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Financing for raw land
Posted on 5/5/23 at 8:19 pm
Posted on 5/5/23 at 8:19 pm
I have an opportunity to buy 334 acres of raw land planted in loblolly pines.
Does anyone have any good ideas on financing a purchase like this? At $3500/acre it's roughly 1.169MM and the best I've been quoted so far is 10% interest from a bank I've dealt with in the past. Are there any ways to deal with a bank on this and not get killed in Interest?
Does anyone have any good ideas on financing a purchase like this? At $3500/acre it's roughly 1.169MM and the best I've been quoted so far is 10% interest from a bank I've dealt with in the past. Are there any ways to deal with a bank on this and not get killed in Interest?
11
Posted on 5/5/23 at 8:27 pm to BillWilliamson
First, your will need 20% down, second, raw land always carries a higher rate. Rule of thumb is 2% above average 30 yr mortgage rate. Land/farm banks and credit unions are your friend.
Stay out of LA, already too many city assholes buy every stitch of something green.
Stay out of LA, already too many city assholes buy every stitch of something green.
Posted on 5/5/23 at 8:56 pm to BillWilliamson
Land banks are your answer
first south farm credit has been good ( much better than 10%) to me
first south farm credit has been good ( much better than 10%) to me
Posted on 5/5/23 at 10:55 pm to BillWilliamson
quote:
Are there any ways to deal with a bank on this and not get killed in Interest?
Not on raw land unless you’re coming with 40% or more in cash.
Posted on 5/5/23 at 11:17 pm to BillWilliamson
Id reach out to First South Farm Credit at their Thibodaux office (Ben or Tommy). I've dealt with them a few times for timber/hunting land purchases. Good people to work with and I closed with them recently, it'll be better than 10%, but keep in mind that interest rates in every loan sector are terrible right now and raw land financing is higher risk in the eyes of the banks, so set your expectations accordingly. The days of 3% interest land loans are a few years in the past.
Posted on 5/6/23 at 4:22 am to GREENHEAD22
quote:
First, your will need 20% down
Not true. I bought a track of land 4 years ago. Price was 130k and it appraised for 188K. Bank let me use the net equity as part of my DP.
If you can put it in an LLC you may can get a commercial loan which can get you a better rate.
This post was edited on 5/6/23 at 4:24 am
Posted on 5/6/23 at 5:23 pm to BillWilliamson
I just financed a farm and sent a loan package to 4 different lenders. The company that had the best rate and terms was Prudential. Their lending arm is called PGIM. I would sure give them a call. The guy I dealt with is in Jonesboro, Arkansas
Posted on 5/6/23 at 6:47 pm to lsufan1971
Yes but let's not take best case scenario. Assuming the property is priced to appraisal you will need at least 15% down and if over 300k most want 20%.
Posted on 5/6/23 at 6:50 pm to BillWilliamson
Timber sucks financially. I would be tempted to pay the seller $4000 an acre if he will clear cut the pines and pile the limbs.
Posted on 5/6/23 at 9:13 pm to deltafarmer
What kind of terms were they offering?(Prudential)
Posted on 5/7/23 at 4:57 am to BillWilliamson
They were very flexible relative to the other lenders I worked with. Financing out to 40 years, payments structured to my needs, interest only if I was buying to flip the property (I wasn't) plus they asked for what they needed document wise up front and asked for very little else. The others kept asking for other things. It got very tedious. Eventually I took a loan with 40 year amortization with interest fixed at 4.7% for 7 years. This was done back in August of 2022. Interest will be much higher now I'm sure. They made it very easy.
Posted on 5/7/23 at 10:06 am to deltafarmer
I've never done one like that before. So what happens after the first 7 years are up? Just principle for the remainder of the term? Sounds too good to be true.
Posted on 5/7/23 at 10:29 am to BillWilliamson
quote:Variable rate, they tear your arse a new one is what happens.
So what happens after the first 7 years are up?
Posted on 5/7/23 at 10:29 am to BillWilliamson
quote:
So what happens after the first 7 years are up? Just principle for the remainder of the term? Sounds too good to be true.
It’s called hybrid financing
At the end of the 7yrs, if you don’t refinance it, it becomes an ARM (adjustable rate mortgage)
Posted on 5/7/23 at 11:13 am to BillWilliamson
I will be making regular semi-annual payments amortized over 40 years for 7 years. Refinance after that hopefully at a lower interest rate.
Posted on 5/7/23 at 6:29 pm to deltafarmer
Thank you for all the responses.
This definitely looks like the best thing going as far as I can tell. Hopefully in 7 years interest rates will be creeping back down instead of up! LOL
I'm dealing with a large land management company to buy this land. They represent several smaller subsidiaries. I would like to get a cheaper price per acre and also would like to buy a few more acres than we have talked about in the initial conversation. Does anyone have any good strategies for doing this?
My initial offer was $3,000/acre
Their reply is $3,500/acre
I'm curious if I offer to purchase another 100 acres or so if they'd be flexible. The land is in a rural community and isn't being developed like other places are right now. The topography is rolling with wetlands around the perimeter for the most part acting as a barrier between it and the connecting property. Really good property for growing pine trees but not so much for pasture conversion.
Anyone know any savvy negotiating strategies for raw land?
This definitely looks like the best thing going as far as I can tell. Hopefully in 7 years interest rates will be creeping back down instead of up! LOL
I'm dealing with a large land management company to buy this land. They represent several smaller subsidiaries. I would like to get a cheaper price per acre and also would like to buy a few more acres than we have talked about in the initial conversation. Does anyone have any good strategies for doing this?
My initial offer was $3,000/acre
Their reply is $3,500/acre
I'm curious if I offer to purchase another 100 acres or so if they'd be flexible. The land is in a rural community and isn't being developed like other places are right now. The topography is rolling with wetlands around the perimeter for the most part acting as a barrier between it and the connecting property. Really good property for growing pine trees but not so much for pasture conversion.
Anyone know any savvy negotiating strategies for raw land?
Posted on 5/7/23 at 8:10 pm to BillWilliamson
What’s the going rate for land that isn’t planted in pine?
How old is the pine?
Has it been thinned?
How far away is the closest mill?
All this affects the price.
How old is the pine?
Has it been thinned?
How far away is the closest mill?
All this affects the price.
Posted on 5/8/23 at 3:57 am to BillWilliamson
I have a couple of guys that would attend the LSU Football signing day Bash. They are in the timber business. They know timber sales. If you could get a little money out of the timber, that would offset your cost.
Posted on 5/8/23 at 5:09 am to BillWilliamson
I’m interested to know why the OP is so interested in getting a tract of land that covered in loblolly pines.
Posted on 5/8/23 at 8:31 am to CalcasieuTiger
Because you can do a lot of things with land...
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