How to buy land?

[hex0rz]

Alright, they say the best teacher is experience. Well, I certainly don't want this one to be my teacher in this case! I'd much rather receive advice instead!

 

Life is doing better, things are looking brighter in my world. Work seems to have a great future and so does me and the wife's employment there. Yes, believe it or not we both work at the same place and have the same shift. But different departments. Its a very nice way to make our income. The company seems to appreciate the fact of having family work together as we are not the only ones like this that work there.

 

Alright, so with that being said, I have a few more considerations to take into account, but I still need to get the path laid working towards my goal of getting possession of some land.

 

Obviously, I do not have such liquidity to just buy land outright. I will need a loan from some sort of institution. My question is what is the best way of obtaining one?

 

I have searched a little and find that there may be a few options to my approach:

 

1. A construction loan

 

2. Home mortgage loan

 

3. Open line of credit

 

List others if there is anything else...

 

First, I do not really have a large sum of cash to put down for a down payment. I understand most of the time they look for 20% down, IIRC. One institution I went to for pre-approval said they wanted 50k down before they would consider a construction loan!

 

I'm really trying to figure out how I can obtain land, naked with no buildings and build on it myself in my time. This of course could probably only mean that I would only get a loan for the amount of the land and build with my own money in time. Asking for more to build would probably be denied as the loan would exceed the value?

 

I was approved for a USDA loan to the tune of 210k with an absurd monthly payment. I'm obviously not going to apply for one with that amount unless I became landlord. The only way this approach would be achievable would be to have a large shop with the house. I was told I would not even need a down payment and it would be financed for 100% of the loan. Although, I'm a bit leery about USDA loans...

 

This approach would be the quickest and easiest, but I would not get what I envisioned for. But then again, who is to say I could not build plus, instead?

 

The line of credit thing, I know a guy who did it through his business and built a shop. It was for business purposes, and I would do it the same way. Long term goal is to do beekeeping for a living. I would need a building of some sort for the operation...

 

Of course, I do not want to commit fraud in any way...

 

So, who knows real estate, or has gone through the process enough to give me proper advice for a good approach?

[MnTom]

 My recommendation is to go to your local credit union or bank the knows you and see if they will give you a loan for raw land and if so how much, terms, down, etc. Then go to a realtor that you trust and tell them what you are looking for and your budget. A good realtor will assist you greatly in the purchase of land.

[gassernomore]

If you plan on living on it, make sure that it is zoned for that.  States have different zoning for virgin land.

[joecool911]

My recommendation is to go to your local credit union or bank the knows you and see if they will give you a loan for raw land and if so how much, terms, down, etc. Then go to a realtor that you trust and tell them what you are looking for and your budget. A good realtor will assist you greatly in the purchase of land.

And since the seller usually pays for the realtor fees, you get professional representation for no cost. Can't go wrong there. Unless you want to look at FSBO, then you'd need to enter into an agreement for service.

Edited October 22, 2014 by joecool911

[dorkweed]

Is this for investment or to live on????

[hex0rz]

I want to live on it. Get partially pastured, mostly timbered with year round creek. I've been seeing some ads for such places locally for good price. Then again living off the land is my investment.

[JAG1]

The only way I've ever bought raw land is to deal directly with the seller. I would be honest in telling him what I can afford and how much I had to put down. Then he would tell me what he needed ea. month or year to make it work for him. We would write a contract expressing what our final agreement was, open an escrow account at the tittle company with whatever money and the Land sale agreement. Tittle company does the property tittle search making sure there are no liens or incumbrances on the property. Once everything stands good with a clean tittle, the deal gets signed and then recorded at the county recorders office or county serveyors office.

 

For me dealing direct with the seller worked in both land sale agreements because it is difficult to find a lender that will lend on undeveloped property.

 

But..... you need to go down to the county zoning and planning and find out if it will fly in every way according to how you want to use it. Such as, will it be okay to install a standard septic system. Other types of systems are 3-4 times the amount. Sometimes rare conditions require 20-30 thousand bucks for a system.

 

Talk with all the neighbors and find lots of info. Sometimes you will find that you will want to avoid that particular county all together as some are impossible environmental cases. and with the local well driller to find out how deep and expensive the surrounding wells are. Some get crazy with depth and costs.

[hex0rz]

Thanks for the input JAG.

 

I'm still definitely going to need to research this for quit some time.

[anoldbiker]

I only bought 11 acres outside of the city limits. But when looking for a loan, the banks didn't want to touch it since there wasn't a structure. There was a farmers loan company that deals with bare land as long as your intent is to build and live on it, or use it for farming or ranching. For the life of me I can't remember the name of the financial institution but I'm looking through old papers trying to find it. I bought mine in 99. They were recommended from the local co-op in the area. They naturally deal with farmers and ranchers and they have needs for these kind off loans. And their rates were WAY cheaper than any other possibilities I had.

[JAG1]

Some counties are just the very best, most easy going you'll ever find. So be sure of a nice rural county that has not been converted to big city tactics.

Never buy any land in city limits, unless a good investment. Some cities are getting so bad with fees and tactics that it's best to steer clear.

Edited October 27, 2014 by JAG1

[bjytech]

I only bought 11 acres outside of the city limits. But when looking for a loan, the banks didn't want to touch it since there wasn't a structure. There was a farmers loan company that deals with bare land as long as your intent is to build and live on it, or use it for farming or ranching. For the life of me I can't remember the name of the financial institution but I'm looking through old papers trying to find it. I bought mine in 99. They were recommended from the local co-op in the area. They naturally deal with farmers and ranchers and they have needs for these kind off loans. And their rates were WAY cheaper than any other possibilities I had.

Here in Ohio most people that buy bare land like you're seeing end up going through a company called farm credit.

[LiveOak]

The only way I've ever bought raw land is to deal directly with the seller. I would be honest in telling him what I can afford and how much I had to put down. Then he would tell me what he needed ea. month or year to make it work for him. We would write a contract expressing what our final agreement was, open an escrow account at the tittle company with whatever money and the Land sale agreement. Tittle company does the property tittle search making sure there are no liens or incumbrances on the property. Once everything stands good with a clean tittle, the deal gets signed and then recorded at the county recorders office or county serveyors office.

 

For me dealing direct with the seller worked in both land sale agreements because it is difficult to find a lender that will lend on undeveloped property.

 

But..... you need to go down to the county zoning and planning and find out if it will fly in every way according to how you want to use it. Such as, will it be okay to install a standard septic system. Other types of systems are 3-4 times the amount. Sometimes rare conditions require 20-30 thousand bucks for a system.

 

Talk with all the neighbors and find lots of info. Sometimes you will find that you will want to avoid that particular county all together as some are impossible environmental cases. and with the local well driller to find out how deep and expensive the surrounding wells are. Some get crazy with depth and costs.

 

JAG1 gave you some SOUND advice.  You want to avoid getting a loan or going into commercial debt.  Try to save up as much money as you can so you can have at least a 20% down payment.  Avoid realtors especially when it comes to raw land.  Most.....NOT all, just want to collect a commission. 

 

A good real estate agent will go down to the courthouse and getting copies of previous deeds and related documents going back at least 20 years, find copies of surveys (you definitely want a survey sheet if it is available) , as JAG mentioned, the local ordinances and zoning are a must to be on top of. 

 

I am ALL OVER what JAG mentioned about talking with neighbors, getting a good clean title, and finding any possible land mines (like 2nd deeds of trust or IRS leans). 

 

A good attorney can be worth EVERY penny when it comes to a title search.  Also make sure you have a FULL understanding of mineral rights to ANY land you plan to buy.  Be sure to get out there and walk it to make sure you know what you are getting or at least do an aerial assessment via the tax assessors office, google, or other internet aerial photography. 

 

I am by NO means an expert in this area but I have been blessed and of fortunate circumstance that have allowed me to buy land.  I have had some very smooth and enjoyable transactions and I have had some REAL Doozies that made my head hurt. 

[JAG1]

Thank you for the complement LiveOak. I think most buyers would rather not deal with the county, septic permits, well drilling, power company and land use zoning and water rights etc. Lots of folks would rather have those things taken care of. There is less risk anyway.

Edited November 14, 2014 by JAG1

[LiveOak]

Thank you for the complement LiveOak. I think most buyers would rather not deal with the county, septic permits, well drilling, power company and land use zoning and water rights etc. Lots of folks would rather have those things taken care of already when they buy a place. There is less risk anyway buying with that all completed.

 

For most land buyers I think I would be in agreement with you.  When buying land for forestry and investment goals, being able to save that 10% real estate commission the agent gets can be a substantial amount of money in more that a few cases.  Buying and managing land is not for everyone but if you can make it work and pay, it can be rewarding.  Every dollar has to count.  You have to find every way you can to make the land pay for itself.  This can sometimes be a challenge but in the end worth it especially as I see it when I can improve wildlife habitat, improve forestry stands, and make the land available to responsible folks to enjoy. 

[hex0rz]

...still working on this beaten path.