financing options

Discussion in 'Homesteading Questions' started by afrikaner, Oct 10, 2005.

  1. afrikaner

    afrikaner Well-Known Member

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    Being a "ferrner" (foreigner) in GA makes life interesting. It is hell to get started up (no credit etc).
    Here's my question - I'm looking at this property - how do I go about financing a bare piece of land - no buildings on it at all. I've heard it is much more difficult.

    What experiences have y'all had during the process?
     
  2. katlupe

    katlupe Off-The-Grid Homesteader Supporter

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    Well, I didn't finance bare land, but a bank would not have financed our homestead. It is off the grid, never had any wiring or plumbing in it. Needed a lot of TLC, not the kind of thing banks around here will bother with. My friends just bought a house with financing from the bank, and they have 6 weeks to paint the back of it, above the shed-connected to the house. So you know they would not have even considered our house!

    So what I did was to write out a proposal or offer to buy. I put down the amount I would give for the down payment, the interest rate I wanted, and how much I would pay monthly (use a amortization book) and for how long. Then I also figured it out so they would see how much they would make by owner financing. They accepted, just wanted more down and for less amount of years. Interest rate was fine.

    It's to their advantage to owner finance. It's not a land contract - that's different. But they make much more money this way. We pay the taxes, everything is in our name. No problems at all.
     

  3. Terri

    Terri Singletree & Weight Loss & Permaculture Moderator Staff Member Supporter

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    There was a realtors name on the "for sale" sign, so we asked her.

    She was happy to help us get financing, and even happier to arrange the sale so that she got her commission.

    She knew what bank had financed the undeveloped property next door, so we went with that bank.
     
  4. Kenneth in NC

    Kenneth in NC Well-Known Member

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    Terri has the right idea. The realtor has (Commission) reasons to want you financed.


    Kenneth in NC
     
  5. ArkansasLady

    ArkansasLady Well-Known Member Supporter

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    also, dont think banks are your only option for financing...there are all sorts of financiers out there...though just land with no buildings is not a easy way to go...

    ~C~
     
  6. edcopp

    edcopp Well-Known Member

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    Vacant land is difficult to finance. That said often the owner will finance the transaction.

    Prepare some indormation about yourself that you can let the owner see. Such things as your job and income are of interest. The owner will also want to know what your chances for continued employment are, and how secure your job is. If you have a credit history, credit report, or other credit references this will also be of interest. In other words tell him where the money is going to come from to make the payments on the land.

    Do you have cash on hand, like savings? How about other assets ? Make a list of the assets that you have and their estimated value, for the seller to see. The point here is to establish that you are prudent with your funds, and that you have some assets to rely on if times get hard.

    First you need to shop around for a seller who is willing to take payments for the land that he has to sell. Then you need to agree on a price, and terms. The terms include interest, and how long the contract will run. You will need to agree on a payment of so much a month, and so on. It would be wise to hava a local attorney draw up the proper documents so that your interests are protected.
     
  7. patarini

    patarini Well-Known Member

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    If you do go contract for deed, make sure an attorney looks it over, there can be some pitfalls with it that can cost you!
     
  8. labrat

    labrat Well-Known Member

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    I had a problem financing because my on property was a small rustic cabin. It's considered rustic because the lack of electricity and water. Banks and finance companies don't want to finance something they later have to put money into to sell if they do have to foreclose. Due to this, I financed with the landowner, having him carry the note for 10 years. There are several names for this process; some call it contract for deed and others call it a land contract. As others have said, if the land is listed by a realtor they have a vested interest in the property being sold and they will help and if you do go through this process make sure an attorney looks over the contract. One thing to consider, if you are limited on funds, this process can cost more simply because the realtor will get his/her fee; mine divided his fee between the seller and me. The amount the realtor gets obviously depends upon the selling price of the land and his/her % commission. Also, if done through a realtor, they will have an attorney look over the contract. Another thing to consider is that while a land contract is advantageous, in the fact that you don’t have to go through the mortgage/credit check process, the contract most likely will be shorter and so monthly mortgage will be higher. However, whatever happens, because this is a land contract, it will not show up on your credit report, but you do get the advantage of claiming mortgage fees and interest on your annual federal taxes and here in Kentucky, the state taxes. The disadvantage is that there can be stipulations not normally in regular mortgage contracts, such as, if you get behind one month, the owner can foreclose, higher check fees and who knows what else. I just went through the process this summer.
     
  9. GoatsRus

    GoatsRus TMESIS

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    See if you have a Farm Credit operation in Ga (I'm sure they do). Farm Credit will finance almost anyone who a "farmer" or "wanna be farmer". They have good rates, you become a member of the operation and they work with you on terms. You check them out online at www.farmcredit.com
    Good luck
     
  10. thebugguy

    thebugguy Not just another fungi

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    We bought 120 acres of bare ground in NE Kansas with bank financing, but it wasn't easy (this was before we decided to build). After some (not exhaustive) searching, we found a local (i.e. Kansan) bank that would finance the land on the condition it was treated as a "commercial" ARM loan until we decided to build. Their thought process being that we were treating the land as an investment until we decided to settle on it. I doubt they would have agreed to it at all if we hadn't put almost 45% down in cash- ouch!

    We're not fond of ARM loans, but we figured that we'd poop or get off the pot (build or sell) within the fixed period of the loan. The other bummer is that commerical loans are pegged a couple percent higher than normal loans, but again, we figured it was worth the extra cost of the commerical loan to give us time to decide whether to build or not.

    While the commerical loan was ticking away, we found another local company, Frontier Farm Credit, that was willing to offer us a construction/mortgage loan on our property/barn. While they wouldn't finance just anything, they were extremely friendly and flexible, and had no problems giving us the cash we needed to build our Morton Building house/barn. We managed to get a 30 year fixed mortgage for this type of construction (absolutely impossible with anyone else), but also at the cost of about 1.5% higher a rate than conventional houses in town. We chalk up the extra cost as what we owe for living in a beautiful place in a house/barn that we wanted.

    One other perk with Frontier- they issue rebate checks to their customers once a year, giving back a percentage of any profit they made the previous year. I don't know exactly how much that might be, but I got the impression that it was a sizable hunk of a month's mortgage payment. Definitely cool.

    So, I would very highly recommend following up on GoatsRus's link to lists of farm credits in your area. Frontier Farm Credit, the one we used, is listed, so I bet you can find one locally.

    Lastly, I'm not a lawer, but I pretend to be one while reading contracts, and I've never found a "contract for deed" that I liked. They were all severely slanted towards the seller, for obvious reasons. If you really trust and like the person you're dealing with and can negotiate decent terms, this might be the way to go. However, I would read and think about the fine print VERY carefully before entering in such a contract.

    cheers,

    thebugguy
     
  11. afrikaner

    afrikaner Well-Known Member

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    Thank you for the advice, all!
    I really like the idea of owner financing. I beleive that the world was a better place when a person's word was all that counted.
    I will defenitely look into farmredit.com!

    Thanks!
     
  12. brokerjack

    brokerjack Member

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    I am a mortgage broker in Fla.
    What you are looking for is a Foreign National loan. Do you have a creditr history back home? If so you might be able to use an international credit report. Or perhaps letters of reference from creditors back home.
    Check around with local banks as they might be more inclined do do a loan outside of regular guidelines.
    What is the property zoned? And how large is it?