Posted: 7/8/2017 10:59:28 PM EDT
|
My neighbor is a farmer who owned a large amount of the land surrounding his home. Long ago he got his realtor's license, subdivided his property, and sold off some of the lots of which mine and some of my neighbors homes sit on.
Two of the lots, totaling about 20 acres, beside my property are vacant and serving as hay fields. In the past I have mentioned to him I'd be interested in buying them. I've heard from a very reliable source he has decided to sell the farm and land. Both lots have road access, electric, water, and I believe the owner told me are perc'ed for septic. Property tax on them is nil. I've like to keep the lots in hay or run electric fence for more horse pasture. I'd like to keep someone from building a house next door to me and hold onto them as an investment property otherwise. One lot has SEVERAL different types of pipelines and easements running under about 1/3rd of the property preventing any type of building being constructed there. Does that affect the value of the property? Given the above (available utilities, directly beside my property) and assuming I have excellent credit - what should I expect when trying to find a loan as far as required down payment, interest rates, and even availability of loans for land? |
|
Sure ROWs and easements affect the value of land. It's land that you can't build on. Depending on the shape and size of the parcel vs. the location of the ROWs/easements it could lower the value considerably.
They're essentially a strip or gore of the tract that has for general purposes been in effect 'sold off'. At least so long as it is being used by the ROW/easement Grantee. It could make it hard to get financing as it has encumbrances that limit it's use, and like somebody posted earlier, you might be better off taking out a second mortgage on your house and paying cash for the tract. |
Banks generally aren't much interested in financing undeveloped land but I am sure with your credit you can find someone to help you. I bought an adjoining to my property  20 acres years back and it was the best thing I ever did though I had to scrounge to come up with the cash to make the deal.  If you will be on the property long-term them you should do all you can to make the deal happen. My 2 cents..
|
|
Quoted:
30% down on unimproved land is pretty standard. Go to a local farm bank. As for the easement, depends on the land geometry. Mine has a neighbors driveway, but it's right at the edge so it isn't a big deal. |
|
Two years ago I was ready to buy 63 acres of raw land. Heard about how it's impossible to finance. Called my credit union and was told "no problem, you need 20% down and it has to pass perc in one place on the property."
Didn't have to go that route though, the owner was a great guy and through conversation with him he offered owner financing for the same rate as my credit union. Talk to the owner and see what he says. |
| Last land purchase was with 20% down when I did the initial 12-month interest only. I have since converted the loan to a construction loan for the building of the house and was able to leverage money spent on the improvements as part of the money down for that. Ultimately moving to conventional once the construction is complete. |
|
You will definitely have to look for someone who does such loans, but most areas have at least one.
When I bought what was then supposed to be my rifle range land in a Colorado, I had a heckuva time finding a loan. There was one credit union in Colorado Springs I ended up going through. |
|
Quoted:
If you have enough equity in your current home, it would be cheaper refinance your home and buy the land with cash. Interest rate would be be closer to 4% rather than 7-8% for land. |
|
Not enough equity in the house to even cover a 20% down payment. Have only lived here for 5 years.
Lots of good information here though. Very helpful. I have been looking around for local banks that offer land loans but have only found one and they only offer 15 year ARMS. And my credit card is only 7% interest... |
|
Even though the property has water and power running through it I have read that getting a water and power meter installed on the property will cause it to be "improved" land and open up more loan options. Which explains why I occasionally see lots that have a pole with just a power meter on them.
I can do this easily with one lot and possibly both. But wondering if that raises my tax burden. |
| About 4 years ago, I bought 40 acres of hunting land.I decided to refinance my paid for house/property. I decided to refinance not only because the loan rate was much better, but also the interest on my homestead is tax deductible. It was pretty tough remortgaging your paid off house at 42 years old, but I think we did the right thing |