Found a place, now how to afford it.

[MillIron]

It's been a really long time since I stopped by here. Last time was pretty helpful, so here I go again.

It's probably over a years since I last posted. In that year period, I've been building up my heard a bit, and trying to pay down debt a bit. I'm still operating on all lease land.

I've now found a place within reasonable distance of the town where my day job is, that is of a decent size. More than a decent size, actually, but it would be about perfect for us.

The problem now is that, in this still inflated market, there's no way I can come close to servicing a conventional loan for it.

Any ideas? I'm willing to entertain any possible solution.

 

[novatech]

I operate on lease land also. Land today is a separate issue and should be considered for investment and not as part of the cost raising cattle.
Maybe consider a smaller tract, as investment, resell at a profit. Do this over and over while gradually acquiring larger properties each time. During this process, of course, you must continue to lease.

 

[MillIron]

I operate on lease land also. Land today is a separate issue and should be considered for investment and not as part of the cost raising cattle.
Maybe consider a smaller tract, as investment, resell at a profit. Do this over and over while gradually acquiring larger properties each time. During this process, of course, you must continue to lease.

Good points. However, one thing I worry about on an all lease operation is that at some point, when the non using owner decides to sell, for example, you're suddenly out of business, or your economics are wrecked. I know that operating on lease ground is pretty common, but it always feels more than a little insecure to me as well.

Also, I'd like to have a place that my boy can step in to, if he wants too. I can't see that happening on a lease operation. I myself am descendant from a father who couldn't step into a place, as a prior generation had lost it.

 

[Frankie]

It's been a really long time since I stopped by here. Last time was pretty helpful, so here I go again.

It's probably over a years since I last posted. In that year period, I've been building up my heard a bit, and trying to pay down debt a bit. I'm still operating on all lease land.

I've now found a place within reasonable distance of the town where my day job is, that is of a decent size. More than a decent size, actually, but it would be about perfect for us.

The problem now is that, in this still inflated market, there's no way I can come close to servicing a conventional loan for it.

Any ideas? I'm willing to entertain any possible solution.

Could you buy it and then turn around and sell a portion in smaller plots? Then put that money toward your loan.

I understand your concern about leased land. We lost a lease suddenly several years ago. The grandson had decided he wanted to try the cattle business, but no one had notified us. So we had to get cattle off the place quickly and wound up selling cattle that we didn't want to sell.

 

[novatech]

I operate on lease land also. Land today is a separate issue and should be considered for investment and not as part of the cost raising cattle.
Maybe consider a smaller tract, as investment, resell at a profit. Do this over and over while gradually acquiring larger properties each time. During this process, of course, you must continue to lease.

Good points. However, one thing I worry about on an all lease operation is that at some point, when the non using owner decides to sell, for example, you're suddenly out of business, or your economics are wrecked. I know that operating on lease ground is pretty common, but it always feels more than a little insecure to me as well.

Also, I'd like to have a place that my boy can step in to, if he wants too. I can't see that happening on a lease operation. I myself am descendant from a father who couldn't step into a place, as a prior generation had lost it.

I agree with you for all the same reasons.
When leasing you almost always have to have more pasture than what you need and on more than one place. Stockers or more liquid type cattle can be kept on extra grass. And I do not have to buy near as much hay. (In my opinion lease pasture is cheaper than hay.)
At the prices of real estate today and the rapid increase in those prices I have found it necessary to just try and make money elsewhere if I ever want to acquire my dream. At my age it probably will not happen. That does not keep me from doing what I like.
As far as passing it on to your children be careful, you could be passing on debt if something should happen.

 

[L.A.]

Yep, land prices are high and no sign of decline even with this drought. Finding someone willing to sell any ground worth having is near impossible. I don't have any advise on the loan, but DON'T GIVE UP, things may workout. Best of luck.

 

[dun]

You might see if the seller is wiling to carry the paper on it. Frequently the interset rates are a little lower and usually the required down is less

 

[Brandonm2]

Have you actually talked to a lender? A 30 year fixed rate mortgage MIGHT not be affordable; but a lot of ranchers/hunters around here are signing up for 50 year paper. I don't recommend it; but it works for some people.

 

[HerefordSire]

It's been a really long time since I stopped by here. Last time was pretty helpful, so here I go again.

It's probably over a years since I last posted. In that year period, I've been building up my heard a bit, and trying to pay down debt a bit. I'm still operating on all lease land.

I've now found a place within reasonable distance of the town where my day job is, that is of a decent size. More than a decent size, actually, but it would be about perfect for us.

The problem now is that, in this still inflated market, there's no way I can come close to servicing a conventional loan for it.

Any ideas? I'm willing to entertain any possible solution.

What is the price of the land, how many acres, your combined household income that will be signing,your down payment, and your debt to income ratio?

 

[MillIron]

It's been a really long time since I stopped by here. Last time was pretty helpful, so here I go again.

It's probably over a years since I last posted. In that year period, I've been building up my heard a bit, and trying to pay down debt a bit. I'm still operating on all lease land.

I've now found a place within reasonable distance of the town where my day job is, that is of a decent size. More than a decent size, actually, but it would be about perfect for us.

The problem now is that, in this still inflated market, there's no way I can come close to servicing a conventional loan for it.

Any ideas? I'm willing to entertain any possible solution.

Could you buy it and then turn around and sell a portion in smaller plots? Then put that money toward your loan.

I understand your concern about leased land. We lost a lease suddenly several years ago. The grandson had decided he wanted to try the cattle business, but no one had notified us. So we had to get cattle off the place quickly and wound up selling cattle that we didn't want to sell.

Thanks. Because of the nature of the place I'm looking at (enough deeded land, with lots of BLM) splitting part of it out probably isn't an option.

I've worried about what you note here about having to sell your cattle. I've been lucky in that I've been able to lease from relatives, and participate in their leases of others deeded land. But it's always a bit tenuous for a variety of reasons.

 

[MillIron]

I operate on lease land also. Land today is a separate issue and should be considered for investment and not as part of the cost raising cattle.
Maybe consider a smaller tract, as investment, resell at a profit. Do this over and over while gradually acquiring larger properties each time. During this process, of course, you must continue to lease.

Good points. However, one thing I worry about on an all lease operation is that at some point, when the non using owner decides to sell, for example, you're suddenly out of business, or your economics are wrecked. I know that operating on lease ground is pretty common, but it always feels more than a little insecure to me as well.

Also, I'd like to have a place that my boy can step in to, if he wants too. I can't see that happening on a lease operation. I myself am descendant from a father who couldn't step into a place, as a prior generation had lost it.

I agree with you for all the same reasons.
When leasing you almost always have to have more pasture than what you need and on more than one place. Stockers or more liquid type cattle can be kept on extra grass. And I do not have to buy near as much hay. (In my opinion lease pasture is cheaper than hay.)
At the prices of real estate today and the rapid increase in those prices I have found it necessary to just try and make money elsewhere if I ever want to acquire my dream. At my age it probably will not happen. That does not keep me from doing what I like.
As far as passing it on to your children be careful, you could be passing on debt if something should happen.

Thanks for your views. I'm beginning to wonder if I'll ever be able to make it too. I'm young enough still that it's a hope, but a rapidly diminishing one.

 

[MillIron]

Have you actually talked to a lender? A 30 year fixed rate mortgage MIGHT not be affordable; but a lot of ranchers/hunters around here are signing up for 50 year paper. I don't recommend it; but it works for some people.

I did earlier, on some earlier, less attractive, deals, but I do need to go back and try it here. Based on my earlier experiences, I'm skeptical, but I do need to try to see what they can do for me, keeping in mind how they can hurt me too.

 

[GMN]

It's been a really long time since I stopped by here. Last time was pretty helpful, so here I go again.

It's probably over a years since I last posted. In that year period, I've been building up my heard a bit, and trying to pay down debt a bit. I'm still operating on all lease land.

I've now found a place within reasonable distance of the town where my day job is, that is of a decent size. More than a decent size, actually, but it would be about perfect for us.

The problem now is that, in this still inflated market, there's no way I can come close to servicing a conventional loan for it.

Any ideas? I'm willing to entertain any possible solution.

Could you talk to the owner see if he would be willing to do a land contract or owner financing, say for 10 years, then a balloon payment would be due, then you could refinance with a 15-30 year morgtage.

GMN

 

[MillIron]

Well I see it's been three years since I posted on this thread. In that three year period, I've become busier than ever in my town job, I have more cattle, but it's getting to look less and less like I'll be able to dump the town job and go to all ag.

Here's part of the reason why.

http://trib.com/news/state-and-regional ... mode=story

I have one of those "good" town jobs that other people think is interesting (and makes you rich). All it is, is stressful and aggravating.

I need to find a way to jump start out of this and into full time ag now. I'm 47 years old now, and not getting any younger? Any ideas?

 

[tncattle]

No offense GMN but you'll regret any balloon mortgage type deal almost for sure. It's not good business and it will kill you when you least need it. I know you don't want to hear this but if you can't afford it simply by buying it then don't. This is one of the many reasons our country is in the shape it's in now, people borrowing beyond anything they could ever realistically pay off ever. We were really on the buying phase 3-4 years ago and now I just lease and it's so much less stress-full and affordable. I know it sucks but if your land owner throws you out and you have to sell your cattle it's still much, much better than being in debt up to your eyeballs with no way out. You can always find more lease land and start over. If you get too far in debt it will ruin your way of life and you'll never be able to enjoy the lifestyle. Just my .02

 

[bigbull338]

if you could get that place bank or owner financed then all you would have todo is suffer through the payments.i know you dont want tobe to far in debt.but if you want a place your gonna have to buy it.we are in the process of selling a house in town.an we are financing it for the buyer.really wanted all the money up deont.but knew we would get it back if they missed the payments.

 

[rkm]

If you can find a way to finance go for it. Don't be afraid of losing it. I know the heartache losing. But I'm only sorry for the deals I never made.

 

[GMN]

No offense GMN but you'll regret any balloon mortgage type deal almost for sure. It's not good business and it will kill you when you least need it. I know you don't want to hear this but if you can't afford it simply by buying it then don't. This is one of the many reasons our country is in the shape it's in now, people borrowing beyond anything they could ever realistically pay off ever. We were really on the buying phase 3-4 years ago and now I just lease and it's so much less stress-full and affordable. I know it sucks but if your land owner throws you out and you have to sell your cattle it's still much, much better than being in debt up to your eyeballs with no way out. You can always find more lease land and start over. If you get too far in debt it will ruin your way of life and you'll never be able to enjoy the lifestyle. Just my .02

You misread my whole post like always-I said a land contract then a balloon payment, with option to refinance,later at a 15 or fixed 30 year, alot of people do it. Realistically no one has the cash to buy land outright, not sure what you mean by bad business, as long as your land is worth more than you owe on it, can't see how you can lose. Now for leasing, that is hopeless, unless someday you intend to buy it, because ANYTHING you put into the land, could be taken away from you as you are not the true owner-
One more thing farming isn't just a lifestyle, thats a true city slicker talking-its a life, the land is more than just a piece that you get sick of buy another-if you were a true farmer you would understand-nuff said!

 

[tncattle]

No offense GMN but you'll regret any balloon mortgage type deal almost for sure. It's not good business and it will kill you when you least need it. I know you don't want to hear this but if you can't afford it simply by buying it then don't. This is one of the many reasons our country is in the shape it's in now, people borrowing beyond anything they could ever realistically pay off ever. We were really on the buying phase 3-4 years ago and now I just lease and it's so much less stress-full and affordable. I know it sucks but if your land owner throws you out and you have to sell your cattle it's still much, much better than being in debt up to your eyeballs with no way out. You can always find more lease land and start over. If you get too far in debt it will ruin your way of life and you'll never be able to enjoy the lifestyle. Just my .02

You misread my whole post like always-I said a land contract then a balloon payment, with option to refinance,later at a 15 or fixed 30 year, alot of people do it. Realistically no one has the cash to buy land outright, not sure what you mean by bad business, as long as your land is worth more than you owe on it, can't see how you can lose. Now for leasing, that is hopeless, unless someday you intend to buy it, because ANYTHING you put into the land, could be taken away from you as you are not the true owner-
One more thing farming isn't just a lifestyle, thats a true city slicker talking-its a life, the land is more than just a piece that you get sick of buy another-if you were a true farmer you would understand-nuff said!

What do you mean I "misread your post like always"? I can't even remember the last time I responded to one your posts. I sure haven't made it a habit. Get over yourself, I meant no offense and obviously you can't understand that. My life will never be the same because you said I wasn't a true farmer. :cry2: There are some pretty sweet lease deals in my area, not sure about yours. But it's light years better than having some huge payment. Realistically some people do have the $ to buy land outright, you just have to be patient and smart. You do it your way, I'll do it mine. GEEEZ...

 

[agmantoo]

MillIron
I was raised in a small town on a quarter acre lot and never inherited a square foot of land. Under those circumstances I have still managed to acquire some decent acreage using various plans. I suggest that you have a one on one conversation with the current owner(s). Be honest and tell them your situation. Ask them is there any way that you could come to an arrangement to where you could over time become the owner and that in turn you can improve the place and share some of the income. Explain that they have nothing to lose because if you cannot met the obligations they can take the place back and it will be better than it was when you received it. The best enticement is if you can show some down payment as good faith. You may be surprised at the outcome. If you can work this out, hire a lawyer to document the arrangement. Good luck.