Land Financing

Uncle · Sep 12, 2008

I am looking into buying some land. Not a large chunk but just some land.
My current bank will not loan on just land, they want a permanent home on the land.
Anyone have a source for financing on just land alone?
Brian

John e.c.MI · Sep 12, 2008

In our area Farm Credit Service is making these types of loans.

Anonymous-0 · Sep 12, 2008

Here in Texas, Capital Farm Credit finances farm or timberland.

Mike (WA) · Sep 12, 2008

Another possibility is buying on a Real Estate Contract- This can be attractive to sellers since they usually would have to pay capital gains tax on all the profit if they sell for cash, but would only pay on the portion of profit they receive in each year on a contract, spreading it out over the years, and avoiding getting into a higher tax bracket in the year of sale; Also, you can offer the seller a higher interest rate on the contract (say, 8%) than they could get get if they got cash and then re-invested.

Uncle · Sep 12, 2008

Great, Thanks for the input. I'll pursue this further.
Brian

Anonymous-0 · Sep 12, 2008

They are not the only bank in town find another one as someone will help.

Bob seND · Sep 12, 2008

Farm Credit Services (Ag Country) in our area will loan 50% of the appraised value. That is a bit of a disappointment, as in the recent boom in land prices ~$4000/acre, the appraised value is still in the $1500/acre range. That means they'll loan you $750per acre on a $4000 per acre purchase price. That's at around 6.5% 15-yr fixed loan. My lender recommended a home equity loan instead.
Bob seND

paul · Sep 12, 2008

Credit unions also are a little different, & some do ag loans.

--->Paul

Anonymous-0 · Sep 12, 2008

Any chance for seller financing ?

DR Darren · Sep 12, 2008

try this

www.cgb-afs.com

noncompos · Sep 12, 2008

Even tho you may be nowhere near an area that was part of the housing bubble or builders/developers loans, the fallout from the bubble bursting has every banker puckering up, being conservative...
If your state has a contract type of sale (seller taking a down payment and monthly payments, you get deed when all paid) be sure goes thru atty to protect you from local quirks...
One problem here with contract sales was no executed deed placed in escrow (to be delivered/recorded when cont fully paid) and sellers mentally incompetent to make deed (Consrvatorship required) or died (all heirs must sign deeds, Probate may be required) etc etc.
Or seller may deed, take back mortgage/TD for balance, for the interest, as with a contract.

Mike (WA) · Sep 13, 2008

Thanks for recommending an attorney to do the paperwork. I am a real estate attorney, and have enough business such that I don't need to straighten out disasters to make a good living. But I estimate that I have earned enough fixing deals made "on the hood of a pickup" to put at least one of my kids through college. Generally speaking, if those folks had come to me in the first place to do it right, it would have cost them about 10% of what they ended up paying to fix it later. Not including the cost of sales lost because of the title problem, which of course doesn't show up til you're selling, and the buyer flees the deal.

Land Financing

Uncle

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John e.c.MI

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Anonymous-0

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Mike (WA)

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Uncle

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Anonymous-0

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Bob seND

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paul

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Anonymous-0

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DR Darren

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noncompos

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Mike (WA)

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