Should I bother with a FSA Farm Ownership loan?

[moparrob]

Hello- My wife and I are looking for property to build a home and raise cattle on. We have great non-farm income, so we aren't planning on getting rich raising cattle, but we'd like to have something besides a house in suburbia to pass onto our kids.

We have found some properties that offer seller financing, but the one we really want is 160 acres and the seller can't carry the note. The banks we've spoken to won't loan on more than 20 acres, and their rates are terrible (and they want perfect credit and huge down payments).

We used to raise goats and chickens at our previous house (which we lost to foreclosure), but we never filed Schedule F and never made any money doing it (neighbor's rotweiller killed our first herd, and we sold the last herd for almost nothing right before the bank took the property back).

I'm filling out the papers for the USDA Direct Farm Ownership loans and wanted to hear from someone who's actually been there to find out if we have a chance at it. The FSA folks I've spoken to on the phone were all pretty vague, and from what I've read in their online fact sheets, it looks like it would be a good fit.

How important is the previous farm experience (at least 3 out of the last 10 years) and do I need to have been doing it as a career? I'm retired now with a great pension, and my wife still works full time making great money. Aside from the foreclosure, our credit is decent, and I put together a great sounding business plan.

We've never claimed our native American ancestry in order to get any benefits or preferential treatment, but in this case, I'LL TAKE IT! Apparently, our ancestry makes us socioeconomically disadvantaged farmers, as does my wife being female and all. Will this help?


Any and all advise is appreciated, especially from folks who actually got a USDA Direct Farm Ownership Loan.

 

[tom4018]

Hello- My wife and I are looking for property to build a home and raise cattle on. We have great non-farm income, so we aren't planning on getting rich raising cattle, but we'd like to have something besides a house in suburbia to pass onto our kids.

We have found some properties that offer seller financing, but the one we really want is 160 acres and the seller can't carry the note. The banks we've spoken to won't loan on more than 20 acres, and their rates are terrible (and they want perfect credit and huge down payments).

We used to raise goats and chickens at our previous house (which we lost to foreclosure), but we never filed Schedule F and never made any money doing it (neighbor's rotweiller killed our first herd, and we sold the last herd for almost nothing right before the bank took the property back).

I'm filling out the papers for the USDA Direct Farm Ownership loans and wanted to hear from someone who's actually been there to find out if we have a chance at it. The FSA folks I've spoken to on the phone were all pretty vague, and from what I've read in their online fact sheets, it looks like it would be a good fit.

How important is the previous farm experience (at least 3 out of the last 10 years) and do I need to have been doing it as a career? I'm retired now with a great pension, and my wife still works full time making great money. Aside from the foreclosure, our credit is decent, and I put together a great sounding business plan.

We've never claimed our native American ancestry in order to get any benefits or preferential treatment, but in this case, I'LL TAKE IT! Apparently, our ancestry makes us socioeconomically disadvantaged farmers, as does my wife being female and all. Will this help?


Any and all advise is appreciated, especially from folks who actually got a USDA Direct Farm Ownership Loan.

If you don't go with FSA you might check with Farm Credit if they are in your area.

 

[bmoore87]

My brother and his wife are getting a Begining Farmer loan through them currently on a place since most banks won't work with you unless you have a large down payment which with land prices in Iowa is pretty hard just starting out. It has been a 4-5 month process with the paperwork, appraisers and general messing around.

I don't know if I would do it based on the guidelines you may have to follow from the FSA after you get the loan and would probably try for one of those owner financed agreements if available.

 

[TexasBred]

That foreclosure on your record is not going to help you.

 

[moparrob]

Thanks for the input. If it works out, I'll give the play-by-play for anyone who's interested. So far, it only looks like it will cost me $25 or so for the credit check. I tried American AgCredit, and they wanted a big down payment, and the foreclosure was definitely an issue, even though it was 4 years ago.

 

[hicky214]

Not trying to be rude but if you and the wife make so much money why in gods name did the bank have to foreclose on your last piece of property? If i was a lending institution I would require 20-40 percent down at least if an individual was trying to borrow money on 160 acres with a prior foreclosure. If you can afford 160 acres and to start a farm you should be able to afford half down on the property in my opinion. Cattle and good equipment will probably cost you close to what the 160 acres will. So think are you gonna have to fiance that also?

 

[gertman]

My cousin bought a farm through this program and the process took a long time about 6-7 months mostly because of the FSA appraiser. The land did not appraise for the asking price so he had to put up more collateral. Also after he received the loan, every year he must provide a copy of his tax return, a balance sheet, and a projected income statement, this is for process they call graduation. Your foreclosure may not hurt as much as you think because I believe in order to receive a loan under this program the applicant cannot be able to obtain credit from another financial institution. Not trying to discourage you but the only bright spot I see is the really low interest rates.

 

[moparrob]

The FSA loan is probably our only way to buy this place, unless we want to try a private investor and pay 10-12%, which basically we can't afford. If this doesn't work, we'll have to keep looking for a place with seller financing.

We have a lot of competition from "medical" marijuana growers, who make big down payments and agree to high interest rates, but then walk away from the property after they harvest their "medecine" or get busted by the cops. The sellers are happy to get a large down payment and several months of high interest payments, but then they have to go through the foreclosure process and clean up all the fertilizer and drip irrigation line (and other trash) that the dope growers leave behind.

I guess we're in the wrong business...

 

[Jogeephus]

I've always paid my debts. Being considered a bad credit risk must really suck. But you do say you have a great business plan. I guess that's all that matters.

 

[Lucky_P]

Don't know a thing about this loan deal, but after a number of years chasing those 'givernment' dollars, I've sworn off all of the FSA/NRCS type programs..
Looking back, most of the time, it wasn't worth the hassle- and ended up costing me more in the long run than I gained, as the 'government' requirements didn't work in the real world, and I ended up having to go back and re-do things on my own dime.
They've got their hands in my business too much already; don't want 'em knowing any more about what I do than they currently know.

 

[John Baker]

moparrob

I suspect it is your business plan that is causing you problems, as there is lots of money at reasonable rates, out there.
Why don't you post your business plan so I can see if that is your problem?
John

 

[ranching mn]

First I would make sure your kids are interested, as raising
Cattle is not a hugely profitable business.
So If your kids aren't into it and they sell the place
When you drop, it wastes all your VERY hard efforts
Db