Land/Farm Purchase - Partial Owner Financing

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I own right at 2 dozen rental properties and thought I had creative financing "behind" me as my business has matured and my portfolio loan has grown with it.


We are looking at purchasing a large tract of land. This would not be an investment, per se, but more of a homestead. With a possible very long term investment potential but that is not the intent. The land is in a very rural area and is all "unimproved " farm land. I had looked at it maybe 12 months or so back and the owner was asking $400k which was a bit over what we were looking to spend ($300k). 

My primary reason for trying to stick closer to $300k was to minimize the down payment. With raw land of course you are almost always looking at 25% down, and $75k I can manage and not even dip into my comfort level of reserves but that is just about the absolute max. At $100k I am $25k into my "safety net"...and I am very risk averse.

Anyway after seeing the property sit a year I decided to reach back out to the owner (its a FSBO) and have another conversation. He claims he has been offered $350k and turned it down, because he "knows" (rightly so) that his value is right. (Side note - he has done a horrible job marketing the property. Not online anywhere. Just a small for sale (like you would place in a car windshield) sign hung on a fence that is only visible when traveling from 1 direction in a very rural area. There is an active appraisal on the property for $440k that I have seen. Its legit.

So over a cup of coffee this morning he agreed to at least consider a partial owner financing scheme. Where I would pay his $400k asking price and he would finance $100k back to me for 10 years interest free with a 20 year amortization and a balloon at month 121. He would be secured by a second position. In theory this would allow me to buy the land and him to cover my down payment and allow me to keep my cash reserves. Seems like a win-win.

Until....Talked with a lender this afternoon, a specialized farm and agricultural lender, and they wont consider it without me physically paying 25% down at closing. They want the check made out to them or the escrow company and them write the full purchase price amount check to the seller.

So...any ideas? 

I thought about approaching the seller about writing me a check for $100k after the initial closing and doing a second mortgage type arrangement. But that certainly is "messy".

Thanks in advance for any help/ideas/thoughts.

I'm inexperienced compared to you but on my most recent purchase of a SFH, I put down about 6% with owner financing making up about 18% which gave my lender assurance I was personally invested, that there was a lot of room for them to recoup their money and helped me to have a lower DP.

Perhaps a different lender would feel differently than the one you are currently working with?

You say a 'specialized farm and ag lender.'  If it was a traditional bank then maybe they would be more open to discussion if you were to leave a large amount of your safety net sitting in an account at their bank for a certain time as a "hedge" against your possible failure while also giving them room to lend more to others (because of the $ they have on deposit)?  Maybe that's also possible with this lender?

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