So we are thinking about trying to find a place to buy instead of leasing a deer lease...invest our money...my question to yall is, if you have purchased land, what is the best way to go about it? Who did you finance it with? have any of yall done a loan with USDA or FSA? They seem like a good way to go possibly? Any thoughts would be much appreciated...

Now is the time to buy while interest rates are low. Whatever the entity, pick the one that will approve your loan with the lowest rates.

Banks usually charge significantly higher interest for raw land than for homestead loans. So check the options you mention plus the Ag credit options.

I financed my place through a local bank because the interest rate was about the same or less than other options. But it was still higher than home loan interest rates. When home equity loans became legal in TX, I simply took out a home equity loan in an amount sufficient to pay off my farm note - which saved me a bunch.

Buying land is quite a sacrifice and commitment. But I wouldn't change a thing. It's a great investment and provides much more enjoyment than any other type of investment one can make.

Good luck to you.

Thanks...the down payment is what I cant quit figure out how to afford that part of it!!

I've used Capital Farm Credit several times. You might pay just a bit more interest with them but the patronage checks more than make up for it.

LAND loan is gonna require 20% down these days. In general, higher interest rate than a home.
Tip: Look for a place that has a (old) home on it; might be able to buy as a 2nd home (way better interest rate & lower down if u got good credit and ample income) - I just pulled this off, and it's like I got a 3000sq ft 'cabin' for free (w/ the purchase of the land!)

If you are a Vet check Texas Veterans Land board. They will finance up to $125,000. I think they are 6.25% interest with 5% down. They will go 30 years. You have to be careful because if the land appraises for less you will have to come up with the difference. Only reason I say that is because on land only they do not factor in barns, trailers waterwells or electric as value added.
I used Capital Farm Credit also...think my interest was 6% for 20 yrs and 20% down. My first year I got a $550 dividend check back. Great people to work with.

Make sure it has deer!

Really...also it's nice to have cell phone coverage.

Tried that, multiple lenders said the residence had to constitute 50% or more of the total value in order to qualify.

mine sure didn't... there were two single wides on my place that wasn't worth 1/4 of the property... unless they had it just shown that way on paper

Some sellers will agree to carry a second lien on the 20% down payment amount for a few years until 1st lien holder will purchase their second lien. Sellers can get more interest for their money doing that. CD rates are pitiful.

Check with FSA.

I've gotten all of my farm loans through them and it has been great.

I've looked at their loans for land and although I can't remember all the details I do remember the interest being low and you could finance it for 40 years.

Doesn't hurt to see what they offer.

Also, note water and electrical lines. Electric companies will only run so many poles for free from the main highway and after that it runs about $1500 a pole. Water lines can get expensive depending on the terrain and length of run. Make sure fences are in good shape. If the property is in ag exempt, then you have two years to do something to the property to keep the exemption (ag or farm). Otherwise your property taxes will increase. Our ranch, we opted for a wildlife exemption. Have to maintain stock tanks and plant X amount of acreage in food plots that can't be harvested or grazed by livestock. X amount of ranch had to remain in its natural state, etc.

Good luck. I had to sell my share of the ranch back to the LLC when I moved to Alabama. I sure do miss it.

Good points so far. I financed my land through Capital Farm Credit. Put about 25% down and my interest rate is currently under 5%. Was much easier than buying a house.

But at the end of the day, if you don't have at least 20% down payment, you can just about forget about financing land unless you get owner financing.

Get your financing in order first. Get your down payment saved up and in the bank. Then start to look for land. I went with Capital Farm Credit and got a rate under 5% on a 15 yr note. The patronage checks are really great from them. Mine was equivalent to a little over 1.5 monthly payments that I got back last year.

Another way is to use your IRA, if you have one. There are rules and regulations on use but you can use it to make money also. Lease it out when your not there. I Leased land for cattle grazing when I first bought 10 years ago. Just can't use it for personnel use. Yeah right. Bought ours this way and carved out (bought out) a 3 acre place for the house and the rest 85 acres was in typical IRA for years. Broke out 30 later in a roth and paid taxes on that part where house was. Leased out all to cattle leasing when we first started. All money made (profit on small ranch) has to go back in to your IRA not your pocket. Keep close records. It's called a Self-Directed IRA. I used The Entrust Group out of Houston Tx. Easy peasy.

I ended up using CFC. Better interest rates than the banks and you get a dividend check after the first year. The additional memberships fees you pay them, will be returned in dividends with the 2nd year.

Land is way easier to buy than a house. I purchased 2 joining tracks about a year apart. The first one was shockingly simple. Basically a hand shake and the deal was done. The second one was extremely difficult because the land owners grandson was a lawyer. I guess he was upset with them selling the land and conviced them he needed to be involved. Drug that purchase out for 3 months and then sent another contract over after we had already closed on our portion. We actually had to close twice because of that jack wagon.

As for the down payment, I looked at every possible option to reduce the down payment. I could not find anyway to lower the 20%. I heard later that if you use your wife as the primary buyer, you can get some discounts because of WOB and EO etc. I didn't research those further (2nd purchase) because my wife does not work.

My 401k has a borrowing option. I was able to borrow the down payment from myself on a 5yr note and pay myself 4.25% interest. I didn't want to use liquid funds because I saw this as a long term investment. This also bought me more time to save up for the second purchase. That was the land I originally wanted anyway.

These have been by far the most rewarding investments I've ever made and have enjoyed every minute of it.
Good luck!

There really isn't a downside to Self Directed IRA use on real estate if you buy and hold for awhile. Bought mine 10 years ago and selling 47 acres as we speak and have made 125% profit on original purchase price. Better than I've done in the market. Put it right back into IRA account.

PM Sent

Not to throw cold water but if you cannot afford at least the 20% down payment then is it a good idea to commit to a loan on non income producing land? Just food for thought