 

[johnnylabguy]

Good deal...

I have a couple of "raw land" properties. Both were bought by contract for deed by the owner. My land in Virginia has done very well investment wise. It is near Charlottesville, and I bought it in '93 for $800 an acre. Tax value on it now is $8500 and acre. All hardwood old growth. One day I'll have to get back there.

Don't normally use the emoticons but:jawdrop:!!! Nicely done! I think I'd live closer than minnesota! LOL!

 

[MJR]

I bought my land for $21,000 for 89 acres. It is located on non maintained roads with no power. The owner held the note. I put 40 tillable into a CRP program in which the gov’t paid ½ the cost of my seedlings and half of the planting. (26,000 seedlings) I did the planting and land prep so I got to keep all that money which made up for the seedlings. Next the gov’t paid me a rental fee $1300 for 15 years. Once the seedlings were planted the taxes went down (abandon farm land). Every year I mill off (My mighty LL24) some hard wood to cover the tax bills. I have very little of my own money involved. If you are willing to do some work and talk to the people at the USDA office there are some very good deals out there.

 

[logbutcher]

Congradulations on the financing.....but,

Reminder: know the land before you own.

1. Title search= who owns and owned what, and abutters.

2. Professional inspection--possible pollutants, dumping, use, resources.

3. Survey: know what exactly you will own. Walk the lines.

 

[LHJim]

looks like I am late to the game

anyway here goes:

2 years ago I bought almost 88ac in southern VA...not too far from Leesville Dam and SML. The taxes I pay on this property is $350/yr and I have land use taxes. I pay 50% less because my property is a timbered property. 60 ac is Loblolly Pine (7.5 years old now) and 27ac is oak/pine/old growth. I use it as hunting property and land investment. I paid 66% what the asking price was...and because I got a good deal and Farm Credit (who financed my purchase) did the appraisal or hired it to be appraised to be done...my offer was what it was worth. I only needed 15% down and my rate is 7.35% for 20 years. They have higher rate because they pay a patronage fund every spring (I got $1275 last month) and this patronage refund reduces your true borrowing rate by 1.2% or a bit more. So my true rate is a tad over 6%.

I expect to get stumpage income when the loblolly pine trees are 15 years old...and again stumpage when the trees are 25 years old. Finally when the trees are 30 years old I can get sawtimber income.

I figured if I paid extra on it and pay it off in 10 years...I can always get a loan on my land if I need money. Not only that if I pay it down faster than the full ammoritization term...I save interest money.

Recreational land is a good investment however if you over pay for a property...you are not getting a good investment. Don't pay for land that is worth $$.$$ in 15 years...pay what it is worth NOW.

I noticed a farm credit in Northern KY I think and they have rates that are lower than my rate by about 1.5% but they pay no patronage refund. So I think all in all it comes out about even.

Good luck and enjoy what you can now cuz you are in the minority few who own land.

 

[Dalmatian90]

I fully support mutuals / co-operatives ... but this line made me snicker:

They have higher rate because they pay a patronage fund every spring

And commercial banks have lower rates because they don't pay dividends?

I do agree that, as long as the co-op is well managed and returns a patronage discount each year, it does cut your effective interest rate down.

 

[ryan_marine]

2500/ac in not bad in my book. Right now I am seeing prices in the 3K range for land with out any buildings depending on location. I am only 30mi south of mansfield. I would say grab it up.

Ray

I watched a farm sell today that had 80 ac. 50 tilliable 25 woods. Price was 3500 per ac. I logged that farm 2 years ago. Good healthy woods but will have to wait another 8-10 years till a good harvest.

Ray

 

[johnnylabguy]

If you dream it, it will happen...

Just had to post another update because I'm so excited...

Officially signed the papers to get my own woodlot/possible homesite/hunting grounds/place to grow crops and heat my house when the government falls apart/ teach my children be outdoorsman/investment property!

I work two jobs and my wife gave up a fancy kitchen remodel so we can do this. In the long run it will be well worth it for the short run sacrifices. It needs a lot of stewardship on my part to get it to the perfect property but I'm looking forward to the challenge. The price was right(thanks to a close family friend in part) to make it happen sooner than I thought but honestly researching,asking, hard work and setting goals is what really made it happen. Isn't that what made this country what it is all about?

Thanks to all of you for your info and encouragement. It really helped! Hopefully I can repay you with a GTG in the near future! I'll let you flog every saw I own too!

 

[headleyj]

Just had to post another update because I'm so excited...

Officially signed the papers to get my own woodlot/possible homesite/hunting grounds/place to grow crops and heat my house when the government falls apart/ teach my children be outdoorsman/investment property!

I work two jobs and my wife gave up a fancy kitchen remodel so we can do this. In the long run it will be well worth it for the short run sacrifices. It needs a lot of stewardship on my part to get it to the perfect property but I'm looking forward to the challenge. The price was right(thanks to a close family friend in part) to make it happen sooner than I thought but honestly researching,asking, hard work and setting goals is what really made it happen. Isn't that what made this country what it is all about?

Thanks to all of you for your info and encouragement. It really helped! Hopefully I can repay you with a GTG in the near future! I'll let you flog every saw I own too!

Congrats - that's awesome news.

 

[kd460]

Yes congrats, this was a nice thread to read. Happy ending and I learned a few things. Thanks guys!