How to PAY FOR LAND! | The Dream 80
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- čas přidán 26. 12. 2022
- In this episode, the Owner of High Point Land Company Jacob Hart details some key pieces of advice on how to purchase land. He goes over many of the common language used in land transactions and details how to get creative.
#land #forsale #hunting
The videos are so informative and eye opening. Thank you for schooling us!
I got 12 acres by a lake in NE GA via foreclosure for $25K. Zoned AG/Residential. Financed with a traditional bank; 30% down for 10 years at 8%. I paid it off in 5 years. Put a 3 br 2 ba Mobile home on it and paid it off in 3 years. Loving my hobby farm with chickens, garden and tractor.
hell yeah, good job, living the dream
I think pulling equity out of your home to have recreational land is quite risky and not worth it. If crap ever goes bad, job loss, or some other income loss, you lose your house and land. Pay off your house completely, then go find land and either pay cash or at least save your money for the down payment.
Exactly. It made me uncomfortable listening to him say you can collateralize your home or equipment or other properties. You’re setting up the bank to take your livelihood if you have a slip-up.
Everyone’s appetite for financial risk management is different, but I agree that mortgaging your primary residence for recreation land leaves little room for “murphys law”. Interesting video nonetheless…financial philosophies are highly personal, to each their own!
@@joshshaffer2666 great way of putting it
If something happens and you can no longer afford the payments such as the event of a job loss can't you just turn around and sell the farm and still keep your house?
depending on the timber removed you're devaluing the land asset , most all mortgage contracts have devaluation clauses which could end with your deforestation resulting in an accelerated repayment clause of the initial loan as the timber was taken into account on the appraised value of the purchase.
This video was fantastic! Very informative! Thanks!
Good work, Jake.
WOWWWW. So many questions answered. Great vid
This is a very helpful video. Thanks for posting.
Great info!
Love this!
Great content!
Great video - one missing detail would be whether the loan was a fixed rate or ARM (5/6 is common). This would have a big impact on payments down the road if rates stay high
Great information!
Thank you Kore, we appreciate the support and we hope you enjoy this series moving forward!
Really enjoy the videos!! There is so much to learn on the finance d side of things!
We definitely agree. We hope to teach people something along the way from our experiences!
Very helpful thank you
Owner carry is a beautiful thing and in most cases is mutually beneficial. Another way is to buy other cashflowing assets and let them pay the bill, a little deferred gratification goes a long way. The rocks on land may also be sellable.
Great video
Great video. Really well done
Thanks, Sean, we appreciate the kind words. We hope you had a Merry Christmas, Thanks for the support.
Great series
Thanks for the support Joe, we really appreciate it.
Great videos guys!
Thanks so much! We appreciate the support.
Owner financed land contracts often have a clause that says timber can't be cut. This is to protect the seller in case the buyer sells the timber then defaults on the !and contract.
Hi Jacob. Thanks for taking time to educate and encourage folks on investing in one of our most precious and valuable assets. I've been an Ag Lender in South Central MN for nearly 19 years and I get mailers from your company. I would encourage you to try and use more current interest rates in your videos so your numbers will be a bit more realistic. Also, don't forget the additional monthly payment on the new $116,000 Home Equity Loan in your scenario. The fact is Land has increase in value so much over time it has price many (dare I say most) people out of the market in purchasing it. It takes substantial Off-Farm income or some other source of income/cash to float the "Dream 80 Purchase" nowadays.
Take Care and Thanks Again.
Absolutely it does, I couldn’t agree more. It takes a little time to film, edit proof and proof again so defiantly 6 months behind on the interest rates by the time this posted. Thanks again for the comments and following along!
Property does not go up in value. Its your dollar shrinking every year. So any interest is more or less covered by appreseation in land value. The big question that was covered in this video was how to pay for it. But you really dont need to pay for it to have it. You only need to cover the land tax plus the interest to the bank. So then Ta Da! when you sell it you get your interest back. Bank rates are high now, that's the time to start shopping. People will be suffering and needing to dump dept. so the deals will follow. Get in, sit down, buckle up and enjoy the ride! Great video!
Thank you
Awesome video, thanks for the information!
One question about using your home equity to help offset the down payment. If you have 200,000 in home equity and you use that for the down payment, will you continue to have two loans: a mortgage for the house then mortgage for the land? Or would it condense down to one? Thanks.
How do you get a 3.75 intrest in a market that's 6+
A good and informative video. With that said, these prices are getting out of control. And banks wanting 25% is ridiculous too.
No it’s not. It’s raw land and not an income producing property. Only 25% down is generous. This is not like buying a house, completely different.
@Toxic Masculinity 25% is generous?? What do you suggest is the proper down payment? In my area, for land, it's 25%. Land has also gotten so expensive, most can't afford it.
I am a Maui based Hawaii Realtor. I would love to work with any referrals. Great info!
Like the timber harvest option. You can achieve habitat goals, and generate some income concurrent. Need more young forests!
Thank you Scott, we definitely agree. Timber options are often overlooked in many tracts and the fact that it helps habitat is an added bonus! Thanks for the support!
Yeah but most landowners want the timber before they sell it… rarely do you see land with marketable timber for sale. Landowners know theyre better logging it, then selling it, even though it’ll lower the land’s value-not enough to offset the revenue from a timber sale
Good stuff. I put a golf hole on my land
There are many great ways to fund recreational property which you mention in this video and I would jump all over the opportunity you described in today's market. I enjoy your content and I appreciate the fact that this is not financial advice, but a lot of what is being described simply does not exist today and may never be available again in the future. Thank you for briefly touching on rising rates but the numbers associated with higher rates is vastly different than what you describe. Refinancing to get a better rate at a later date is expensive. There are no mortgage rates as described of 3.75% and may never occur in our lifetimes again. Current residential rates are 6.5%+. With a 30 year mortgage at a current rate of 7.5% for non-residential recreational/farm property the new owner would have a monthly payment of $3,244 per month plus taxes and insurance which would be almost impossible to recoup in the situation described unless it is part of a larger operation. The closing costs are also very expensive for a mortgage which needs to be recouped. Maintenance on a property is also a very expensive venture. To harvest lumber to fund the property is a viable option but it also devalues the property. Leveraging other assets like a personal home to raise enough money for a down payment sounds way too risky to those who mean the most to us and would likely require additional costs for leveraging the funds. My biggest question is where can I get 80 acres of land with a $464-K value with only $416 in annual taxes? Let's discuss what it takes in today's market to cash flow a recreational property.
That had to be the monthly tax payment. The $400 in insurance was.
Cash is king!
What state is the land you guys are showing in the video?
Unbelievable..nearly $500,000 for a measly 80 acres.so sad to see these land prices
I had no idea it cost that much. I thought 3 grand an acre around the area i live was high.
In this neighborhood, we determined the price of $5,800 was a great deal. Using other comparables in the given area of over 10,000 $/Ac we established our decision based on that.
No kidding! In one year increasing 30-40% in some markets. Think what this stuff is going to be worth in 30,40 50+ years! …unless the stock splits or more gets printed I don’t know how we ever go back to where we would all rather see it.
I google this every time I get bearish on land prices “how much farmland gets destroyed or converted in the US annually”
Bill Winke nailed this topic in a video a while back on the topic of locking in a price.
Thanks for your positive comments!
25%? Uff... (even the bank knew it was over priced!) either poor credit score or appraised value did not meet sale price? Alot of financial institutions are between 10-20% down for land. Were there any closing costs? Where did you calculate those numbers into your math? And for the kids at home, and the millions watching worldwide... when these guys sell the dream 80 for $6,800/acre in 6 months, or chop it up into 20 acre parcels... don't let them con you into thinking they made $800/acre on the sale... they're paying $1,000/month in interest. Ouch. You guys going to remove this comment too? Like my last one? You guys are killing small towns and local communities.
What bank is only requiring 10% down on raw land? Must be a guvment reparations loan….
$6k per acre is nuts. Here in vermont good land with decent timber is still $1k per acre . Marginal land (cutover, steep, wet, remote, etc) runs $500-700 per acre. As for rates I went through Farm Credit… starting at 4.25% for the land now it’s over 8% 🤯🤯🤯
Definitely not a crazy price per acre. Here in whitetail obsessed Central Wisconsin, land goes allllll day for $5k plus per acre. Premier hunting ground can be $10k per acre. A friend of ours just turned down $10k per acre on 240 acres. Keep in mind this is vacant, rural, undeveloped land.
Wow! Vermont is beautiful. Here in Montana, dry, ugly land which won't grow anything but has a view of mountains 20 miles away is often $10K or more per acre.
@@georgeboros263 you can look on my channel for some videos (I really need to get more videos up) of the land I paid $160K for for 225 acres about 18 months ago. 9 acres of lush pasture, nothing is that steep or wet, good hardwoods and softwoods, bordered by two Brook trout streams and tons of bears and decent whitetail. No zoning, power and fiber optic internet on the roadside, etc. Rural Vermont is a nice balance of good availability of affordable large wide open private parcels while still having decent amenities and close to “civilization”. Some of these prices guys are paying for unusably steep rocky ledge in places like Tennessee and Montana are nuts. Land is still affordable in upstate New York and Vermont bc everyone’s leaving lol.
@@aaronbarrett3554 yeah that’s crazy. I love the land I have and I LOVE working on it and improving the habitat, my trails, etc, but if someone offered $4k per acre for mine I’m pretty sure I’d take it (I paid $720 per acre 18 months ago).
@@pacodefrancis7235 Buffalo county in Wisconsin is the best deer hunting county in the US. People pay millions for 100+ acres lol
Can you use a va loan on land?
Great video! Do you have any videos or could you comment on how to get into CRP? Can you CRP while the land is being paid on land contract? I imagine that would be answered by the contract’s details as well. We recently made a deal on 100 acres and are in year 2 of 10. The farmer who leases it now told me he has 5-10 years of farming left before retiring and I’d like to establish a plan for when that day comes. My hopeful plan is to CRP 30-40 acres and farm the rest myself.
yes you can enroll in CRP as long as you have your name on the deed. great programs in CRP to help with costs to maintain a good habitat for wildlife and hunting
I think you can, as long as you control the land. Call your local FSA office and the should be able to put a plan together for you
10.5 acres started as a 10month lease I sign my land contract next month at just over 9% everything is included except taxes, which I am exempt from, in my payment
yep we will take that deal now ! lol
Question on how you are calculating your monthly payment and principal amount. Every loan I've ever seen you pay the interest first like you have shown but each month closer to the end of your term, the principal payment and interest payment change. For instance you are stating that your principal payment stays fixed throughout the loan at $701.68. I don't think that is correct. Can you confirm that with your amortization schedule?
Yes, excellent catch! We ran the numbers based on 1 annual payment (another thing we probably should have bought up in the video that payments can often be scheduled so they match an annual income stream like harvest, CRP or tillable land rent payment) so technically you correct since we stated monthly and not annually. (See below)
Our math
$348,000
X3.75% annual interest
=$13,050
Divided by 12 mo
=701.68/ mo in interest if paid annually and divided by 12.
However what you caught is correct, if paid monthly it would reduce your principle balance by about 2 dollars monthly reducing the amount of interest you are paying on the principle balance which has now been reduced 1087.50 in monthly 1. (See below)
Example months 1-4
Month 1 - P $1,087.50 Int 701.68
Month 2 - P $1085.31 Int 703.87
Month 3 - P $1,083.11 Int 706.07
Month 4 - P $1,078.69 Int 708.28
Excellent catch again, thanks for commenting!
I was wondering the same thing, thanks for the detailed explanation!!
The last farm in my neighborhood sold for $36,000 an acre, anything less than $30,000 an acre is now considered a good deal. I'm going to have to relocate to be able to buy land.
$36,000/acre!?!? Was there a gold deposit there?
People paying that are not smart.
$701 principal portion of payment increases a little each month in a normal amortization schedule. Also, most mortgage orders would expect you to get their approval before selling timber. May likely require mortgage reduction from proceeds, but need to ask!
You only need to ask if this is in the terms.
Are 25 yr loans pretty standard in land purchase? or does it follow a more 15 or 30yr like residential?
20 years...25 or 30 only if it's going to be a home property
I have never seen 3.75 rate on raw land? It's almost always a point higher than home loans
Disclaimer: This is not banking, investing or financial advice. (See below)
If you check local lenders that are versed in financing land in their local market and comfortable with Ag zoned Real Estate in my experience it is lower than residential secondary market home loans every time I have purchased a agricultural zones farm over the last 10 years.
Talking to many banks (usually by getting turned down over and over) taught me this and showed me who I should be dealing with.
Thanks for the comment!
Land banks here in Louisiana are charging 2-3% higher than residential conventional loans. Want to give us some pointers?
I agree the major land lender in Florida Farm Credit of Florida when I called a few weeks ago said the current interest rate is 10 percent!!!! Insanity.
@Clayton Burris Land contract, private money, or what worked for me is I purchased a home with the land attached. It is more of an asset with a home thus you get a better rate plus you can rent out the house
I purchased my first 20 acres approx 23 years ago. Had 68 at one time, sold 28 and own 40 acres today. My biggest regret is I sold some and didn't buy more. My advice to anyone buy as much as you can afford as soon as you can. Remember your chasing inflation and inflation today is a mean bitch.
Where do you get a land loan with 25% down? Banks I ask are at 50% down.
What bank is offering straight line amort????
And if you cut timber you will be able to pay down the principal which would reduce your overall cost of interest. Plus, if you need a hunting lease to afford the land then you shouldn't buy it
Did you have a lot of walnut to have that much timber value?
That farm does yes however it was not factored into the listing or purchase price so I saw it as an opportunity even without that. Hunting land in NE Iowa is extremely scarce to become available for purchase so it continues to rise based on scarcity in proximity to cool stuff the area has to offer over cash flow in that specific area overall.
I'm a 22yr lender. Solid video. Makes me want to sink my teeth into a large patch of earth!
Now if only there was land available
The interest rates will go down when the market goes down. If the market goes down then the value of the property will most likely go down. Don't assume you can refinance when the rates go down. You could easily get in a situation where you're 'underwater' and when you go to refinance, the appraisal will come up short of what you owe, and then you'll have to come up with the difference in order to refinance.
Renting part of your land to a farmer, and renting storage space to city slickers are two great ways to pay for your land.
Taking a home equity loan on your current house for new land is a terrible idea because you aren't making any money, and you have exposed yourself to more financial risk in the event you lose your job.
Live within your means my friends, make money on your land like I suggested, and thank me later.
Lol we’ll that was a shocker. Who would’ve thought you could go to a bank for a land loan?
How can the prop tax be that low???
Everyone talking about how great of info this is like it’s a secret… go do it then. This is reckless advice to say the least without knowing your base finances. Also you’re not going to get much “land” that worth anything as far as return goes for $6000 an acre. If so, then yeah it’d be easy. My advice is for everyone to go do exactly what he says with no base; and I’ll be at the sheriffs sale
What would Dave Ramsey do
how to pay for land:
1. have a ton of money
2. get the current owner to give it to you and let you make payments
3. get the bank to loan you a ton of money
how to come up with the down payment:
1. have a ton of money
2. have a ton of assets
3. have a ton of assets
thanks for wasting my time
So basically he paid over 8.4k an acre over the life of the loan.
Nobody is giving you 25 year fixed at 3.75 for raw land. Sorry, just ain't happening.
Not a 25yr fixed rate. It’s a 25yr amortization. Loan was probably 5 or 7 year fixed rate with payments based on a 25yr repayment schedule (amortization).
I got 4% a couple years ago. Double that today
I might have used student loans for mine 🙄 sub 5%
Are interest rates usually lower on land than a mortgage? I’m 26 and trying to learn real estate.
@@icydrink97 I'm pretty sure a mortgage is the lowest interest rate of all money loans.
Please please please recommend them getting title insurance otherwise they could LITERALLY be throwing away their money
This guy sounds like a car salesman.... goodness... "all you have to do is...... " Look, putting together a land deal is a magical event where all the stars and the moon and the sun come into perfect alignment. The price has to be right, the location has to be right and the money needs to be in place all at the same time. It can be done. But it's not as easy as a car salesman would have you believe.
If your are going to sell land always get your money let someone else finance if the guy files bankruptcy on you u are at the mercy of damn judge he may come in value it at half what u sold it for and therefore you are screwed never finance for some one if u are going to sell get the money
I have no income because I refuse to pay taxes for moral reasons (so only I barter, but no possible way to get a loan). It's a big sacrifice compared to the luxuries most all can enjoy- but I sleep with a very clear conscious at night. Three kids and a wife. Is there an option anyone knows about to acquire land? I can trade skilled labor or a finished project. I weld and do farm and farm&fab work, I have made several successful desert race trucks and used to fix tractors all day long. I have no qualms about working deep into the night.
So you going back to bank $326100 on a $348000 note I pass I know how you get that
Ill save you 8 minutes. How to pay for Land? With money. You're welcome
Or, wait for a windfall, lottery win, dream, etc 😂
$464,000 for 80 acres. Your smoking some good stuff my guy.
I paid 44,000 for 20 acres raw land.
Must have come with a couple gold mines on it 😂😂
Depends where you live.
In southeast Wisconsin land goes from 10k to 20k an acre.
It’s ridiculous
Yeah, I’m in Indiana, and we’re over 12k an acre now. Farming corn and soybeans has driven the cost so high that you have to be a millionaire to become a farmer.
If you think that's expensive.....don't even dare look at Colorado prices
Good luck following this video. Timber is not viable since loggers are worst thieves on planet. Very poor idea to throw your house up also. Some thing goes wrong and your homeless. About the worst advice I have ever heard. Follow if you want to lose everything. You could go on numerous guided hunts off the interest screwing your going to take.
LMFAO AGAIN You have to be well off to purchase land these days PERIOD............................ !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
TRESPASSING is Cheaper by a long shot!!!
Awesome video, thanks for the information!
One question about using your home equity to help offset the down payment. If you have 200,000 in home equity and you use that for the down payment, will you continue to have two loans: a mortgage for the house then mortgage for the land? Or would it condense down to one? Thanks.
3 mortgages 1 for your house, 1 for your equity loan, 1 for the land.
@@jameswilkerson2785 thank you for the clarification!