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06/30/11, 09:48 AM
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Join Date: Mar 2007
Location: Central WI
Posts: 5,399
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Quote:
Originally Posted by 65284
I wouldn't think any thing of the sort. I think they do everything they can to hinder small farmers and any other type of self sufficiency food production.
They are all about doing everything they can to ensure our food is supply is controlled by the corporate giants. If you doubt it please explain the resurrected NAIS assault under another name.
Our govt. is bought and paid for by corporate $$$$$$$$$$$$$$$$$s in the form of "campaign contributions". If/when the conglomerates get what they want and are paying for, total control of ALL food production, not even one back yard tomato plant would be allowed.
I suspect at that point they will get just as greedy and arrogant as the big oil companies. If they aren’t already.
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Actually, if you go to them to get a loan as a farmer they will bend over backwards to help small and especially organic farmers.
I applied earlier this year and the loan was approved quite quickly. I was only looking to buy 40 organic cows and rent an organic farm.
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Deja Moo; The feeling I've heard this bull before.
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06/30/11, 10:04 AM
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Poo Fairy
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Join Date: Jul 2008
Location: Texas Angel
Posts: 6,489
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Quote:
Originally Posted by 65284
I wouldn't think any thing of the sort. I think they do everything they can to hinder small farmers and any other type of self sufficiency food production.
They are all about doing everything they can to ensure our food is supply is controlled by the corporate giants. If you doubt it please explain the resurrected NAIS assault under another name.
Our govt. is bought and paid for by corporate $$$$$$$$$$$$$$$$$s in the form of "campaign contributions". If/when the conglomerates get what they want and are paying for, total control of ALL food production, not even one back yard tomato plant would be allowed.
I suspect at that point they will get just as greedy and arrogant as the big oil companies. If they aren’t already.
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Simmer down...you're gonna bust a vein or something.
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"If you tickle the earth with a hoe she laughs with a harvest."
- Douglas William Jerrold
Real is Beautiful -Sherry in Maine
I am 47 
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06/30/11, 10:09 AM
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Join Date: Oct 2008
Location: wouldn't you like to know der, eh? Zone 3b/4a
Posts: 1,809
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It really seems like a heck of a deal. It would be really easy to farm all you want and not make any profit at all - that's what most of us are doing. As far as you not being allowed to get a job - that's just to keep your income below their limits, right? I'm sure you could get a job if something happened to prevent your spouse from working.
Government agencies are very lazy. They just want their i's dotted and their t's crossed. I seriously doubt they're going to come back and check on you or watch you closely. If it was me I'd just make sure to do like everybody else said - keep receipts of your expenses to show you're not coming out ahead if they happen to ask. Don't claim profit on your taxes, etc.
It would be really hard to pass up a deal like that.
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"What if I fall?" "Oh, but my darling, what if you fly?"
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06/30/11, 10:17 AM
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Join Date: Aug 2005
Location: Austin-ish, Texas
Posts: 5,000
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If you need advice on how NOT to make a profit farming, feel free to ask me.
We've been farming this 10 acres for going on 8 years; haven't made a profit yet 
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"Perhaps I'll have them string a clothesline from the hearse I am in, with my underwear waving in the breeze, as we drive to the cemetary. People worry about the dumbest things!"
by Wendy
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06/30/11, 10:28 AM
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Retired farmer-rancher
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Join Date: Apr 2007
Location: north-central Kansas
Posts: 2,897
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Quote:
Originally Posted by Wisconsin Ann
Good one, Stan 
I made some calls yesterday after reading all this and poking around the USDA loan thing website.
As mentioned earlier the loans aren't meant for buying a farm. It's for low income families (you need to be under a specific amount, depending on the area) and it's meant to help keep rural areas alive..instead of folks moving into the city. Instead of "urban development" they are doing "rural development". The gentleman I spoke to said they've seen so many moving from the local small towns into the larger cities..and that means fewer options available for the rural people (farmers) that USDA developed this loan project as an option for bankers to help "loosen up the cash".
About the "not farming for profit" ... the response I got was that they're in the business of providing loans for HOMES, i.e. HOUSES....the purchase of a legally defined FARM would mean a totally different loan. Remember...we're dealing with a very tightly controlled agency. They have to follow all laws and regulations that define their loans. (the other thing one lady brought up was people who buy a few acres and then put in an egg farm, or maybe a big flower farm...a BUSINESS.) The USDA can only guarantee HOUSE loans..personal loans..not business loans...hence the requirement that you're not going to go into business on the property.
I was also told that if you do decide to start a business that involves the acreage, the loan can easily be redefined and sent to another agency...OR if the payments have been made on time for over a year, your mortgage, it's quite possible that the mortgage company will no longer require the USDA guarantee and drop the requirements.
FARMS are a business. Whole other tax structure and loan thing. It's purely a legal requirement.
The purpose of the USDA guarantee is to free up cash from the banks. Loans are horribly hard to get now..since the Fannie Mae scandals, etc. They have the money, but with everything so iffy in the market, and with so many regulations being changed willy nilly, the banks are scared to lend. |
Thanks Ann. Facts and correct information are always worth repeating. Personal bias and guesswork on a lot of the other posts only confuse the issue.
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* I'm supposed to respect my elders, but its getting harder and harder for me to find one. .*-
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06/30/11, 10:29 AM
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Join Date: Jan 2008
Posts: 2,639
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Quote:
Originally Posted by crookedoak
There is a limit on how much money you make to qualify for this type of no money down loans. .....
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A 100% mortgage??!?!?!?!?!???!
Have we not learned anything from the past two years?
(Removed comment that repeated Wisconsin Ann's comments)
Last edited by Lazy J; 06/30/11 at 10:33 AM.
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06/30/11, 10:31 AM
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Join Date: Jan 2008
Posts: 2,639
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Quote:
Originally Posted by ksfarmer
Thanks Ann. Facts and correct information are always worth repeating. Personal bias and guesswork on a lot of the other posts only confuse the issue.
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Hear Hear!!!
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06/30/11, 01:17 PM
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Join Date: Feb 2011
Posts: 143
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I know I will not make a profit at all. I am just worried that say I want to sell some extra eggs or a calf that I do not have room in the freezer, that they are not going to come down on me. This is our first time to buy. We were in the process of starting to save for a downpayment, when this place came up for sale. We did not have enough saved for a bank loan. And this is my dream place. So we did not want to pass it up. Plus the house was a foreclosure.
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06/30/11, 04:56 PM
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Join Date: Jul 2010
Location: Watertown, Tn.
Posts: 2,152
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USDA loans have max income restrictions and the property cannot be income producing.
It's the guideline. No different than a speed limit. you cannot speed, just because it is happy hour.
It is not for income producing properties.
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06/30/11, 05:02 PM
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Happy Scrounger
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Join Date: Feb 2007
Location: South Central Wisconsin
Posts: 13,635
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About that 100% loan....this is a great way for people who can afford a rental property with a little left over but not enough to do a $20K downpayment, to buy property. Personally, I have no problem with someone buying a foreclosure, in a rural area, getting a loan to do so...as long as they go through some real banking mortgage checks...as it appears Crookedoak is doing. Sounds to me like her family is being thoroughly vetted and given the green light. 
It wasn't that the mortgage companies gave out 100% loans that caused the problems..it was that they did it to ANYONE WHO ASKED. Time after time we heard "they never checked the paperwork" and "they never told us about increases". Time after time we heard stories about brokers who said "oh don't worry if you can't make the payments, we'll just increase the loan so you can". OY VEY!
The link that Geo provided is excellent. Everything in one place. (kind of a hard read if you're not used to government-speak, but worth going through it)
CrookedOak...remember, if you ever DO want to form a business or a farm, you can ALWAYS negotiate a new loan. You're not stuck with this forever. Go with the best deal you can get and live with. Then re-evaluate in a year. right now loans are at an all time low interest. It's a good time to do this. The government loans will probably dry up in another year..and loans will, in general, be more strict starting in 2012. (new regulations coming in)
Good luck! (and we'll need pictures once you get settled in! (if not sooner  )
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"A good photograph is knowing where to stand. ” - Ansel Adams
 (and a lot of luck - Wisconsin Ann)
Rabbits anyone? RabbitTalk.com
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06/30/11, 05:12 PM
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Join Date: Jan 2004
Location: MN
Posts: 7,609
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This is a govt subsidy, set up to do something govt feels is important with tax money - help people buy houses in certain areas that couldn't normally buy a house. Seems it will be easier for them to not work and get this govt backed loan rather than go hard at it with 2 jobs and something on the side to get regular financing.
Agree or disagree with the program, it's there, not against any person who uses the programs available to them.
But as such, one has to conform to the rules of the govt program, and so you can't make more money than they have as their family income limit, and you can't use the property as a business, it is a program for housing only. Such are the rules.
Selling a few garden items to neighbors is not going to be 'profitable farming' in any case, so if that is your plan you shouldn't worry. You will have much more money tied up in equipment, supplies, feed, vet bills than you will ever make for the first 5 years in selling off surpluses. Now if you planned to put up a poultry barn, hog barn, or intensive flower or truck garden with several employees and big sales, that would be a different story.
--->Paul
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06/30/11, 05:25 PM
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Join Date: Jul 2010
Location: Watertown, Tn.
Posts: 2,152
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Quote:
Originally Posted by Wisconsin Ann
About that 100% loan....this is a great way for people who can afford a rental property with a little left over but not enough to do a $20K downpayment, to buy property. ) |
AKA Fraud!
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06/30/11, 05:26 PM
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Join Date: Mar 2009
Location: Rural Colorado
Posts: 286
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We are looking at a guaranteed USDA loan, which has pretty broad income limits. $101,000 for our county for a family of 5+ - IMO not exactly "low income". The ratio is 115% of the local median income.
After seeing this thread, I called our USDA agent to double check with them. You CAN sell surplus from your family farm/home, you CANNOT operate as a business farm. If you are going to sell surplus eggs, goats, etc you aren't running a business. Our agent flat out told me- "If you raise a sow or two and sell off the extra piglets, no problem If you are planning to have a pig farm then you need to apply for a USDA B&I loan." She went on to tell us that we could be a "family farm" but your taxes need to reflect that- no business designations or deductions.
IMO- they aren't telling you what to do with YOUR land just what you can do with THEIR money. We are looking at it because the property that we are looking at needs rehab. USDA offers a lower interest rate than a traditional short term construction loan, and allows for us to hang onto more cash up front to pay for immediate work. If we want to then take advantage of farm "business" deductions on our taxes, we can refinance with the substantial equity that will come from the completed project.
Last edited by r93000; 06/30/11 at 05:33 PM.
Reason: Double checked figures and corrected.
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06/30/11, 05:35 PM
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Join Date: Jul 2010
Location: Watertown, Tn.
Posts: 2,152
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Quote:
Originally Posted by r93000
We are looking at a guaranteed USDA loan, which has pretty broad income limits. $101,000 for our county for a family of 5+ - IMO not exactly "low income". The ratio is 115% of the local median income.
After seeing this thread, I called our USDA agent to double check with them. You CAN sell surplus from your family farm/home, you CANNOT operate as a business farm. If you are going to sell surplus eggs, goats, etc you aren't running a business. Our agent flat out told me- "If you raise a sow or two and sell off the extra piglets, no problem If you are planning to have a pig farm then you need to apply for a USDA B&I loan." She went on to tell us that we could be a "family farm" but your taxes need to reflect that- no business designations or deductions.
IMO- they aren't telling you what to do with YOUR land just what you can do with THEIR money. We are looking at it because the property that we are looking at needs rehab. USDA offers a lower interest rate than a traditional short term construction loan, and allows for us to hang onto more cash up front to pay for immediate work. If we want to then take advantage of farm "business" deductions on our taxes, we can refinance with the substantial equity that will come from the completed project.
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Agreed!
Property needs to be semi rural and there are income limitations and of course some property/use restructions.
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06/30/11, 05:47 PM
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Join Date: Aug 2003
Location: NC
Posts: 1,803
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Quote:
Originally Posted by rambler
This is a govt subsidy...
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Actually, the USDA guaranteed loan program is subsidy neutral. They charge a 3.5% fee when the loan is made to keep it that way. In October, they will begin assessing an annual fee that will ensure that the program continues to be subsidy neutral. This program shouldn't be confused with the "direct loan program" whereby funding is secured "directly" from Rural Development. That program is heavily subsidized, and consequently, funds are short. The guaranteed loan program continues to be fully funded and very popular.
Trust me--contrary to what another poster said--most USDA-Rural Development staffs work very hard to fund as many loans as possible, while continuing to deal with staff cuts. And no, for this particular program, they don't have time to go back and check to see if Mrs. Jane Doe has sought employment, or if she's selling eggs to the neighbors.
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06/30/11, 07:37 PM
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Join Date: Feb 2011
Posts: 143
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Quote:
Originally Posted by rambler
This is a govt subsidy, set up to do something govt feels is important with tax money - help people buy houses in certain areas that couldn't normally buy a house. Seems it will be easier for them to not work and get this govt backed loan rather than go hard at it with 2 jobs and something on the side to get regular financing.
--->Paul
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I am working, but do not get paid. It is called being a stay at home mother to my children. It is one of the hardest yet underpaid jobs out there. Plus I moved in to take care of my 83 year old grandmother(yet another hard and not paid for job). Her children will not help except for my mother. And they are talking about putting her in a nursing home soon, because she is getting where I need more help with her. So my husband and I needed to find a place to buy asap since her children will want us moved so they can sell her place. These place came on the market and we jumped on it. So we did not have time to save up the money. So I am working and work very hard, I just do not get paid squat for it.
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06/30/11, 11:59 PM
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Join Date: Jan 2008
Location: The Beautiful Ozarks
Posts: 1,394
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In my past experience as a real estate agent, any government backed loan will make you go through the run-around, be it "no farming" or "no income over XYZ". I would shudder when my clients told me they were going with an FHA/VA or other similar loan. These types of loans WERE, in general, used by people with little or no down payment and / or low incomes. I ran into many snags trying to sell homes / farms where a person tried to get a "better" loan through a government program and found out that there was always some stipulation in it that they couldn't do this or that. It's not something anyone wants to hear, but if you want "their" money, you have to play by their rules.
As for the original question & worry the OP has, there are many ways to show you aren't making a profit (and as some have already asked the almost-jokingly question if ANYone makes a profit on their small farm) on the land that it would be an almost non-issue.
So, yes I've had many, many problems (second hand, that is) with several types of government loans. Unless you just cannot afford to go another route, I would highly suggest getting a conventional loan from a local, trustworthy bank. It may cost you a bit more, but then you shouldn't have so many issues.
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I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. - Thomas Jefferson
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07/01/11, 12:09 AM
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Join Date: Oct 2003
Location: Carthage, Texas
Posts: 12,261
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Quote:
Originally Posted by crookedoak
We also had to sign an affadaivte stating that we will not farm the 10 acres of land for profit.
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Simple solution. Sign... with the honest intention of not making a profit. Very few people actually make an honest profit from their labors. If one includes infrastructure costs, labor, and a myriad assortment of maintenance costs, rarely is there a true profit. Unless one is actually starting a CSA, and has experience running such an operation... thinking of profits is premature. At least IRS recognized profits...
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Luck is what happens when preparation meets opportunity. Seneca
Learning is not compulsory... neither is survival. W. Edwards Deming
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07/01/11, 12:24 AM
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Just living Life
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Join Date: May 2002
Location: Now in Virginia
Posts: 8,277
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I have a conventional 30 year fixed rate loan from Wells Fargo and put a really big down payment on the house/land too. DH has an good paying job and we have excellent credit.
They still made us sign a No Farm clause.
So I don't think it is just the beginner loans/no down loans that are doing this.
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Shari
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07/01/11, 01:27 AM
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Join Date: Feb 2011
Posts: 143
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They did not tell us about the no farming for profit till right at the end. And they had weeks to let us know.
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