land financing

[Jim Wineinger]

Does anyone have suggestions on "line of credit" associated with land only?

I believe everyone here knows, that I deal with tax sale properties and due to the economy there is a lot of acreage being lost in this way. In my area there is two different tracts of land that are available for less than 2k each. One is 96 acres and the other is 92 acres.

These lands are listed as "farm" land even though they are 100% forrested and more suited for hunting than farming at this time. What I am really interested in is after I pick them up, how easy would it be to gain an "line of credit" using the property land values as collateral, one is 106k and the other is 140k.

I am really interested in that line of credit to finance the purchase of the tax sale properties that I am interested in to quickly fix and flip.

Which kind of financial institution is best suited to approach for something as this, or is the land financing market just a no go at this time?

[Jon Holdman]

If the land is severly restricted in terms of its use, it will have much less value than if it was unrestricted. My family owns land in MO, so I watch values there. Farmland that's actively cultivated is the most valuable. Pasture land that's used from grazing, but is cleared and could be clutivated is less valuable. Timberland is less valuable, still, and its value depends on the value of the timber that could be harvested. If you're restricted from cutting the timber or building on this land, it has very little value.

2009 MO survey of land values

Crop land values
Pasture land values
Timber/recretation land values

Yes, its possible for a farmer to get a loan to put in a crop using the land as collateral. That's not a HELOC in the sense you are thinking, though. Its money that's spent all at once in the spring to put the crop in, then repaid when the crop is sold in the fall.

Your best bet is to have a discussion with the bankers in the towns nearest your land. But my guess is that if you can't produce a crop, livestock, or timber on the property, they're going to give the land a very low value.