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Has anyone here financed raw land with low interest?
Posted on 7/24/22 at 7:38 pm
Posted on 7/24/22 at 7:38 pm
Current rates on raw land are 6% or higher from what I've been told by my bank. I have 400 acres I want to buy but will get killed in interest payments at that rate.
Aside from paying cash for the property, are there cheaper ways to buy a property this size outside of a conventional land loan?
I realize rates have gone up across the board and we are headed into a downturn which could help me negotiate a lower price per acre, but I'd lose any gains paying back the bank on a purchase this size.
Does anyone on the board know of any creative ways to borrow for raw land without losing your shirt?
Aside from paying cash for the property, are there cheaper ways to buy a property this size outside of a conventional land loan?
I realize rates have gone up across the board and we are headed into a downturn which could help me negotiate a lower price per acre, but I'd lose any gains paying back the bank on a purchase this size.
Does anyone on the board know of any creative ways to borrow for raw land without losing your shirt?
7
Posted on 7/24/22 at 7:59 pm to BillWilliamson
I am a commercial banker. Where are you located and where is the property located?
Posted on 7/24/22 at 8:00 pm to BillWilliamson
What do you mean by raw land? I’m not in ag so there maybe some options for legit farmers I don’t know about, but yeah interest rates are way up so I think your options are limited.
You may look into something like a Heloc? But I wouldn’t recommend that.
You may look into something like a Heloc? But I wouldn’t recommend that.
Posted on 7/24/22 at 8:01 pm to BillWilliamson
I doubt you can even get 6% on raw land right now but if you can you better jump on it. That’s as good as it is gonna get.
Posted on 7/24/22 at 8:22 pm to Sput
I’m also a commercial banker and broker. 6% is pretty good on raw land especially if you want to converting it to any kind of construction loan in the near future.
Is it truly raw land like forest, or does it have any utilities run to it, are you tapped into water or sewer etc that would make it improved vs just raw land
Is it truly raw land like forest, or does it have any utilities run to it, are you tapped into water or sewer etc that would make it improved vs just raw land
Posted on 7/24/22 at 9:00 pm to Im4datigers
I wouldn't plan to convert it to any other kind of loan. Its just pulpwood land that was cut two years ago and replanted. I can afford the down payment and principal payment on a 30 year loan but 6% interest would double it. I just wanted to see if anyone had some ideas that I hadn't thought of.
My current situation is good. I own my home and other land I bought in 2017 and have no debt except for my wifes car ($30k).
With a recession looming I don't want to do anything too risky especially since it's not necessary.
Whats your professional advice?
My current situation is good. I own my home and other land I bought in 2017 and have no debt except for my wifes car ($30k).
With a recession looming I don't want to do anything too risky especially since it's not necessary.
Whats your professional advice?
Posted on 7/24/22 at 10:49 pm to BillWilliamson
Row crop?
Timber?
Recreational land?
What state?
Timber?
Recreational land?
What state?
Posted on 7/24/22 at 11:09 pm to KillTheGophers
Its timberland in Baldwin county, Al.
Posted on 7/24/22 at 11:23 pm to BillWilliamson
If you can get 6% on large raw land you better take it because that is great right now. Raw land is usually 1.5-2% higher than your standard home mortgage. Try farm credit services, land bank, or credit unions.
Posted on 7/25/22 at 12:34 am to GREENHEAD22
Reminds me of a guy I know that bought a bunch of raw land north of DeRidder. Wanted to make a homestead.
Come to find out he didn't realize it was going to cost about $200,000+ to clear it.
He now has very expensive hunting property and can't get rid of it.
Come to find out he didn't realize it was going to cost about $200,000+ to clear it.
He now has very expensive hunting property and can't get rid of it.
Posted on 7/25/22 at 6:30 am to DiamondDog
I’m not sure of the situation in Alabama but in Louisiana timberland is not a good investment.IP and Boise Cascade sold all theirs.
I have 100 acres I bought in 85,got it replanted.It was thinned twice and recently had it logged-some chip and saw and some poles and piling and some puplwood.I haven’t made a profit yet.I would have except for capital gain taxes.Another thing that hurt is I had to spend $22,000 getting road restored,the other access crossed an old bridge I didn’t want bunch of log trucks crossing.
I have about another 35 acres of hardwood and bottomland and farmland nearby so it is reasonably good deer hunting,that’s the only thing that has made it worthwhile.
I have 100 acres I bought in 85,got it replanted.It was thinned twice and recently had it logged-some chip and saw and some poles and piling and some puplwood.I haven’t made a profit yet.I would have except for capital gain taxes.Another thing that hurt is I had to spend $22,000 getting road restored,the other access crossed an old bridge I didn’t want bunch of log trucks crossing.
I have about another 35 acres of hardwood and bottomland and farmland nearby so it is reasonably good deer hunting,that’s the only thing that has made it worthwhile.
Posted on 7/25/22 at 7:14 am to GREENHEAD22
How is land that has no utilities but has passive income (renewable pipeline servitudes) classified for loan purposes ? Would you know current borrowing rates in Louisiana?
Posted on 7/25/22 at 7:48 am to BillWilliamson
quote:
I realize rates have gone up across the board
quote:
but I'd lose any gains paying back the bank on a purchase this size.
this being typed out is very cringe. like you know but then you don't know.
Posted on 7/25/22 at 8:02 am to Chad504boy
[quote]but I'd lose any gains paying back the bank on a purchase this size.
You're taking my quote out of context bud. I said that in reference to getting a better price due to the looming recession but then would pay back those gains in interest to the bank.
If you don't have anything constructive to add just stay out of the conversation.
You're taking my quote out of context bud. I said that in reference to getting a better price due to the looming recession but then would pay back those gains in interest to the bank.
If you don't have anything constructive to add just stay out of the conversation.
Posted on 7/25/22 at 9:50 am to CharleyLake
The passive income doesn't really change anything. Most traditional banks won't want to mess with large raw land and if they do they will try and push a balloon.
In my experience the rates are always a little higher than a traditional home mortgage.
If in LA go to Farm Credit Services and LA Land Bank first, they will most likely give you the best rates and offer 20-30 yr terms. I know some people have had good luck going through Credit Unions but not sure of any particular ones.
Also you will need a minimum of 15% to put down and probably at least 20% due to the cost.
In my experience the rates are always a little higher than a traditional home mortgage.
If in LA go to Farm Credit Services and LA Land Bank first, they will most likely give you the best rates and offer 20-30 yr terms. I know some people have had good luck going through Credit Unions but not sure of any particular ones.
Also you will need a minimum of 15% to put down and probably at least 20% due to the cost.
This post was edited on 7/25/22 at 9:52 am
Posted on 7/25/22 at 10:04 am to GREENHEAD22
Appreciate that. Will follow up. Location is in Louisiana, looking for a ten-year term and expect to be able to put down 30% to 50%. Will that change anything?
Posted on 7/25/22 at 10:49 am to CharleyLake
@charleylake
A ten year term today is going to be tough for any bank. I can take a look for sure with 30 to 50% down we only require 25% down. We can do a 5 year deal right now or interest only for 12 months if you plan to do something with it.
A ten year term today is going to be tough for any bank. I can take a look for sure with 30 to 50% down we only require 25% down. We can do a 5 year deal right now or interest only for 12 months if you plan to do something with it.
Posted on 7/25/22 at 3:20 pm to soupboy10
It appears that most of the income will be received in year 5 and year 6 but some in 2023 and 2025. It is presently owned by a Family Group LLC and was recently listed for sale by the Board of Directors who wish to divest this parcel and another remaining parcel. None of them reside in Louisiana. There would be no longer an LLC at the time the assets are sold. A few LLC shareholders including myself suspect that it is undervalued based on estimated future income from ten-year renewable term pipeline rentals and are considering purchasing it.
What profession would be best for me to engage to analyze the value of the property considering the future income as a ratio to sales price, ideal down payment, borrowing rate, inflation, etc.? The future rentals for the pipelines is based on the CPI adjustments. The property has no other value than a pipeline corridor. It is anticipated that all of the existing pipelines will be continued. There will be nothing needed "to so something with it" but there is room should more companies want to construct additional pipelines.
What profession would be best for me to engage to analyze the value of the property considering the future income as a ratio to sales price, ideal down payment, borrowing rate, inflation, etc.? The future rentals for the pipelines is based on the CPI adjustments. The property has no other value than a pipeline corridor. It is anticipated that all of the existing pipelines will be continued. There will be nothing needed "to so something with it" but there is room should more companies want to construct additional pipelines.
Posted on 7/25/22 at 3:29 pm to CharleyLake
What parish and do you want partners? 
It is just timber? Plan to hunt it?
It is just timber? Plan to hunt it?
Posted on 7/25/22 at 5:10 pm to BillWilliamson
quote:
Its timberland in Baldwin county, Al.
If you are looking at this as a true investment you need to be getting one helluva deal. Straight timberland in that part of the world is risky at best
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