similar to another thread going on here but I have some questions about purchasing a property next to my farm. My farm is a rough 50 acres of timber. One of the farms I go through to get to my farm is being offered to me. It's 84 acres with a cabin with water and electric. And a whole lot of prime deer hunting land and some pasture for cattle etc. since I'd love to purchase this piece of property, and I realize this may be my only chance for years to come, I'm trying to figure out how to best go about it without over extending my resources. I could put my current farm up as collateral but is that the best route? Keep in mind I'm 37 and have 4 kids. Just trying to build something for the whole family to enjoy for decades to come and making the best of fairly limited resources. Thanks for any ideas.
Property purchase help/ideas
- Thread starter nateb440
- Start date
Natty Bumppo
5 year old buck +
Not knowing where you live or your economic situation...my gut reaction is to say "go for it." You may never get this chance again in your lifetime. Of course, this all depends on what you can afford. But as long as taking on more debt doesn't do anything to put you and your family in dire economic distress, I personally would do what it takes to make this happen.
Diesel5610
5 year old buck +
I was in this same position about 15 years ago. My wife and I had to really tighten our belts to make it happen when 30 acres bordering our 20 came up for sale. My kids were small and we did not have tons of disposable income, we sacrificed some things to make it happen. Drove older vehicles, no expensive vacations for a few years, etc.., It is the best thing we ever did. My kids love our property and we get all kinds of enjoyment out of it. It will be theirs eventually and hopefully they get the chance to add on to it in their lifetimes. If you can figure out a way to swing it I doubt you would regret it.
Freeborn
5 year old buck +
There is nothing wrong with leveraging an asset like your current property. The key for someone who has a young family and resource demand is cash flow. Do not get into a situation where you have more than one payment and make certain you have a payment you can manage. Look at where you are today (debt/Income/Future liabilities) and where you will be in the next 5-10 years. Interest rates are good but purchase price is more important then interest rates.
If you have to find a way to add income you could sell something or could you buy the property and then rent the cabin for 5+ years to bridge yourself to ownership? Make certain you structure the loan to as long as possible with no penalty for early payoff. If you rent the cabin understand you will receive taxable income but with a little creativity your tax accountant should allow you to depreciate much of the asset to offset your tax liability.
If you have to find a way to add income you could sell something or could you buy the property and then rent the cabin for 5+ years to bridge yourself to ownership? Make certain you structure the loan to as long as possible with no penalty for early payoff. If you rent the cabin understand you will receive taxable income but with a little creativity your tax accountant should allow you to depreciate much of the asset to offset your tax liability.
Boll Weevil
5 year old buck +
Several thoughts you might consider:
1) Don't get in over your head and look at the opportunity with financial objectivity.
2) Assess whether your current property or the new land could provide sources of revenue like renting tillable/pasture ground, enrolling in CRP, or a timber harvest.
3) A trusted buying partner. A friend of mine and his brother have purchased several tracts that individually, they may not have been able to acquire.
Best of luck to you and I hope things work out favorably for you.
1) Don't get in over your head and look at the opportunity with financial objectivity.
2) Assess whether your current property or the new land could provide sources of revenue like renting tillable/pasture ground, enrolling in CRP, or a timber harvest.
3) A trusted buying partner. A friend of mine and his brother have purchased several tracts that individually, they may not have been able to acquire.
Best of luck to you and I hope things work out favorably for you.
You may want to talk to your tax adviser as every state is different.But what I did was put everything as far as land on the same note and put it out on a year length I could afford at the time then make extra payments or lump payments as things got better.I actually have a triplex,a new 80 I bought an my original farm now all on the same note and under a trust.If anyone considers buying land with a partner be sure and discuss what would happen if one of the partners whats to sell or dies.I would also have each partner buy insurance on the other if the land was to be sold upon a death.This way they surviving partner would pay off the the purchase of the other with the insurance money.You can specify in the policy that that is what it is for but have in writing what the agreed price is.This can be also written out for if it came up one wanted to sell, and first right of refusal.What I have seen done is that there is a clause saying if you price it to me too high then I refuse you have to buy mine at that same price you quoted.Sorry to get off track but as said before there are many ways to do it.I would look at your equity on current land,if you are able to make 2 payments if current land is almost paid off.
Put together a budget my friend. Figure out what you can afford. If it fits your budget buy it.....if not do the prudent thing and let it go.
I know a guy who was in a similar situation and overextended himself to get the deal done that he "couldn't pass up". Life happened and he was too leveraged. Long story short....the bank took the great deal and the property he leveraged.
I know a guy who was in a similar situation and overextended himself to get the deal done that he "couldn't pass up". Life happened and he was too leveraged. Long story short....the bank took the great deal and the property he leveraged.
Tree Spud
5 year old buck +
Lots of good advice above.
Given your age & family situation, make sure you consider the resale value of the parcel(s) should you ever find yourself in a situation that you have to sell. In other words, how quickly could you sell if you had too without suffering a loss?
Make sure you understand that after you purchase, your property taxes may increase considerably based on new valuation. As stated above, put together a budget ... basics are PITI ... principle, interest, taxes, & insurance plus upkeep, maintenance, and utilities on the house.
Make sure you can afford the time required with a property and a house.
Buy what you can afford based on a 15 year note.
Something to consider ... ask the seller if they would consider a land contract. Offer to pay above market interest rate for 5 years with a balloon payment. We did that once as the seller was more interested in income and it worked out very well for both of us.
Good luck.
Thanks for the replies guys. I'm still thinking about it. I could make it happen but it would definitely be a sacrifice. Trouble is, I'm currently out of room to plant more trees haha. Personally I think the guy is asking too much. We attempted this deal on his property a year ago (at the time it was just 55 acres) but there was an easement issue. He has since purchased an easement for $7500 dollars...and just this past month he purchased 28 more acres which together it made his asking price jump more than he put into both by over 20k. He's undecided as to whether to sell or not, but would at the price he quoted me. I'm thinking of offering a considerably lower offer than asking price and if he won't move on it, I'll just tell him I'll wait and save in the mean time.
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