Land purchase options

[cross_7]

Lets say I only have enough cash to purchase a piece of property that is smaller than I would like.

Option 1
Buy a smaller property and own it free and clear, then borrow money for another property that may be a few miles away.(Not using the property I own as collateral)

Option 2

Borrow the money to purchase the size property that I want and have it all in one parcel, giving me a mortgage and not own any of it free and clear.

 

[alohacattle]

Based on the simple fact that I borrow huge amounts of money every year for commodities that could all be worthless in the morning, I say borrow the money and get what you want and need. I would never be nearly as successfull or profitable on my own money.

 

[backhoeboogie]

You simply have to do a business case analysis for yourself. Can you make it pay? Better to put money in land than cars, boats, or other toys. I bought a piece the cows are paying for. Didn't like it but couldn't pass up the deal or the opportunity. I am back n debt. Happy about it. Place is appraised at just over a million. I owe $180k. Steadily improving it too.

 

[bigbull338]

i think you would be better off borrowing money an getting the amount of land you want an make payments.an use the money you have for a down payment.

 

[denvermartinfarms]

i think you would be better off borrowing money an getting the amount of land you want an make payments.an use the money you have for a down payment.

+1.

 

[Ouachita]

cross7,
I've recently ask myself the same question. I did option #1. I think it is really a personal/situational decision. I made my choice because of the current world/economic climate. If the world turns to shyt tomorrow, I own what I own. Considering that we as citizens of the USA are the collateral for our government's borrowed money, I don't think it matters anymore. But I will feel better about busting a cap when the chinamen come to take it.
I say buy what you can pay for free and clear. Then borrow on the blue sky. Somewhere in between, pray to God. I think you can find your answer in The Book. You're a Christian Man and I know that you already know the answer to your question. I also know it's good to have confirmation and reassurance, and that is the reason you ask. Pray hard

 

[cross_7]

I would like to own part of it free and clear, bucause you just never know.
I would rather have it all under 1 fence but I would sleep better at night owning some of it and not having it all mortgaged
That is the only reason I would think of buying 2 seperate properties, but I am not sure if I could be forced to sell property 1(paid for) to settle debt on property 2 in I default on the loan.
I would never borrow the money if I didn't know for sure I could make it pay but no one can see the future and I am sure the lender would require enough of a down payment to cover themselves if i default.

 

[Nite Hawk]

I have a differing opinion than some here, I figure one bird in hand is better than 2 birds in the bush. One never knows if sickness or injury might prevent one from paying a mortage off or not, then you lose not only the place you are trying to buy, but the one you have paid off and have the mortage on .
I figure buy one place clear and free and build up your finaces before either selling what you have, or with the built up finances buying a second place.
I know it is a pain to have 2 places, but it is possible that something else might come up that is together and bigger that appeals to you
, and you have the ability to sell what you own.
Remember what the word mortgage comes--From the latin word Mort= "death" from which comes the word mortuary.
I know many people who have mortagages, but don't know too many who actually OWN their own place, the bank owns it.
Just my opinion..

 

[cross_7]

Thanks

 

[Texas PaPaw]

I would like to own part of it free and clear, bucause you just never know.
I would rather have it all under 1 fence but I would sleep better at night owning some of it and not having it all mortgaged
That is the only reason I would think of buying 2 seperate properties, but I am not sure if I could be forced to sell property 1(paid for) to settle debt on property 2 in I default on the loan.
I would never borrow the money if I didn't know for sure I could make it pay but no one can see the future and I am sure the lender would require enough of a down payment to cover themselves if i default.

Cross
If you buy in Texas you will have homestead protection on up to the first 200 acres that is free and clear. If you get in a jam on other deals your homestead is safe. Talk to an attorney (or title co) for more details. This could be a real plus in a bad situation, however once it is a free and clear homestead you can't use it for collateral for another piece of property or a line of credit.

Under they right circumstances it might be possible to pay cash for a portion of a place and make that your homestead and have a mortgage on the balance. Would take a cooperative seller and some good legal advise. Maybe buy the homestead parcel first then close on the balance in a later (ie, next day) transaction.

Just another 2 cents worth.

 

[cow pollinater]

The bank is going to want you to have a net worth of at least 50% of what you want to borrow. If you can buy the smaller place for a little less than it's worth and then show the true value of the place to the bank it can help you out quite a bit to buy small first. They see paid for land as an asset the same as money in the bank.

 

[razephroot]

What about buying the larger piece in two parcels? Pay one parcel in full and mortgage the remainder.

 

[Caustic Burno]

Lets say I only have enough cash to purchase a piece of property that is smaller than I would like.

Option 1
Buy a smaller property and own it free and clear, then borrow money for another property that may be a few miles away.(Not using the property I own as collateral)

Option 2

Borrow the money to purchase the size property that I want and have it all in one parcel, giving me a mortgage and not own any of it free and clear.

In My world there is only one option and that is cold hard cash.
But I was raised by a generation that didn't believe in someone else owning their place.
If you don't pay it off out right, you are nothing more than a renter paying someone else a third or half more than the purchase price to own a place. That money can go a long way for other items. Remember until you pay the last payment and get the release of lien you don't own crap.

 

[Jogeephus]

As cheap as interest is, I don't know if I wouldn't borrow especially if the land had the potential to go up in value. Key with borrowing - IMHO - is not to borrow more than you can pay off in a realistic manner. Too many people bury themselves in debt and they allow interest to work against them than for them. You need to strike a balance and I think you should always consider your family in the event you fall over dead one day cause you don't want to leave them in a bind. You also have to be painfully honest with yourself on what the land can produce. You need to use a dull pencil when figuring this to be sure you have plenty of cushion cause most times it ain't gonna work like you think.

 

[Nite Hawk]

I would check out this "homestead act" might be something there that might benefit you.
Had a relative that had a mortage at high interest rates years ago, ended up paying like $10,000 grand a year on the interest and $2-3000 grand on the principle, and yes they lost it.. would have been better off renting at that rate.
Remember Proverbs warning about "surety" in the Old Testament.
Most lenders don't give a hoot about you and your situation, all they care about is their bottom line.
There is also a clause with some banks, that a 3rd party can buy out and call up the loan.
Meaning someone who wants your place can go to the bank and say--I want to buy that mortgage. They slap down the money, and now they hold your ownership and you have to pay them. They can then request FULL payment, which is due usually in 6 months, and if you cannot pay, they forclose and you are out the door, and there is NOTHING you can do about it. I know of cases where that has happened. One was a sawmill worth $8,000,000, and the owner had a mortgage of I think it was about $1,000,000 so he could make improvements. He had it figured out that is could be re-paid on time, but someone big bought the mortgage and called up the full debt, and the guy lost his mill because he couldn't find $1,000,000 in 6 months time.
Very wicked, but some rich dude didn't care a bit about the guy who lost his business.
I have heard of other cases too so
Be careful.....

 

[Jogeephus]

If you are wanting some really good cattle land that would be easily fenced I know where there is a 1000 acre rectangular block that will be up for sale in a short time. I know this cause the owner told me the other day that as long as the bank kept loaning him the money he should have no trouble making his payments to them. I suspect when they call the note the whole place will be stumped, limed, fertilized and ready to go in production.

 

[heath]

What does land go for in south Georgia?

 

[Jogeephus]

Good average would be about $1800/acre but it depends on a lot. I've gotten it as cheap as $250 and as high as $8000/acre

 

[TexasBred]

I would check out this "homestead act" might be something there that might benefit you.
Had a relative that had a mortage at high interest rates years ago, ended up paying like $10,000 grand a year on the interest and $2-3000 grand on the principle, and yes they lost it.. would have been better off renting at that rate.
Remember Proverbs warning about "surety" in the Old Testament.
Most lenders don't give a hoot about you and your situation, all they care about is their bottom line.
There is also a clause with some banks, that a 3rd party can buy out and call up the loan.
Meaning someone who wants your place can go to the bank and say--I want to buy that mortgage. They slap down the money, and now they hold your ownership and you have to pay them. They can then request FULL payment, which is due usually in 6 months, and if you cannot pay, they forclose and you are out the door, and there is NOTHING you can do about it. I know of cases where that has happened. One was a sawmill worth $8,000,000, and the owner had a mortgage of I think it was about $1,000,000 so he could make improvements. He had it figured out that is could be re-paid on time, but someone big bought the mortgage and called up the full debt, and the guy lost his mill because he couldn't find $1,000,000 in 6 months time.
Very wicked, but some rich dude didn't care a bit about the guy who lost his business.
I have heard of other cases too so
Be careful.....

Somebody's yanking your chain. To make it short" as long as you pay according to the terms of the note they cannot touch your property" !!! Even if they sell the note, that lien holder cannot demand payment in full for NO reason. Mortgage companies really do care about you. When they loan you that money they hope they never see you again....ever....that means they never had to go collecting payments or refinancing and wiaving payments. Lenders do have state and federal regulatory agencies they have to answer to as well as state laws for the particular state involved. The last thing they want is to own a bunch of unoccupied real estate out in the middle of nowhere especially when the amount owed is double what the property is worth.

Now if someone goes out here and makes some sort of deal with an individual or unlicensed little back office lending operation there is no telling what might happen. But you usually get what you deserve when you deal with these people AND when you don't make mortgage payments to even the most reputable of lenders. d

 

[Nite Hawk]

Laws vary from area to area, and I am sorry but in this area they CAN call up the note and demand full payment in 6 months, unless things have changed recently. I have read the clause on the paper myself.. its in there.
I also know the businesses that were involved.
That is why I have no trust or respect for some of the banks. Maybe Credit unions or lending companies are different. Don't know, and maybe your laws are different down there, but they are allowed to do that here, although it doesn't happen often as not alot of people have that kind of $$$$ to buy out loans....