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Buying land?

by , Posted to on 10/11/2010 1:58 PM | "Quote" | "Quick Reply" |

Joined: 07/13/2003
Location: ND
I am seriously considering buying a parcell of land. I'm interested in a quarter section for hunting and hopefully to build a retirement place. My questions are, how do I go about it? I mean I've got a mortgage for my current home, but I've never bought a peice of ag land or anything larger then a 5 acre lot. What are some things to consider or tips from people who have done this before? Just go to a bank and bend over?
Re: Buying land?
by on 10/11/2010 2:30 PM | Reply #1 | "Quote" | "Quick Reply" |

Joined: 09/05/2008
Location: ND
Water!   To much or not enough.  Either way it's not good.  If you want to hunt it, stand in the middle of it and look for your shooting lanes.  I looked at a quarter and every way you looked there was a neighbors house or barn.  Somewhat of a concern for rifle hunting or bird hunting.  Good luck!
Re: Buying land?
by on 10/11/2010 2:33 PM | Reply #2 | "Quote" | "Quick Reply" |

Joined: 03/11/2006
Location: ND
Loans are a little tougher to obtain when there isn't a "home.  You can typically expect to have to put 20% down.  You may want to check with the local banks of where you are purchasing as somethimes they will have special programs so you can get by with 15% down.
Re: Buying land?
by on 10/11/2010 3:53 PM | Reply #3 | "Quote" | "Quick Reply" |

Joined: 11/21/2005
Location: ND
In NW part of the state you can expect to pay 1500 per acre that what it is going for up here. Pasture land was sold for 667 per acre. Some CRP sold this spring and brought 1100 per acre.  In NW ND a water well will cost 22.50 per foot  my 330 foot well cost 8877.00 this spring and that was hooked to the house.  east of 52 there is rural water but you have to pay to dig it in from the supply line

The best democrat platform a Republican can stand on it a manure pile

drug test everyone on welfare

have an open season on molesters

Re: Buying land?
by on 10/11/2010 4:27 PM | Reply #4 | "Quote" | "Quick Reply" |

Joined: 05/07/2009
Location: ND
Cost of land aside, here is a couple other money things to consider.


1.  15% to 30% down is norm from the banks I have talked with.  As a first time land buyer, you will have to have the cash.  Don't think they will let you use the equity in your house to cover down payment side.

2. Even with morgage rates at all time lows, you are looking at 5%-7%.  The longest you can lock in is 5 years.  Most banks prefer to do 3 years after which time you are at the mercy of interest rates at the time the loan is up to finance your balloon again.

Even is you build a place on it, they will not allow you to put more than 10acres and the house onto a morgage, rest at terms stated above.

Now everyones credit, bank, and buddy may find different deals, but this is what I have found in my personal experience.

 

There is no limit on a Good Time!!

Re: Buying land?
by on 10/11/2010 4:30 PM | Reply #5 | "Quote" | "Quick Reply" |

Joined: 02/28/2007
Location: ND
If you have enough equity in your house to cover the purchase get a home equity line of credit so yo can write it off.
Re: Buying land?
by on 10/11/2010 4:33 PM | Reply #6 | "Quote" | "Quick Reply" |

Joined: 07/14/2003
Location: ND
Grizzly Bear Said:
Loans are a little tougher to obtain when there isn't a "home.  You can typically expect to have to put 20% down.  You may want to check with the local banks of where you are purchasing as somethimes they will have special programs so you can get by with 15% down.

Yeah still makes me scratch my head how land is worthless in the banks eye unless there is a building on it.




 
Kirsch's Outdoor Products | Fargo, ND | 701-261-9017 koutdoorproducts.com
Risovi Taxidermy Studio | New Rockford, ND | 701-947-2048 risovitaxidermystudio.com
Jig-em-Up Guide Service | Grand Forks, ND | 701-739-9198 jig-em-up-guide-service.com

 
Re: Buying land?
by on 10/11/2010 4:40 PM | Reply #7 | "Quote" | "Quick Reply" |

Joined: 07/10/2003
Location: ND

Depending on what part of the state you're in, I'd check if there is a 'Farm Credit Services' in your area.  They will take 35% down as noted by some above, but the interest rate for the variable rate is currently 3.9% amortized over 25 years.  Plus since they are a Co-Op, you get a 'profit' sharing check each year so the actual cost is even less - doubt you'll get one of these from any bank.

You can get a fixed rate of around 5.5%, but that's only locked in for 5 years I believe.

"I didn't claw my way to the top of the food chain to become a vegetarian."
Re: Buying land?
by on 10/11/2010 4:41 PM | Reply #8 | "Quote" | "Quick Reply" |

Joined: 09/05/2008
Location: ND
Goosefishmen (That's quite a name) is dead on.  It's quite a racket if you ask me.  That's just what I had to deal with when going through my last land deal. 
Re: Buying land?
by on 10/11/2010 7:14 PM | Reply #9 | "Quote" | "Quick Reply" |

Joined: 02/28/2007
Location: ND
Tim Sandstrom Said:
Grizzly Bear Said:
Loans are a little tougher to obtain when there isn't a "home.  You can typically expect to have to put 20% down.  You may want to check with the local banks of where you are purchasing as somethimes they will have special programs so you can get by with 15% down.

Yeah still makes me scratch my head how land is worthless in the banks eye unless there is a building on it.

I honestly believe this is a ploy used to control the price of farm land.  If it starts going crazy it'll be really bad. 

Re: Buying land?
by on 10/11/2010 8:23 PM | Reply #10 | "Quote" | "Quick Reply" |

Joined: 07/13/2003
Location: ND
Thanks for the info guys. Looks like I'll need to save up more!
Re: Buying land?
by on 10/11/2010 10:29 PM | Reply #11 | "Quote" | "Quick Reply" |

Joined: 11/26/2003
Location: ND
Anything I've seen lately around here is up for auction.  I've wanted to do the same, BUT, you show up and bid against the guy with the biggest checkbook.  Some of them are so greedy they will go way over actual value, either an out of stater with big $$ or a big farmer that wants it.

Re: Buying land?
by on 10/12/2010 00:06 AM | Reply #12 | "Quote" | "Quick Reply" |

Joined: 05/07/2009
Location: ND
LIke any investment, you have to run the numbers and understand the risk.  The numbers get a lot easier when you can pay cash.  and have a 10 CRP garantee. 

There is no limit on a Good Time!!

Re: Buying land?
by on 10/12/2010 08:10 AM | Reply #13 | "Quote" | "Quick Reply" |

Joined: 07/14/2003
Location: ND
HUNT,

When I was in the hunt (same time as ole goose was) I had dug up all kinds of information, links, made copies, printed stuff, etc.  It has been awhile and I've lost most of that paper trail.  But the point is, call some banks, call the USDA, etc and find out what kind of programs may or may not be available.  I found a couple that were pretty darn sweet but the other end (the seller) kinda put a kibosh to me when the price of land jacked up well over 2,000 an acre.  That was stinging a bit.  So I got frustrated and just settled on being a damn city boy.  Grrr...




 
Kirsch's Outdoor Products | Fargo, ND | 701-261-9017 koutdoorproducts.com
Risovi Taxidermy Studio | New Rockford, ND | 701-947-2048 risovitaxidermystudio.com
Jig-em-Up Guide Service | Grand Forks, ND | 701-739-9198 jig-em-up-guide-service.com

 
Re: Buying land?
by on 10/12/2010 08:35 AM | Reply #14 | "Quote" | "Quick Reply" |

Joined: 11/09/2004
Location: Sa
 
Goosefishmen Said:
Cost of land aside, here is a couple other money things to consider.


1.  15% to 30% down is norm from the banks I have talked with.  As a first time land buyer, you will have to have the cash.  Don't think they will let you use the equity in your house to cover down payment side.

2. Even with morgage rates at all time lows, you are looking at 5%-7%.  The longest you can lock in is 5 years.  Most banks prefer to do 3 years after which time you are at the mercy of interest rates at the time the loan is up to finance your balloon again.

Even is you build a place on it, they will not allow you to put more than 10acres and the house onto a morgage, rest at terms stated above.

Now everyones credit, bank, and buddy may find different deals, but this is what I have found in my personal experience.

 
That is pretty much spot on with my experiences. You will no doubt have to put cash down but like anything the better your credit and the more equity you have the easier it will be. Expect a short term loan for sure. 


kjs Said:

Depending on what part of the state you're in, I'd check if there is a 'Farm Credit Services' in your area.  They will take 35% down as noted by some above, but the interest rate for the variable rate is currently 3.9% amortized over 25 years.  Plus since they are a Co-Op, you get a 'profit' sharing check each year so the actual cost is even less - doubt you'll get one of these from any bank.

You can get a fixed rate of around 5.5%, but that's only locked in for 5 years I believe.

I think it depends on the use of the land. When I bought some a few years ago FCS was the first place I had in mind so I talked to them and they didn't want to offer me a loan. Mine was somewhat of an "investment" property. I wanted to buy the land for use somewhere down the road, build a place on it, etc and they didn't have a loan for me. I'm not sure if it had something to do with it not being ag related or what it was.

J
Re: Buying land?
by on 10/12/2010 11:20 AM | Reply #15 | "Quote" | "Quick Reply" |

Joined: 02/20/2009
Location: nd
I f you ever want to build on it, you'll eventually need power, water and a driveway. Look for where existing utilities are...it can cost a bundle to extend a powerline or rural water a mile, even more to build a long access road/driveway. Need to also consider what might happen for development around you...future coal mine, wind farm, gravel pit, oil well or feed lot? Last but not least, drainage...is there a spot to build that will be out of the flood plain that also minimizes all the above costs? Good luck on making your dream a reality!
Re: Buying land?
by on 10/12/2010 2:34 PM | Reply #16 | "Quote" | "Quick Reply" |

Joined: 05/23/2002
Location: ND
kjs Said:

Depending on what part of the state you're in, I'd check if there is a 'Farm Credit Services' in your area.  They will take 35% down as noted by some above, but the interest rate for the variable rate is currently 3.9% amortized over 25 years.  Plus since they are a Co-Op, you get a 'profit' sharing check each year so the actual cost is even less - doubt you'll get one of these from any bank.

You can get a fixed rate of around 5.5%, but that's only locked in for 5 years I believe.


There are 3 FCS Associations in the State of ND.  They all have territorial boundaries so you need to deal with the one where you are buying the land (there might be an exception but explaining it takes too long).  FCS of Mandan has a "patronage" program so you can expect to get a dividend each year.  FCS of ND (Minot) and AgCountry FCS (Fargo) do not pay patronage.  It really doesn't make much difference as the rates will be lower from the Associations that don't pay patronage (Minot and Fargo).

If you are just buying the land and not looking to finance a home, these organizations can provide the financing at favorable rates.  First of all you must be "eligible" and there are rules to follow and tests to be met.  If there is CRP on the land or tillable acres, that usually meets the test.  They will typically finance 65% or possibly 70% of the purchase.  You can get variable, adjustable, or fixed rates.  The fixed rates go up to 25 years.  Obviously, the longer you fix the rate for, the higher it is.  There are not any banks that will give you fixed rates like FCS.

If you want to buy land and build a home on it, GOOD LUCK.  A poster said you were limited to 10 acres.  That is no longer the case.  40 acres is the limit for loans that a lender will sell into the secondary market.  If the Lender retains the loan, it doesn't matter how many acres are included.  (Don't even ask for this type of loan from a big bank, they won't do it).  Banks hate to jump through the "underwriting" hoops on these types of loans and they hate dealing with the Consumer Protection laws that apply.  You won't have much better luck with FCS either because the same Consumer Laws apply and they might not be equipped to deal with these types of loans.
Re: Buying land?
by on 10/12/2010 2:45 PM | Reply #17 | "Quote" | "Quick Reply" |

Joined: 07/14/2003
Location: ND

The issue of 10 versus 40 acres comes in with comparables I think.  I was looking at 32 acres and it would be basically impossible for me to get a loan because of the 10 acre limit.  In other words, a survey parcel which would provide a comparable for the appraiser and ultimately the bank or credit union.  Again, this is doing the "conventional" type loan.  There are other ways to deal with it as Farnorth said.

It will make your head spin and yes, as Pat said you will definitely want to look into all of those things.  Rural water is ONE expensive luxury if you have to bring a line all by yourself.  The chunk I was looking at had rule water in the area and had plans to expand the direction the property was.  Plus had another builder coming in.  If they have more than one reason to come they often foot the bill with exception to around 80 to 100 feet and the hook up fees.  Your other option is well water.  That can be a wild goose chase in its own.

Power is pretty cheap.  Most utility companies will run to you as well as telephone.  High speed internet could be a challenge though.

And of course township and county requirements on approaches and new roads.  It adds up quickly.  Drain fields too!  Depending on what you do it will run around 7,000 bucks just to get a septic installed.

If you have some cash on hand I think you can get a loan on some land and pay out to 7 years and at a decent interest rate but you better have intent to build by then or have the money to pay the loan off.  If you have intent you can then roll into a construction loan.

Otherwise the loans are shorter and interest is higher.  I think this is a site I was using quite a bit for information:

http://www.rurdev.usda.gov/HSF_SFH.html

I have some others too but they are on my home computer.

It all makes a guy's head spin!

 




 
Kirsch's Outdoor Products | Fargo, ND | 701-261-9017 koutdoorproducts.com
Risovi Taxidermy Studio | New Rockford, ND | 701-947-2048 risovitaxidermystudio.com
Jig-em-Up Guide Service | Grand Forks, ND | 701-739-9198 jig-em-up-guide-service.com

 
Re: Buying land?
by on 10/12/2010 3:07 PM | Reply #18 | "Quote" | "Quick Reply" |

Joined: 02/28/2007
Location: ND
HDFatboy Said:
Anything I've seen lately around here is up for auction.  I've wanted to do the same, BUT, you show up and bid against the guy with the biggest checkbook.  Some of them are so greedy they will go way over actual value, either an out of stater with big $$ or a big farmer that wants it.
what people are willing to pay at auction is actual value.  what the appraiser says is actual value in all reality is a mythical number

Re: Buying land?
by on 10/12/2010 3:24 PM | Reply #19 | "Quote" | "Quick Reply" |

Joined: 05/23/2002
Location: ND
eyexer Said:
HDFatboy Said:
Anything I've seen lately around here is up for auction.  I've wanted to do the same, BUT, you show up and bid against the guy with the biggest checkbook.  Some of them are so greedy they will go way over actual value, either an out of stater with big $$ or a big farmer that wants it.
what people are willing to pay at auction is actual value.  what the appraiser says is actual value in all reality is a mythical number


Every appraisal I've seen in the last 10 years on land sold at auction had the same value as the sale price.  Willing buyer and willing seller equals market value.

Now, as a lender, I might want to take historical values into account when I decide what percentage to lend against the property.  Maybe 70% is too much and I might stop at 50% and make the buyer put more "skin" in the game.
Re: Buying land?
by on 10/12/2010 3:41 PM | Reply #20 | "Quote" | "Quick Reply" |

Joined: 07/14/2003
Location: ND
I should be an appraiser.  Pretty simple.  Just wait until the check is written and head on over and say "yep, I agree, same as what the check says." 




 
Kirsch's Outdoor Products | Fargo, ND | 701-261-9017 koutdoorproducts.com
Risovi Taxidermy Studio | New Rockford, ND | 701-947-2048 risovitaxidermystudio.com
Jig-em-Up Guide Service | Grand Forks, ND | 701-739-9198 jig-em-up-guide-service.com

 
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Posted On: 10/11/2010 1:58 PM
3254 Views, 41 Comments

Tags: land, buying, i'm, parcell, considering, interested, build, hopefully, quarter, seriously
More Tags: bank,
Region: North Dakota

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