Short on cash but found a property I like...

[Bellyman]

I'm curious about whether there might be some of you that could give me an idea or two that would help me with something.

I've found a property that I like. It's about 6 1/3 acres of land with a small pond, fruit trees, some very nice garden areas (several acres worth) and numerous small outbuildings. It does have an old mobile home that's been added on to but I am thinking more of the value of the property excluding the mobile home. The place is listed at just under $50k. I know it last sold less than 2 years ago for about $41k. They put a little money in it, mostly paint and a bit of flooring, but nothing all that substantial to either the mobile home or the property. I am guessing they'd probably take about $44k to $45k but that's a guess.

Here's the thing. With the old mobile, I have been told that a typical bank or mortgage company is not interested in financing the place. And that's ok as I really don't like banks or mortgage companies anyway. But I don't have that much cash.

Having some recent hospital bills for a broken leg, that kinda wiped out a lot of our savings. I do have something I could sell that would take me maybe 6 to 9 months to sell that would cover pretty close to half of the purchase price. So with a little time, I would be half way there.

But what about the other half? I'm sure I can tap some of the family for a little but I'm not sure they would be willing to part with quite that much. Honestly, the whole place would be paid off in about the time a normal car loan would get paid off. It's just that I don't have that much cash.

Any ideas on how to make something fly?

I will add that the realtor mentioned that he could get "private financing" (at 8% interest) if I'd put down 15%. That sounded good at first but then he added the words, "land contract". Hmmm. I have not heard a lot of good things about land contracts. That would mean that until I've paid the last payment, I don't own anything but a piece of paper, and I don't really have any guarantee that I'll get anything if said investor does something illegal and loses everything, including the property I've been paying on at which time I have pretty much nothing, including no place to live. I may be over-reacting but it put my brakes on pretty quickly.

So I wondered about whether there may be some other options I'm not thinking of. I like the property. And I think it's priced fairly reasonably in the area it's in. I also think I could build a house on it that would increase the value of the place, perhaps even subdivide it into two places as I think there was an old homestead on the other end of the property at one time. But that's not the kind of thing you do on property you don't even own.

Thoughts?

Thanks!


Brian

[Miss Kay]

You say you could pay it off in about the same time frame as a car loan. Do you have a car/truck/camper that is paid off that you could get a loan on?

[GeneMO]

Well, they are probably not gonna wait around 6-9 months. But if you had half down, surely someone would loan you the rest.

Are you a Veteren by any chance? They are advertising they do Zero down home loans.

Gene

[Bellyman]

Have an RV that we currently live in. That's where I can get the first half, by selling that. It helps but doesn't get there.

Nope, not a veteran.

Thanks for the suggestion.

[FarmboyBill]

Look for HUD homes. Get a REA to help you hunt, OR type in Google, and then type in Looking for house with property in ????????? Tenn. Then make you permeters of just how many towns your encompass, and when you've checked out one town, hit another until you've hit the ones your interested in.

[Dutchofsc]

RUN FROM A LAND CONTRACT!!! Don't do it, just like you said, you will be making payments and only have a piece of paper.

I was able to get a loan from a local agricultural bank, but they wanted 20 percent down and it was at 7 percent. Also had to show bank statements and other financial papers to get the loan.

Being a Dave Ramsey fan I would tell you to have a solid down payment and sell your camper to pay this of ASAP.

Sounds like the property is livable right now, so you could sell anything you won't need, including the rv, to put towards the property. Also think of any repairs or upgrades you will need done right away.

Lastly, make sure you still have a rainy day fund, otherwise your dream can turn into a nightmare really quickly, like having no money and braking a leg.

Best to you, keep us posted.


Sent from my iPad using Homesteading Today

[HoofPick]

Originally Posted by GeneMO

Are you a Veteren by any chance? They are advertising they do Zero down home loans.



Gene

VA loans won't cover mobile/manufactured homes.

[Johnny Dolittle]

I would consider a land contract if done through a reliable attorney ....

[calliemoonbeam]

I don't know if they'd loan it to a new customer, but some credit unions will make loans if you have 40% down. I don't remember what they call it, not a mortgage, but it's sort of like a car loan, to be paid off in about that period of time. I found out about that when I was trying to buy my place about seven years ago.

I ended up buying my place on a land contract, and it worked out great. It was the only way I could, coming off over a year out of work and huge hospital bills due to a heart issue and no savings. I was desperate to get out of a very bad part of the city though (gangs, drugs and shootings almost daily), so I took a chance I might not have otherwise. I bought a property almost identical to yours, but 5 acres, with an old mobile that had been added onto.

The seller had a contract already drawn up, but advised me to get a lawyer to go over it which I did (and also made me a lot more comfortable about things since he was the one to bring it up, lol). We changed a couple of small things, but otherwise it was very fair and comprehensive. We went together to file with the county clerk. I made a small down payment, paid minimal closing costs and then just started making monthly payments.

My contract was for 10 years, but my goal was to pay it off in five. I didn't quite make it, took 5-1/2, but I also had more health issues, time off work and medical bills again during that time, so I think I did pretty well. I also put about 7 thousand dollars worth of materials into it, fixing it up during that time (with free labor from my son and his friends).

I had a great experience, and I've heard of other people who have too. I think the horror stories are mostly from people who didn't do their due diligence and got caught by a shady seller or were not responsible about paying on time and holding up their end of the contract. I could have never owned my own place without a land contract, and I just thank God that there are still good people out there willing to do it for people like me. Good luck!

[FarmboyBill]

Places that make ag loans wont even talk to a person unless they have 50+ acres. Least not here in Okla.

[fireweed farm]

Call a few mortgage brokers. I've found them to work harder to get people loans, and in my case gave me the benefit of the doubt that the regular bank would not. Their rates may be lower than the banks as well.

[Wolf mom]

Have you considered a lease purchase with a portion of the monthly payment going towards the down payment?

That'll give you a year to get more financially stable and live where you want to live.

OR

You could ask the seller to carry the note himself. That way you could structure the loan any way you wanted. Put as much down as possible, make monthly payments with 3000.00 balloon payments yearly or every other year - That's just one example. People don't like balloon payments, but sellers do & it sweetens the deal. Something like that would take the pressure off finding outside money. Your interest rate would naturally be a few points higher, but that's your cost to make it work.

Sell your realtor on this (as obviously he has not thought of this as he has not run this idea by you) by telling him that the buyer is making more money on this (the interest) by carrying the note and if you default he gets not only the property back, but gets to keep all the money you've paid him.

If this flys, write it up as seller to carry first trust deed and make payments through a third party (title company) to keep track of payments. This protects both seller & buyer and the small cost can be split 1/2 & 1/2.

Sheesh - your realtor needs to think outside the box and get creative.

BTW: 1. if the seller recently bought the property, put money in it and has to pay a realtor, he may be loosing money on this deal.
2. If you want to get a loan, get a broker as a mtg. broker has many sources of money where as a bank doesn't. and many banks won't lend a 1st on that small amount. That may be one reason your realtor is suggesting private money. And remember, you will have to pay for anything you get outside the very narrow norm.

[po boy]

Try Farm Credit................................

[Use Less]

It does not sound like the timing is right for you.

[bigjon]

your right mobils(anything with a frame under it)have no loanable value.its all about the land under it, 6 plus acres even with improvements-pond,fruit trees etc-under $50.$8000 an acre ? wow,i'd have to pass.

[Homesteader1]

Here is an idea. In fact I did it to buy my homestead that sits on 231 acres. The owner was an older guy and had several farms that he subdivided. I found one that he did not divide yet. I asked him if he would finance it. Because of his income tax he said yes, so I bought it and paid him every month for 5 years now I own it and set up homestead. If you can get owner finance your good. Get a lawyer to set up paper work. Just remember you do not pay the land goes back to the present owner. The lawyer will also check to see if their are leans and what have on the property. You can do it.

[FarmboyBill]

I tried 2 ag loan placers. Farm Credit was one of them. I cant remember which one said I didn't satisfy their requirements by what standard, but I went in there in my 50s, with a full line of machinery wanting 20 or less acres, and they wouldn't talk to me in Okla.
I think here, that they save their money for loans to the big ranchers, perhaps ones they've delt with in the past, OR ones who are deep in hock and they yet need loans to keep going in the hopes that a lucky year might bail out the ranchers and the loaners also.

[Waiting Falcon]

So make an offer....of say 1/3 off the asking price.
Or the value of the land with what it will cost to dispose
of the mobile home.
Most prices unless it says "firm" are asking prices.

[Bellyman]

I haven't talked to the owner directly. I've only had an email exchange with the broker, who is something between an acquaintance and a friend.

The broker tells me that he can do something like this:

Once I commit to wanting the property, he can have a third party investor buy the property and I can then contract with the investor to pay off the property on a land contract.

Seller receives cash. Broker receives commission. Investor receives 8% on his money. And IF, - IF - everything goes well, I would receive deed to the property at the end of the contract when it's paid in full. (I would anticipate trying for a 10 year term and seeing if I couldn't pay it off in maybe 4 or 5.)

That's the broker's plan. I'm not crazy about the "land contract" part of it. If the investor would just loan me the money and take the first mortgage on the place, he'd still get his 8% and I'd probably have not thought much about it. I have wondered whether the investor would be willing to do that with maybe a higher down payment but haven't explored that yet.

I'm supposed to be getting together with the broker next week to sit down and chat about it. I'm sure we'll be talking about this.

I really do like the property. At $49k, it's not really a "great" deal. At $41k, it would be a much better deal. I know I could find cheaper land but I also know that much of that cheaper land is likely to be rocky or wooded or otherwise not really so great for gardening or field crop type work. I've seen the dirt on this place and it's some of the nicer I've seen in the area.

There are a few members of the family that may have some CDs that aren't making much money that I might be able to convince to help out. But that's kind of a long shot. It might get me part way there, not sure.

I have some basic machinery that could possibly bring a little but I'm reluctant to sell things I know I'm going to need on the homestead. That seems like going backwards.

I do appreciate the thoughts. It may be that we won't be able to make it happen. Haven't given up yet. But not willing to do something stupid just to force a deal, either. We'll see what comes of it all.

Thanks!

[Terri]

Bellyman, most of the LARGE, NATIONAL banks will not cover bare land, but you could mention the mobile home and hope for the best.

BUT! Some of the SMALLER, LOCAL banks may well give you a mortgage! They are number 2, and they try harder! So, today you may want to look up the small banks in your area and mark them, then on Monday you could go down the list and see if any of them will.

Personally, a local bank offered a 20 year flexible loan on my 5.7 acres, take it or leave it. Well interests rates have dropped since then, so it actually worked out to my benefit that the rates were flexible, and tied to the prime lending rate!