Attempting to purchase a farm

In reply to yupididit :

It depends what you want.  I'm from here but I've lived all over the world.  It's a small farm community but I drive about 40 minutes to work in Kansas City.

dculberson (Forum Supporter) said:

Steve_Jones said:

yupididit said:

An acre of raw land is like 30k around here.

 

multiply by 10 here. It's crazy. 

Well there's "an acre of build able home site" then there's "one acre out of a hundred in farm land" - those are two radically different value propositions. Around me a .2 acre home site can be $200,000+ or an hour out you can get 20 acres for your $200,000. 
 

heck here's 5 acres in your county for $125k:

https://m.landwatch.com/delaware/sussex-county/farms-and-ranches-for-sale/?id=337430786

I know you just like to try and prove me wrong, but that's nowhere close to where I live. Yes my profile might have it, but surprise my name is not Steve either. 

Patientzero said:

In reply to yupididit :

It depends what you want.  I'm from here but I've lived all over the world.  It's a small farm community but I drive about 40 minutes to work in Kansas City.

How "diverse" is that small farm community? I know it may seem silly but I've had bad experiences in some small farm towns because of how I look. 

With that said. In the next 7 to 10 years, I plan on moving to and living in a small town on a decent amount of land. I was hoping to be within an hour or so of a decent size city. Here in Texas that used to be an affordable thing, but not anymore!

In reply to yupididit :

I can understand that.  I lived in Houston for about 4 years and I'm glad to be out of that E36 M3hole.

I would say above average diversity for a small farm town.  Being so close to KC probably helps that.  We have a pretty healthy hispanic community.  Not a huge black community but several families around.  There are definitely people that are going to be unwelcoming but I think that can be said about anywhere.  The younger generations are more open minded than the older generations but that probably goes without saying.

Steve_Jones said:

dculberson (Forum Supporter) said:

Steve_Jones said:

yupididit said:

An acre of raw land is like 30k around here.

 

multiply by 10 here. It's crazy. 

Well there's "an acre of build able home site" then there's "one acre out of a hundred in farm land" - those are two radically different value propositions. Around me a .2 acre home site can be $200,000+ or an hour out you can get 20 acres for your $200,000. 
 

heck here's 5 acres in your county for $125k:

https://m.landwatch.com/delaware/sussex-county/farms-and-ranches-for-sale/?id=337430786

I know you just like to try and prove me wrong, but that's nowhere close to where I live. Yes my profile might have it, but surprise my name is not Steve either. 

Wow ok I was honestly just trying to make conversation. Showing that land varies massively by intended use and location. If your location in your profile had been right then it is close to you as "within the same county" in Delaware is close by any reasonable standard. Obviously you're a peachy guy and I'll be sure to avoid you from now on. Hope you have a nice life. It's obvious why you use a fake name and fake location. 

Patientzero said:

In reply to yupididit :

I can understand that.  I lived in Houston for about 4 years and I'm glad to be out of that E36 M3hole.

I would say above average diversity for a small farm town.  Being so close to KC probably helps that.  We have a pretty healthy hispanic community.  Not a huge black community but several families around.  There are definitely people that are going to be unwelcoming but I think that can be said about anywhere.  The younger generations are more open minded than the older generations but that probably goes without saying.

Thanks for the honest feedback. In really appreciate that. I sent that zillow link you posted to my lady and she was astonished at how much you can get for that money all while being within reasonable distance of civilization. 

How's the winter though? I hate snow 

In reply to yupididit :

We get about 5 good snows per year.  Not a great deal but enough to play in sometimes. 

dculberson (Forum Supporter) said:

Steve_Jones said:

dculberson (Forum Supporter) said:

Steve_Jones said:

yupididit said:

An acre of raw land is like 30k around here.

 

multiply by 10 here. It's crazy. 

Well there's "an acre of build able home site" then there's "one acre out of a hundred in farm land" - those are two radically different value propositions. Around me a .2 acre home site can be $200,000+ or an hour out you can get 20 acres for your $200,000. 
 

heck here's 5 acres in your county for $125k:

https://m.landwatch.com/delaware/sussex-county/farms-and-ranches-for-sale/?id=337430786

I know you just like to try and prove me wrong, but that's nowhere close to where I live. Yes my profile might have it, but surprise my name is not Steve either. 

Wow ok I was honestly just trying to make conversation. Showing that land varies massively by intended use and location. If your location in your profile had been right then it is close to you as "within the same county" in Delaware is close by any reasonable standard. Obviously you're a peachy guy and I'll be sure to avoid you from now on. Hope you have a nice life. It's obvious why you use a fake name and fake location. 

You've said here you don't like me, so calling you out on it shouldn't come as a surprise. Delaware isn't even the correct State. As far as fake names, pretty sure your username isn't your given name either. You've said a few times you'll avoid me, but for some reason you don't. Please try harder

In reply to Steve_Jones :

With such a sunny disposition how could I help but love you? Hugs and kisses, good night sweet prince. 

In reply to Patientzero :

Btw i followed you on IG

In reply to Ranger50 :

When I attempted something similar I spoke to a banker friend. 
he told me to treat it like any other investment. 
Start with the books. Look up annual profit and losses. To establish the earning potential.  He said he would never finance any land that doesn't have statements going back 20 years or more. 
Land is only worth what it can yield in income.  
if it's been fallow or shown no reasonable expectation of return it's not an investment it's speculation. 
He will  lend on spec if you have a record going back 20 years that justify the risk.  
I wanted an Apple orchard. I read everything I could get my hands on.  Spoke to a lot of farmers who were remarkably willing to open their books for me. 
Looked at where I was financially and decided 80 Acres with adjacent orchard that was 105 acres and a farmer in his late 80's ( and no family)   
Or hard are a bit different in that the age of trees and variety(s). Had more impact than crops did. 
His best year was $9,000  income and approximately 1 year in 7 he lost money. 
He did take advantage of some government programs I wasn't even aware of plus deductions for insurance and vehicles etc. 

You know how to make a $1,000,000 farming?  Start with $3,000,000.  

The barn where my cars are is 15 acres and was $425,000.  I almost bought a 20 acre parcel with a million dollar view of the whole central valley of California for $49,000 about 10 years ago.  Geez, it sold a few years ago for $250,000 after they took it off the market for a few years with no buyers.   It did have a long steep dirt road, and was not farmable, but mountain goats would work. :)     I think this might be a picture of it, it was at the top of this hill in the background, or it was on the left at another hilltop.

Now you can buy the land in front, 20 acres for $99,000 today.

I like to look at farms and land for sale. Dream is to move to the country and run some cattle, chickens and pigs Mostly interested in raising my own food more than trying to make a living off the operation.  So, this thread is of interest to me. Please keep the signal to noise ratio up so it doesn't end up locked. 

bigdaddylee82 said:

There are lending agencies that specialize in this.

I don't know how wide reaching they are, I think Farm Credit Services is a national organization and Ag Heritage is the regional lender that we used, they're part of FCS.  They're a lending cooperative, customer owned lender, all they do is rural and agricultural loans.

We bought 115 acres of raw land, wooded swap, in January of '19.  Property is a lot cheaper in central AR, it really varies, but I've seen stuff sell for <1K/acre and as much as 15K/acre depending on proximity to a population center, access, and a whole lot of other variables.  Ours averaged out to about $1,900/acre, we've got 1/4 mile of highway frontage, that was valued more than the back end of our property.

FCS was easy to work with, we got a good interest rate, then when the Fed dropped interest rates earlier this year, our agent called and asked us if we wanted a lower interest rate, we dropped 0.9% and the savings will pay for the refinancing penalty by the end of the year.

Since it's a customer owned co-op, we get paid back a "dividend" they call their Patronage Program based on our loan annually as well.

Farm Credit Service and USDA's FSA offer beginning and/or young farmer programs as well.

Man, I love this forum.  I am also in the middle of considering a farm purchase, but I never would have thought to post a thread.  You guys really do know everything!

I have applied for and gotten approved financing through AgAmerica (https://agamerica.com), but I was wanting to do a "sense check" with a 2nd lender, and FCS sounds like just what I'm looking for.  My loan was for 4.4% on a 30yr term, with the first 5 fixed, but adjustable after that.  30yr fixed for the whole term on bare farmland was running mid 5%. 

EDIT: Looks like FCS only lends in Iowa, Nebraska, South Dakota, Wyoming, and certain parts of Kansas, per the error message I got starting an application.

To the OP, I'm not sure I understand your original question.  If you're asking, "Are there companies that will loan me money to buy a farm?" then yes, I think there are several posted here in this thread.  If the question was "Will someone subsidize and reduce the purchase price of the $895K property I want to buy at no cost to me?", I expect the answer is no.  Also, your calculated mortgage numbers seem high:

$895K with property tax of $3K (bare land is usually cheaper than housing, even huge lots) and throwing in a $1000 liability insurance policy just because, I come up with ~$4400/month, assuming 20% down (most land/farm lenders want 25-30%, just FYI), and an interest rate of 5.5%.  That's real money, but you're talking a near-million dollar real estate deal.

I think the OP isn't looking to finance a farm, he's looking to finance land. That's a different proposition when it comes to talking with lenders.

Keith Tanner said:

I think the OP isn't looking to finance a farm, he's looking to finance land. That's a different proposition when it comes to talking with lenders.

Mine is just land (mostly wooded), "suitable for farming", but not currently used for that purpose.  AgAmerica did their own due diligence on the lot, but came back with, "Yes, this is acceptable use".  So it's worth a call in most cases.  The lenders I spoke with also seem to be more accommodating vs. BOA/Wells Fargo/Chase/etc, tell them what you're trying to do and they can usually walk you through it.  My application was a pretty plain-language document considering the amounts involved.

In reply to Flynlow (Four-Digit Forum Supporter) :

Who has $150k-$300k in cash to put down these days, damn!

yupididit said:

In reply to Flynlow (Four-Digit Forum Supporter) :

Who has $150k-$300k in cash to put down these days, damn!

Hopefully, the sort of person considering an $895K property :).  For the record, my property, loan, etc, is nowhere near that amount but I was using OP's numbers to try to help them out.

While I agree the dollar amounts are high, if we look at it in terms of %, 25-30% doesn't seem unreasonable to me for a down payment on something, be it a car, house, business, whatever.  The borrower should have some skin in the game.  I think this 0% down, or loans on top of loans to make a "downpayment"  out of thin air that is really a hidden or unsecured loan, is part of the reason for our house of cards economy.  And it goes all the way up: a Fortune 500 company not able to survive because of a bad month like we're seeing (let alone a bad quarter or bad year) is evidence of a business that is wildly overleveraged and made terrible decisions regarding its cash on hand.  But that's as far as I'm willing to go towards patio topics. 

Gonna have to adjust your expectations. Here in mid-MO, undeveloped land is 10k an acre. If you expect to find something with a house, garage, barn, etc, you're talking about 450k for 20 or so acres. I've got a family member that will gladly sell you exactly that for about that amount, so they can buy some acreage where there is no shared driveway. You  may not be looking to share part of your driveway either.

In reply to N Sperlo :

I just posted a property here in Missouri that is nowhere near those numbers.

Sorta related: A childhood friend has a farm in New Jersey between Trenton and Long Branch and recently made this video. 

Ranger50 said:

Hold up. It's already a farm, so it's not raw land. It has a home on the property plus the out buildings for farming. So it's not attempting to start a new farm.

The USDA has a program for down payment assistance or capital expenditures that's what I referenced earlier. 
So again, how does one get the financing towards property that is well outside my price range but is the style of property I want?

To a lender, a "farm" is not some dirt with a couple of barns and a house.  A farm is a business in the agricultural industry actively trying to make a profit. They lend money based on the projected revenues.

Nobody is gonna "loan" you money to buy a property bigger than you can afford to pay for just so you can sit on your tush and enjoy it. 
 

If you have no ability to repay, that's not a loan. That's a gift. Or throwing money away. One or the other.

Let's see if I can put this in automotive terms...

I'd like to buy a large auto shop. About 35,000 square feet.  I found one for sale. It has 24 lifts, and alignment rack, welding and machining area, emissions evac system, 2 stage compressor, air lines and all the equipment.  
 

I've never run an auto shop, but that's ok. I don't intend to use it or operate a business. I just wanna own it, and park my Lemons racer in it and a few project cars. 
 

Dude's selling it at a great price. Only $895,000.  That's way more than I can afford to pay for.  
 

Would you loan me some money so I can buy it??

I just found a 40 acre parcel today with a 1750sf house (new and very nice), huge hanger and a 3500 foot long airstrip, all for $495k.