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Home, Land, and House - Financial Gurus Step inside.

The Beens

Well-known member
Joined
May 19, 2020
Member Number
273
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62
Loc
Missouri
Wifey and I are looking at buying a piece of ground and building a house. We've tested these waters once, but couldn't get the market and sale of the land to process. Here are my current thoughts and for those of you that have done this or know something about it, please feel free to call me a retard or tell me where I'm going wrong.
  1. Buy the land we want. 44.7 acres, closer to work for both of us. We have the savings to cover the down payment and can afford the monthly payment.
  2. Wait to build house when material prices come down from current retarded levels. Assuming that they do. At the same time, sell some timber from the property in the locations that we want to build and clear for pasture/views from the house. Probably enough money there to cover the down payment on the initial land purchase.
  3. Sell current property and use financial gains from said sale to replenish savings/down payment on construction loan to build house.
Side note: No pictures of Wifey, sorry... tact and whatnot. We are not financially burdened, just living in something that isn't big enough and trying to upgrade a bit. Neighbors are collecting ford trucks and stacking them all over their property. Basically looks like Ziptiesandbiasplies place. Good folks but won't do anything for my property value.
 
Land is harder to finance and a higher interest rate, you might look at doing a construction loan and do it all a one loan. Yes materials are high but interest are low so it's probably a wash on a mortgage. Plan B, buy land, put a shitty single wide on it to live in while you build. Bonus points for starting a grow operation in to pay for your house.
 
When I did similar 25 years ago, the bank I used for the construction loan wanted us to own the property free and clear, or take a loan from them to pay off the original loan on the property. Likely so that if there was a default, they were primary not secondary to the original owner who had sold the property to us, and owner financed it. I cashed some investments and paid off the loan on the property.

I think waiting on material costs to come down is probably good, but we could see these elevated prices through this year and possibly even next summer. Some of it is panic / supply and demand, but some of the timber pricing is a result of the mills shutting down most of last year, and not all of them have returned to full production yet.
 
How much timber are you planning on selling??? What kind of wood?

I have found raw land is a little harder to finance and a little higher interest rates (at least in my experience) if that makes a difference.

 
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See if you can use AgChoice for land finance. I used them on 16 acres and they’re great.

As for building, it always came out to be too expensive for me to venture down that path. We ended up finding a house on 20 acres that mostly all wooded.
 
Where are you at? I need a neighbor with a bunch of shitty old Ford`s in the yard so my yard full of shitty old Chevy`s looks nice.

Fairly certain you aren't serious, but if you want to know. 63937


Land is harder to finance and a higher interest rate, you might look at doing a construction loan and do it all a one loan. Yes materials are high but interest are low so it's probably a wash on a mortgage. Plan B, buy land, put a shitty single wide on it to live in while you build. Bonus points for starting a grow operation in to pay for your house.

Don't know the interest rates yet, but we have looked at a single loan for purchase and build. None of the local folks will do that. What stopped us before was having enough cash to come up with down payment. 5 years of saving helps that out a bit. Plus, since we didn't really need anything. The last couple years of taxes and govt. stimulus cheddar has bolstered that. Wasn't a big fan of the stimulus plan but for fuck sakes, it was probably my money to begin with.

They all want land owned first. My thought was buy land, sell timber/clear build area and have the shop built, well drilled, and electric run all in that same loan. Put camper or frame out 2 rooms and a bathroom in shop and live in that till current house sells and new house is built. Not thinking single wide, but could be tempted in modular...I guess those are considered "Single" or "Doublewide" when you look at the papers though. Not sure what Missouri has for grow operations that are legal and the area already has a pretty competitive market for that stuff. I'm not interested in going Breaking Bad until I'm old. Then I'll go all Grand Torino.

How much timber are you planning on selling??? What kind of wood?

I have found raw land is a little harder to finance and a little higher interest rates (at least in my experience) if that makes a difference.

I'm not a forester, but I'm sure I could study enough to ball park an estimate. I have a friend that just cut my current property that will come look and give me an estimate. From my current walk of the property, I'm guessing its probably a 60:40 split between Hardwood and Pine. It looks like about half was cut about 10 years ago. What they left isn't ready to cut again, but should be in about 5-10 years or so. The other half is some good looking timber with little to no undergrowth. I don't really want to cut that, but I'm not opposed to doing what is necessary.

The hardwood is going to be a mixture of Oak (red, white, post), Elm, Ash and some hickory.

See if you can use AgChoice for land finance. I used them on 16 acres and they’re great.

As for building, it always came out to be too expensive for me to venture down that path. We ended up finding a house on 20 acres that mostly all wooded.

All those idgits coming out of the blue states and city's and the yuppy hunting clubs are buying up the places like what you describe and raw land. We've chased this process and found next to nothing that folks didn't want triple last years prices for. In January, we looked at a 40 acre square with house, 2 car detached garage...sort of, and two old barns that were falling apart. The house had lead based paint; basement was leaking and had a shit ton of black mold; and had asbestos tiles. It was a complete gut and refinish along with foundation drains and mold removal. They wanted $5,000/ac. I told the realtor he wasn't anywhere in the ballpark. Apparently I was wrong because its under contract.
 
See if you can use AgChoice for land finance. I used them on 16 acres and they’re great.

As for building, it always came out to be too expensive for me to venture down that path. We ended up finding a house on 20 acres that mostly all wooded.

Missouri's version of that is Farm Credit Southeast Missouri. Haven't gotten a response from them with my inquiry.

Also looked at USDA Farm loans. We had a 55 acre spot picked out but Govt. shut down put the kabosh on that.
 
I'm not a forester, but I'm sure I could study enough to ball park an estimate. I have a friend that just cut my current property that will come look and give me an estimate. From my current walk of the property, I'm guessing its probably a 60:40 split between Hardwood and Pine. It looks like about half was cut about 10 years ago. What they left isn't ready to cut again, but should be in about 5-10 years or so. The other half is some good looking timber with little to no undergrowth. I don't really want to cut that, but I'm not opposed to doing what is necessary.

The hardwood is going to be a mixture of Oak (red, white, post), Elm, Ash and some hickory.

My only point was going to be, 44.7 acres, and I imagine you want to keep some trees, so you aren't just in the middle of a barren pasture, so you are down to ... what 30 acres MAX?

If someone is cutting in your area, you are good to go, but to get someone out to cut a 30 acre tract....... MAYBE.... but it's not a given. It's not the same as the place down the road selling off 250 acres.

(I've found the same issues with hay, it has to be really convenient, or big enough to be worth someone's time).

I don't know, maybe it's different where y'all are.
 
From experience, there is some money in select harvesting, but not a lot. We logged 6 years ago, got about $9k worth of revenue. Unless you want to clear cut, I'd consider calling the local forestry office and talking through the options.
 
My only point was going to be, 44.7 acres, and I imagine you want to keep some trees, so you aren't just in the middle of a barren pasture, so you are down to ... what 30 acres MAX?

If someone is cutting in your area, you are good to go, but to get someone out to cut a 30 acre tract....... MAYBE.... but it's not a given. It's not the same as the place down the road selling off 250 acres.

(I've found the same issues with hay, it has to be really convenient, or big enough to be worth someone's time).

I don't know, maybe it's different where y'all are.

I smell what your stepping in. In our area, at least when I was a kid, as a male you had 3 choices after graduating high school. College, military or go to work. College and military are obvious with their available options but work wasn't. For the ladies, it was the Paramount Cap Factory and for the guys it was the sawmills or the logging crews.

Its still like you say, has to be worth their time. But there are still small business loggers like my buddy that aren't turning anything down. Hell, my current place was only 8 acres and he jumped right on it. This place will be more selective for the area and the cut. Its not real far off the beaten path, but there also isn't a lot of logging real close either. So I would expect that it would fall under the "When we get a chance to get out there" option. I'm still ok with that, if I'm waiting on material prices to come down. If I'm not, then the only way to get them there quick is to advertise the whole thing as cut and run with no clean up. That'll get the most money but it won't be what I want for the place either.
 
Id look at what similar places with a home are going for and then figure what the total cost of your property will be after high intrest rates, permiting, headaches, and 5 years of your time making it happen. If costs are eben remotely close buy a chunk with a home on it and spend the next 5 years being happy and making it your own.
 
I purchased 20 acres of land to build on in Missouri about 12 years ago. FCS is who we used. They require 25% down. I was able to rent the farmable land out to recoup almost 1/2 the land payments. At the 4.5 year mark, I ran the numbers and we would be in it the same as buying a place that was complete. We are talking a $500,000 piece of property that I had to maintain and pay taxes on....Wife was antsy to get into a place so we purchased a shortsale house and ended up selling the property. I regret selling but it was for the best. It wasn't going to be a good situation financially, and it became obvious that we didn't want to live down the road from family. If you have any questions, hit me up.
 
Wife and I are started down the same road. Bought a house 5 years ago. Bought land and sold house last year. Real estate market is bonkers here so we got a nice flip on the house which made buying the land feasible. About to put the first shovel in the ground on a 40x48 shop with an attached apartment. House to come later. Material prices are insane right now but like I said so is the housing market so I say a wash.

130+ acres of timber. We are working with a forester to do some selective cutting and open it up. Be surprised what your buddy says he can take off 40 acres.
 
Land loan will be 25%-50% down and about 6% interest with excellent credit. Land market is nuts everywhere right now, and more is selling than being listed so only expensive or shitty tracts are remaining. Where will you live between homes? Putting the sale proceeds into the new build should avoid capital gains tax from your current home sale. Make sure you do that correctly.
 
Thanks for the info folks but its a moot point now for this particular tract that we were wanting. Made him what we thought was a reasonable offer for comparable tracts in the area. He wants to stick to his original asking price, which in my opinion is about double what it is worth. He is trying to use the sale of this property to cover the capital gains tax on another tract that he recently purchased. To each their own, his property and he can do as he pleases. This piece is bordered by tracts owned by an attorney, a butt scoping doctor, and the largest land owning farm corporation in the area Bakers Acres. So he'll probably get his asking price once his lists the ground. Oh well, ciest la vi.

I will definitely use the info you guys posted for the future though, I do appreciate it.

With homes and property sales in the area being what they are right now, our current equity is approximately 40% to maybe 50%. 1-2 years ago, we were looking at 15-25% equity. This is one of the main reasons we are looking so hard right now. We have the cash for down payments and selling our place should be easy and reasonably fast. Not always a guarantee but in the grand time frame of buying and building, it should land right in there.

We have options for living in between house locations, that wouldn't be a problem.
 
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