Myself and two friends are looking at a piece of property to buy. Looks to be good land and there is a decent amount of good timber on it. What is the best avenue to purchase? We will need to finance so my biggest question is who have you used for purchases like this? We were hoping to not go the traditional banking route unless we have too. THanks for any advice!
Land Purchasing Question
- Thread starter MTNHUNTR
- Start date
treefarmer
Well-Known Member
Check into Farm Credit Services, I understand they loan for "raw" land, whereas banks don't like to. Make sure you have a plan for when one of you wants out, I've seen good friends lose their friendship over deals like this. You may want to invest in a tractor, clearing, maybe selling timber and another wants to leave everything as-is and not spend any money on it, or someone moves or passes away. One wants to trophy bow-hunt only and another wants brown/down to fill their freezer. You could sub-divide and each buy 1/3 but manage and hunt together.
Farm Credit required less down than my bank on my last land purchase. I believe it was 15℅ versus 25℅. That's been a few years ago though.
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This question made me think of Landman. I sure do miss Jimmy around here. Sorry bout the hijack, carry on.MTNHUNTR":2plwzaku said:
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Hunter 257W
Well-Known Member
Farm Credit is who I used also when I bought my land in 2011. When I checked with a couple of banks they balked at giving a loan on raw land. The rate is going to be somewhat higher compared to a mortgage for a house but not a terrible amount greater. I like Farm Credit because you can get the option to refinance for something like $350 if interest rates drop. Also in my case they were proactive and contacted me when the rate did drop and I refinanced for a considerable savings. I used the Fayettville office in Lincoln county.
Farm Credit seems to be a great choice for folks. Personally I've used owned assets (other land) as a line of credit for purchasing land through my local bank. They have given me good rates without much hassle, but I've paid those off in less than 12 months so it's a little different than most folks situations. I can't stomach borrowing a bunch of money and paying a bunch of interest long term on hunting land, certainly affects the investment.
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Hunter 257W
Well-Known Member
PickettSFHunter":1k1hrye7 said:
Where you able to get a rate comparable to current home mortgage rates going this route? Of course the interest rate isn't all that important if you are paying off in a year. A percentage point or two hardly makes a difference over such a short time.
TN Whitetail Freak
Well-Known Member
I have always heard that when buying land as a group it is wise to form a LLC.
MickThompson
Well-Known Member
TN Whitetail Freak":214a8894 said:
This would be a very good idea. It protects the rest of the group should one of the partners have a financial situation.
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Deck78
Well-Known Member
We have at least one resident Farm Credit guy on this site and I can highly recommend him. Cody Eaton. I am betting from your handle MTNHUNTR that you are in East TN? I don't typically handle hunting properties too far east but I do know of one in Knoxville area that the owner might do an owner financed balloon note and it is a pretty good looking hunting tract. I see lots of buying groups set up LLC's and make land purchases, I think it is a great idea and land is way more awesome than the stock market :super:
