Loan for large acreage land
Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
Loan for large acreage land
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesHey Nik the other thing to do here is get the seller to carry.. and what would be common is let the seller reserve the timber deed until you have paid them off.. one of the big things in the north west was for unscrupulous people to buy land on contract slick off the timber then never make payments.. so most folks these days know they need to reserve timber rights until paid in full.. and you can get release clauses for the timber as well. you structure it anyway you guys agree..
although on the surface for that kind of acreage at that price there cant be to much Merch timber .. Logger would have long ago bought it.
and if you can get the seller to carry then negotiate partial releases for each lot that gets sold off.. but do check with your tax person you don't want to sell yourself into a tax bind.. since you will be a dealer.
29 Replies
- Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes7y
Originally posted by @Jay Hinrichs:
Originally posted by @Lee Falkenhagen:
@Nik Moushon Try the Federal Land Bank...in Texas. Its Capital Farm Credit..they do all the ag loans over 15 acres...Federal Land Bank and Farm credit I have tried in the past they only lend on income producing farm properties. and you need DEEP experience to get a loan.
I tired to get one on a chunk of land we are land banking 117 acres in Hillsboro Oregon next prop to come into the city and be upzoned to residential its a 50 million dollar property when it comes in .. right now it makes 25k a year growing grass seed.. Anyway I wanted to plant blueberries and was looking for a few million in first position to do this.
Guy says to me do you have a degree in Ag ( me nope just a real estate developer) OK are you second or third generation farmer.. Nope just a real estate developer.. he said those are our two main under writing criteria we would never lend money to anyone without very deep experience in the space.. so no developers are getting loans from us. so got put in my place on that one.
This is pretty much the same answer I got when I called one of the Ag lenders near me.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Nik Moushon:
Originally posted by @Jay Hinrichs:
Originally posted by @Lee Falkenhagen:
@Nik Moushon Try the Federal Land Bank...in Texas. Its Capital Farm Credit..they do all the ag loans over 15 acres...Federal Land Bank and Farm credit I have tried in the past they only lend on income producing farm properties. and you need DEEP experience to get a loan.
I tired to get one on a chunk of land we are land banking 117 acres in Hillsboro Oregon next prop to come into the city and be upzoned to residential its a 50 million dollar property when it comes in .. right now it makes 25k a year growing grass seed.. Anyway I wanted to plant blueberries and was looking for a few million in first position to do this.
Guy says to me do you have a degree in Ag ( me nope just a real estate developer) OK are you second or third generation farmer.. Nope just a real estate developer.. he said those are our two main under writing criteria we would never lend money to anyone without very deep experience in the space.. so no developers are getting loans from us. so got put in my place on that one.
This is pretty much the same answer I got when I called one of the Ag lenders near me. ya the lender I talked to pert near starting laughing at me.. he said let me get this straight. your a developer.. you have never been a farmer you have no formal training in farming IE advanced degree.. you did not grow up in a farming family and you want us to lend you 2 million for y
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Nik Moushon:
Originally posted by @Jay Hinrichs:
Originally posted by @Lee Falkenhagen:
@Nik Moushon Try the Federal Land Bank...in Texas. Its Capital Farm Credit..they do all the ag loans over 15 acres...Federal Land Bank and Farm credit I have tried in the past they only lend on income producing farm properties. and you need DEEP experience to get a loan.
I tired to get one on a chunk of land we are land banking 117 acres in Hillsboro Oregon next prop to come into the city and be upzoned to residential its a 50 million dollar property when it comes in .. right now it makes 25k a year growing grass seed.. Anyway I wanted to plant blueberries and was looking for a few million in first position to do this.
Guy says to me do you have a degree in Ag ( me nope just a real estate developer) OK are you second or third generation farmer.. Nope just a real estate developer.. he said those are our two main under writing criteria we would never lend money to anyone without very deep experience in the space.. so no developers are getting loans from us. so got put in my place on that one.
This is pretty much the same answer I got when I called one of the Ag lenders near me.
ya the lender I talked to pert near starting laughing at me.. he said let me get this straight. your a developer.. you have never been a farmer you have no formal training in farming IE advanced degree.. you did not grow up in a farmer . And you want 2 million to plant blueberries of which you have no experience.. kind of see where it is going. So the X partner I had on this I told him based on my conversation with the lender I don't WANT anything to do with an Ag play.. we have no experience at it.. so he just pushed on to another of his properties.. and sure as the sun rises in the East he blew through 2 million plus planting his berries.. the B berry market crashed and the investor have taken a total loss and the HML is now foreclosing.. We have to at some point stick to what we know .. all he knew was spread sheets and sure looked good on paper.. but in execution he failed big time..
- Tacoma, WA · Member since 2014 · 77 posts · 92 votes7y
Originally posted by @Nik Moushon:
Originally posted by @Jay Hinrichs:
So Nik any other word on banks willing to fund your deal??
googel Scottman Guide then check out HML and there is a good matrix and will tell you who does land deals.
Seattle funding might look at that deal.
I've heard back from 1 of the 3 that actually said they would look it over and get back to me. In short they said that we could probably figure something out. They said they would need more detailed info on both me and my partner on this before its a firm yes but at least I got a potential yes.
The terms they laid out is what has got me in a bind atm. Basically I got kicked out of the residential land dept. and sent over to the commercial dept. They laid out a 65% LTV, 15 yr am, 6.5% (min.), & a 1.5% bank fee. Now I know I'm new to these type of land deals, so I guess I shouldn't be surprised at this, but a 35% DP is WAY bigger than I was originally thinking. My mind was in the 20-25% DP range, not anywhere close to 35%. So at that point my DP would be ~$130k, if the sell accept my current offer, which is way more than I have and really at that kind of cash makes me wonder if I should spend that elsewhere in a different investment. If I could have a lot sold at closing then I could have that kind of DP no problem but thats a big IF and I doubt the seller would keep pushing back closing till I could have a lot sold. So I'm still go to hold out and see what the other two banks have to say and try a couple others I got from other people today but I'm sure they are all going to be something in that ballpark of a figure.Wow, only 35% down payment for a land deal like this is pretty good. Most banks want to see at least 25% down on a second home or investment property. So for a non-producing $$ piece of land like that is quite surprising.
My family had some agricultural land in that area (Peshastin) and sold it via owner financing and the terms were 50% down payment. This was a long time producing orchard and was sold to a farmer that had many years of ag experience and managed other orchards in the region. Even with his farming experience it's still a risk and 50% DP were the terms. No way would the same deal have been offered to some newbie. All cash or bank financing.
Like Jay mentioned, I think you are underestimating the amount of cash you are going to need just to get this ready to sell the lots. And the fact that it's owned by a logging company and they aren't taking this route speaks volumes. Have you asked them whether they would consider selling half or maybe a quarter of the total land to you? So it's more manageable to you and less $$?
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