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Tractor Talk Discussion Forum

Re: crash course on land buying (long post)

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SweetFeet

12-12-2012 04:09:17
70.35.103.74



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Rich, (sorry - long, but you asked)

MOST IMPORTANT in my opinion: Get a "fixed rate" loan when you do buy. Those ARMS (adjustable rate mortgages) can kill you and make you lose everything if interest rates take an upward hike. Yes, you will pay a little higher interest to lock in on a fixed rate...but you will always know what your payment will be. No surprises down the road.

Also, when we bought our farm - we made darn sure that we could afford the payments even if we both lost our jobs and one of us could only get work at McDonalds.

BEST ADVICE:
1. Work hard now...save EVERY PENNY that you can. Buy AFTER the big bust when prices are much cheaper.

We bought our farm in the mid 80's when the economy was really bad. (Just 2 years before us, a young couple had bought our farm and paid twice as much as we did. They could never afford the payments - not even the interest payments and lost it after only two years).

2. Stretch your mortgage out as MANY years as possible (so if times get hard you are not obligated to a huge payment)... BUT PAY IT OFF EARLY by having the discipline to make extra payments EVERY MONTH (as much as you possibly can-even if it means you don't eat out, or you don't get satellite TV).

3. Look up, read AND LIVE BY Dave Ramsey's financial advice..."Live like no other now - so tomorrow you can live like no other". In other words, forego much of what your peers do now for enjoyment - so that when you are a little older you can live debt free. Then when your peers have to keep working until age 70 because they cannot afford to quit working - you will be living debt free, can maybe retire much younger than they can... and do things that you enjoy because YOU can afford it.

EDIT: P.S. This does not mean that you can never take a vacation or do anything fun... but it just means you cannot do it until you have saved up a big cushion of cash and gotten rid of as much of your debt as possible.
This post was edited by SweetFeet at 04:33:11 12/12/12 2 times.

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Rich Iowa

12-12-2012 06:18:30
173.30.131.95



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 Re: crash course on land buying (long post) in reply to SweetFeet, 12-12-2012 04:09:17  
SweetFeet
Thank you for the advice. I am saving as much as I can where I can, while also get rid of what debt I do have. I have had numerous vehicle and 4-wheeler loans when I was younger, ALWAYS had the loans paid off early. Thank you for the quote as well, I will save that to serve as a friendly reminder to myself.



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JD Seller

12-12-2012 06:47:38
208.126.196.144



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 Re: crash course on land buying (long post) in reply to Rich Iowa, 12-12-2012 06:18:30  
Rich What Sweetfeet is talking about would be ZERO four wheeler and auto loans!!!! Save up and pay with cash and even then by used. Truthfully a young person showing up at the bank with a good payment history on auto loans was a double edged sword. It does show how you have paid loans off but it also shows that you bought things that could have be bought with saving for a short period.

You are talking about working and being in college. You do not talk about what, if any farming experience, you have. This will be an important consideration when you go for any type of Ag loan. IF you by a smaller tract that gets considered a home loan then the farming history is less important.

Most bankers are not going to be impressed with your education and car loan history when you are talking about buying farm land.

Also like several have posted: Farm land is at generational high prices right now. It is not the time to be buying if you can avoid it. Yes my two sons just bought land but it was right next to them. It may not come up for sale in their working life time again. You do not have that issue. You have said that you do not even know where you are going to be working so you have no idea of where you need to be looking at land.

It could very well not even be in Iowa. You will find out that there is a real wage drag in this state. That is why many of your class mates are going out of state for jobs. That drag can be as high as 50%.

Another thing. DO not buy into the trap of thinking you can buy a piece of land today and divide/sell it in a few years and make a big profit. There is very little of that kind of land here in Iowa. The current market has ten people thinking that buying ground right now.

Maybe you can find some with a ran down home that you could fix up and sell but even that market is touch right now.

I would still recommend working and saving now for a future purchase. You have too many unknown factors to make a major purchase in the next year. You need to get a job and get settled in an then start looking for a place.

A piece of land or a house that you buy before you are financially ready will turn into a nightmare real fast and could sink you.

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Rich Iowa

12-12-2012 19:43:11
173.30.131.95



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 Re: crash course on land buying (long post) in reply to JD Seller, 12-12-2012 06:47:38  
JD Seller- Some of your advice comes off a little harsh which I'm sure is not your intention, and I'm not taking it that way either. I do appreciate your helpful advice.

Those vehicle loans were when I was younger and they were used vehicles, haven't had any loan for a few years now and plan to keep it that way.

I admit I don't have lots when it comes to farming experience. Mostly providing extra labor on the farms of friend's parents, cousin's farms, and for a few years I was baling a few acres of hay by myself with less than quality equipment. Not enough experience to amount to much I know.

My degree is in criminal justice and I'm also working on getting my FF1 and EMT certifications through the vol. fire department I'm on. Public safety can be a very good paying stable career ONCE you get in it.

I agree land is extremely high priced right now and at some point these prices will not be able to sustain themselves. I don't see myself moving out of state, I like Iowa. When I do buy land I plan to live the rest of my days there. I have no intention of dividing/selling small lots, I don't want lots of folks living close by.

Like lots of others who posted on this you say I should hold off until more of the variables are figured out. I agree and that's what I'll do. Thanks again.

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Tony Vidlak

12-12-2012 04:23:20
174.74.113.200



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 Re: crash course on land buying (long post) in reply to SweetFeet, 12-12-2012 04:09:17  
Great advice that was the same advice given to me. Our place is paid for and we are completely debt free we also bought in the mid 80s. We took a fixed rate mortgage stretched it over 30 years and was able to pay it off in 12.
Tony



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SweetFeet

12-12-2012 04:30:49
70.35.103.74



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 Re: crash course on land buying (long post) in reply to Tony Vidlak, 12-12-2012 04:23:20  
Tony,

Same with us. We would've had it paid several years ago... but about 5 years we tiled the farm in order to rent it out - because renters need to be able to show up with equipment and get their work done in day. But we will get to debt free in a few short years anyway.



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