How to buy raw (unimproved) land?
How to buy raw (unimproved) land?
I am interested in purchasing some land "up north". The land has no structures and at this point is considered - access by boat only - although there is a logging trail off a maintained road that crosses state land and goes all the way to the property and there is the possibility of an easement from the county for constructing this into an actual road. There are also no utilities directly to the property, no well, no septic.
The price seems reasonable/attractive given the acreage, amount of lakeshore frontage, multiple possible building sites, hunting opportunities, etc. Also because of its size and ample timber, it is the ideal property to selectively harvest trees from which several log structures could be built (which would be the plan sometime in the future)
I am wondering if there is anyone who can comment on experiences financing raw, unimproved land without immediate/planned development?
I realize that the ideal situation would be to pay cash for it. I unfortunately don't have cash to buy it outright otherwise I would do that for sure. There is probably only enough for 20% down at this point.
I've purchased and sold a home previously and used a real estate agent. Mostly because I was buying in a market that I was unfamiliar with and was in a hurry to do so, but obviously they helped me jump through all of the hoops and keep my ducks in a row to make it go smoothly. In this case if I already have the exact property in mind, does that change things? Is there someone other than a real estate agent that can help me understand all the pertinent codes, zoning, etc, etc that comes along specifically with buying raw land or is the right person just a local real estate agent to the property who understands this already?
Other stuff:
- This would not be an "investment" or a rental income property - just recreational land for myself, my family and friends to enjoy. That being said I'm not too concerned about potential for loss of value, etc. I only posted it on this board because I'm assuming there are plenty of people who have purchased raw land as an investment and would have had to go through the same process either way.
- The county has a survey of the land on record from November 2011 and as far as I know there have not been any new easements or other things that would change it. I have never purchased raw land before... would something that "old" suffice?
- It is zoned as a Non-commercial seasonal recreational property, which is what I would want it to be
Are there any good, comprehensive websites/books that have information to guide me through this? I can't seem to find what I'm looking for via Google.
Thanks in advance for any responses!
The price seems reasonable/attractive given the acreage, amount of lakeshore frontage, multiple possible building sites, hunting opportunities, etc. Also because of its size and ample timber, it is the ideal property to selectively harvest trees from which several log structures could be built (which would be the plan sometime in the future)
I am wondering if there is anyone who can comment on experiences financing raw, unimproved land without immediate/planned development?
I realize that the ideal situation would be to pay cash for it. I unfortunately don't have cash to buy it outright otherwise I would do that for sure. There is probably only enough for 20% down at this point.
I've purchased and sold a home previously and used a real estate agent. Mostly because I was buying in a market that I was unfamiliar with and was in a hurry to do so, but obviously they helped me jump through all of the hoops and keep my ducks in a row to make it go smoothly. In this case if I already have the exact property in mind, does that change things? Is there someone other than a real estate agent that can help me understand all the pertinent codes, zoning, etc, etc that comes along specifically with buying raw land or is the right person just a local real estate agent to the property who understands this already?
Other stuff:
- This would not be an "investment" or a rental income property - just recreational land for myself, my family and friends to enjoy. That being said I'm not too concerned about potential for loss of value, etc. I only posted it on this board because I'm assuming there are plenty of people who have purchased raw land as an investment and would have had to go through the same process either way.
- The county has a survey of the land on record from November 2011 and as far as I know there have not been any new easements or other things that would change it. I have never purchased raw land before... would something that "old" suffice?
- It is zoned as a Non-commercial seasonal recreational property, which is what I would want it to be
Are there any good, comprehensive websites/books that have information to guide me through this? I can't seem to find what I'm looking for via Google.
Thanks in advance for any responses!
Re: How to buy raw (unimproved) land?
Can only add a single datapoint - our credit union does loans on land @ 10.5% APR, 12 year term. By way of comparison, their 15-year traditional mortgage is 3.25%.
Re: How to buy raw (unimproved) land?
I've literally just done what you've done. I purchased a 43 acre piece of property in the middle of nowhere, so to speak, and it was a challenge to find a bank to finance it. First thing is, don't think you'll get house-mortgage rates, you most likely will pay higher interest rates. Secondly, find a bank thats in the area of the piece you are buying, and try to contact a credit union for the best rates. My loan is a "balloon" loan, fixed for 3 years, at a 4.75% interest rate, amortized over 15 years, with the caveat that if no late payments were made, they will refinance at the same interest rate after the 3 year term. Expect to pay at least 20% cash down payment.
Also, very important, before you buy, research the land zoning restrictions, some types will not even allow you to live on the property all year round. It sounds like you already did but definitely research if it allows building buildings, and what types, etc. That can affect the value, depending on restrictions.
If you do build a cabin on it, running in utilities can be cost prohibitive so research solar panels/battery bank for power.
Good luck! They aren't making any more land.
Also, very important, before you buy, research the land zoning restrictions, some types will not even allow you to live on the property all year round. It sounds like you already did but definitely research if it allows building buildings, and what types, etc. That can affect the value, depending on restrictions.
If you do build a cabin on it, running in utilities can be cost prohibitive so research solar panels/battery bank for power.
Good luck! They aren't making any more land.
Re: How to buy raw (unimproved) land?
Find a land specialist investor. I've done this.
I used a company that is now part of Compeer Financial. I got a 20 year with 10% down for like 2.75%.
There are options out there. Your local place is likely not great at it. BTW, my experience with Compeer has been EXCELLENT
I used a company that is now part of Compeer Financial. I got a 20 year with 10% down for like 2.75%.
There are options out there. Your local place is likely not great at it. BTW, my experience with Compeer has been EXCELLENT
Re: How to buy raw (unimproved) land?
I just checked "Compeer Financial" and they don't offer loans where I bought from. But by all means if you think you can get a 2.75% interest rate on a raw land purchase (which is, btw, lower than even a house mortgage interest rate) then absolutely try that route.
Re: How to buy raw (unimproved) land?
Are you suggesting I'm lying? I bought the property in September of last year. 12 acres undeveloped. It was Badger Financial now part of Compeer.alter wrote: ↑Wed Aug 30, 2017 9:36 pm I just checked "Compeer Financial" and they don't offer loans where I bought from. But by all means if you think you can get a 2.75% interest rate on a raw land purchase (which is, btw, lower than even a house mortgage interest rate) then absolutely try that route.
Re: How to buy raw (unimproved) land?
Nope, I'm suggesting that if what you say is true, the original poster should absolutely get a loan with a rate that is lower than a mortgage to buy raw land to build a house on, to save lots of money vs a traditional mortgage.
Did you tell the the bank that you are taking the loan to build a new construction on? Or did you just say you are buying raw land?
Did you tell the the bank that you are taking the loan to build a new construction on? Or did you just say you are buying raw land?
Re: How to buy raw (unimproved) land?
Putting a septic system in near water will have all sorts of special requirements so pay particular attention to that. Even if you can put a septic system in now the rules are constantly changing and you might not be able to put one in ten years from now.
Are you sure that you will be able to get some sort of backhoe into the building site? If not putting in a septic system could be hard.
There is a lot to be said for waiting until you are ready to build to buy the land.
One option would be to buy it and put in some sort of minimal cabin now. That could allow you to get a conventional building loan and you could make the land purchase contingent on you being able to get all the needed permits.
You could design the cabin so that it could be expanded on later and still look OK.
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Re: How to buy raw (unimproved) land?
Well and septic you can build yourself (assuming no zoning prevents it).
Power you could possibly get solar and battery (assuming enough sunshine).
Internet access might be a no-go, obviously you can go mobile or satellite but those tend to be a lot slower than a home cable connection and sometimes pricier, so keep that in mind.
Agree to make sure you can build on the property, make sure you have rights to the timber (sometimes you buy property but don't have resource rights). I think a loan for land is pretty doable (they have something they can take away from you after all). Consider maybe your access to hospitals, etc, if roads are an issue. If you were willing to pay for it you could probably build out your own road and just not connect it directly to existing roads, but maybe close enough it would be doable.
Also depending on what part of the country, consider security / squatters on your land.
Power you could possibly get solar and battery (assuming enough sunshine).
Internet access might be a no-go, obviously you can go mobile or satellite but those tend to be a lot slower than a home cable connection and sometimes pricier, so keep that in mind.
Agree to make sure you can build on the property, make sure you have rights to the timber (sometimes you buy property but don't have resource rights). I think a loan for land is pretty doable (they have something they can take away from you after all). Consider maybe your access to hospitals, etc, if roads are an issue. If you were willing to pay for it you could probably build out your own road and just not connect it directly to existing roads, but maybe close enough it would be doable.
Also depending on what part of the country, consider security / squatters on your land.
Where the tides of fortune take us, no man can know.
Re: How to buy raw (unimproved) land?
kjdbonez wrote: ↑Wed Aug 30, 2017 7:53 pm
I am wondering if there is anyone who can comment on experiences financing raw, unimproved land without immediate/planned development?
I realize that the ideal situation would be to pay cash for it. I unfortunately don't have cash to buy it outright otherwise I would do that for sure. There is probably only enough for 20% down at this point.
Land such as this does not seem like a hot market. Why not wait until you can pay cash or at least put down more than 50%? You are financing a non-performing asset, that is a luxury. Doesn't seem like you are in an economic situation to afford such a luxury if you can't put more than 20% down.
Is there someone other than a real estate agent that can help me understand all the pertinent codes, zoning, etc, etc that comes along specifically with buying raw land or is the right person just a local real estate agent to the property who understands this already?
This is the work of land use planners. RE agents are a horrible source of land use information in my experience.
Other stuff:
- The county has a survey of the land on record from November 2011 and as far as I know there have not been any new easements or other things that would change it. I have never purchased raw land before... would something that "old" suffice?
In short, no. You want a title commitment and survey delivered during due diligence period. The title commitment will list easements and other encumbrances to the property and the survey will display those that are site specific.
- It is zoned as a Non-commercial seasonal recreational property, which is what I would want it to be
A planner could explain to your what that means, the implications of that zone, and what you would need to do in order to change that to allow residential or other uses.
Are there any good, comprehensive websites/books that have information to guide me through this? I can't seem to find what I'm looking for via Google.
You could start with the county website, reading the zoning district information and land use change process but a RE attorney or land use planner are going to be better at explaining what it actually means.
I own the next hot stock- VTSAX
Re: How to buy raw (unimproved) land?
I have done this several times in West Virginia and we have gone through Farm Credit of Virginias. They specialized in farm, equipment, rural/raw land loans, etc.
The terms usually vary between 15 - 20 yr and the interest rates are a bit higher than a regular 'mortgage' but that's because its raw land. Good luck!
The terms usually vary between 15 - 20 yr and the interest rates are a bit higher than a regular 'mortgage' but that's because its raw land. Good luck!
Re: How to buy raw (unimproved) land?
I didn't see any mention of who the current owner is, but is there any chance of seller finance? How did you find the property? Is it currently on the market? If so, there may be a broker involved from the seller side that might give advice to expedite the sale
I also didn't see mention of whether the land might flood during times of the year...
I also didn't see mention of whether the land might flood during times of the year...
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Re: How to buy raw (unimproved) land?
I would make sure this is an absolute certainty before purchasing or at least put that as a clause in the purchase contract.kjdbonez wrote: ↑Wed Aug 30, 2017 7:53 pm The land has no structures and at this point is considered - access by boat only - although there is a logging trail off a maintained road that crosses state land and goes all the way to the property and there is the possibility of an easement from the county for constructing this into an actual road.
Re: How to buy raw (unimproved) land?
One other fact, interest paid on a "raw land" mortgage is not deductible for tax purposes until you start construction for a personal residence.
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Re: How to buy raw (unimproved) land?
I have done this twice.
Once to purchase timberland for investment purposes and I used a local bank that I had used since middle school and I still got difficult terms on a commercial loan. 40% down and 5 year ARM.
Second time I also used Farm Credit Service:
[url][/https://www.e-farmcredit.com/homeurl]
MUCH better terms and much lower interest rate with a Rural Development loan.
See if there is a Farm Credit in your local area. They are very similar to a credit union and are focused on rural development/farmland.
Make sure you have a good survey and depending on your area, make sure that you are getting the water/mineral rights and too before you buy.
Check neighboring properties as well. I grew up in a clay mining area and lots of property was optioned/leased to mining companies decades ago and people don't realize they could be buying something that a surge in brick manufacturing results in a mining company coming in and starting to dig a huge pit mine right next door and there is nothing you can do about it.
Owning raw land should be viewed as a luxury rather than an investment and it can often be a lot of work.
Once to purchase timberland for investment purposes and I used a local bank that I had used since middle school and I still got difficult terms on a commercial loan. 40% down and 5 year ARM.
Second time I also used Farm Credit Service:
[url][/https://www.e-farmcredit.com/homeurl]
MUCH better terms and much lower interest rate with a Rural Development loan.
See if there is a Farm Credit in your local area. They are very similar to a credit union and are focused on rural development/farmland.
Make sure you have a good survey and depending on your area, make sure that you are getting the water/mineral rights and too before you buy.
Check neighboring properties as well. I grew up in a clay mining area and lots of property was optioned/leased to mining companies decades ago and people don't realize they could be buying something that a surge in brick manufacturing results in a mining company coming in and starting to dig a huge pit mine right next door and there is nothing you can do about it.
Owning raw land should be viewed as a luxury rather than an investment and it can often be a lot of work.
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Re: How to buy raw (unimproved) land?
We bought raw land as a family hunting property/weekend retreat.
We formed an LLC with our sons. We secured a loan at 20% down for 15 years at 5% interest rate adj every three years. For the 20% down we used another paid off property as collateral. (Not our home)
We insure it as an LLC
We logged it for the first time in 2016 gaining about $11,000. This money is being used for the cabin. We are projected to log a second time in 5 years at an expected profit of around $100,000. We worked with our state conservation department and licensed logging company. The first logging was set up as a tax basis.
In the past we sold our home with property to a land development company, where we were allowed to log the property. That worked out well. Sold well under Capital Gains tax advantage.
We have always made use of property other than the logging.
Our farm is an hour from our front door and in a area sought after by many for hunting / weekend property.
That was key for us. (Having easy access)
We also were able to buy in 2012 when land prices had dropped.
Good luck.
We formed an LLC with our sons. We secured a loan at 20% down for 15 years at 5% interest rate adj every three years. For the 20% down we used another paid off property as collateral. (Not our home)
We insure it as an LLC
We logged it for the first time in 2016 gaining about $11,000. This money is being used for the cabin. We are projected to log a second time in 5 years at an expected profit of around $100,000. We worked with our state conservation department and licensed logging company. The first logging was set up as a tax basis.
In the past we sold our home with property to a land development company, where we were allowed to log the property. That worked out well. Sold well under Capital Gains tax advantage.
We have always made use of property other than the logging.
Our farm is an hour from our front door and in a area sought after by many for hunting / weekend property.
That was key for us. (Having easy access)
We also were able to buy in 2012 when land prices had dropped.
Good luck.
Re: How to buy raw (unimproved) land?
I own about 40 acres of raw timberland in Vermont. A few thoughts:
* Septic is a big deal, at least in Vermont. Know your laws. Consider making an offer contingent on septic capacity. I had my land perc tested before I bought it. Also, be aware of different types of septic systems. My land perc'ed well and qualified for an in-ground system (the cheapest option). Other systems can be much more expensive.
* How far away is power? What does it cost to bring in a line? This can be costly.
* How deep are wells in the area? Again, well drilling can be very expensive.
* You mention lake frontage - that can add more complications in terms of development.
* You also mention lack of road access. Many times the timber easements will provide access for just that - timber. Don't bet on road access for construction, cabin access, power ROW, etc.
* Given boat only access, is there a public boat launch on this lake or some sort of deeded access?
* Is the land within three hours of your primary residence? My land is 6 hours away and that is way too far away.
The land I bought is probably worth the same or less than I paid 10 years ago, even factoring in timber growth. Over the last decade, I've spent enough on property taxes, timber management plans, brush hogging, etc that I could have spent better elsewhere. Don't even remind me of opportunity cost. Land like this probably isn't going anywhere. I definitely wouldn't finance something like this.
* Septic is a big deal, at least in Vermont. Know your laws. Consider making an offer contingent on septic capacity. I had my land perc tested before I bought it. Also, be aware of different types of septic systems. My land perc'ed well and qualified for an in-ground system (the cheapest option). Other systems can be much more expensive.
* How far away is power? What does it cost to bring in a line? This can be costly.
* How deep are wells in the area? Again, well drilling can be very expensive.
* You mention lake frontage - that can add more complications in terms of development.
* You also mention lack of road access. Many times the timber easements will provide access for just that - timber. Don't bet on road access for construction, cabin access, power ROW, etc.
* Given boat only access, is there a public boat launch on this lake or some sort of deeded access?
* Is the land within three hours of your primary residence? My land is 6 hours away and that is way too far away.
The land I bought is probably worth the same or less than I paid 10 years ago, even factoring in timber growth. Over the last decade, I've spent enough on property taxes, timber management plans, brush hogging, etc that I could have spent better elsewhere. Don't even remind me of opportunity cost. Land like this probably isn't going anywhere. I definitely wouldn't finance something like this.
Re: How to buy raw (unimproved) land?
Its owned by someone in the neighboring town. I have their name from the county tax documents, so I could probably even contact them directly to ask about this. It is currently on the market, so I could also contact their real estate agent.not4me wrote: ↑Thu Aug 31, 2017 8:25 am I didn't see any mention of who the current owner is, but is there any chance of seller finance? How did you find the property? Is it currently on the market? If so, there may be a broker involved from the seller side that might give advice to expedite the sale
I also didn't see mention of whether the land might flood during times of the year...
The land has some low "wetland" regions. I went to look at it after 6" of rain so could certainly see where those areas are. There are several areas that are on large rock upcroppings though, well above water level and far out of reach of a flood, and those would be the ideal build sites
Re: How to buy raw (unimproved) land?
Thanks for the information. I'll have to look into some local land use planners in the area there.WhyNotUs wrote: ↑Wed Aug 30, 2017 11:31 pmkjdbonez wrote: ↑Wed Aug 30, 2017 7:53 pm
I am wondering if there is anyone who can comment on experiences financing raw, unimproved land without immediate/planned development?
I realize that the ideal situation would be to pay cash for it. I unfortunately don't have cash to buy it outright otherwise I would do that for sure. There is probably only enough for 20% down at this point.
Land such as this does not seem like a hot market. Why not wait until you can pay cash or at least put down more than 50%? You are financing a non-performing asset, that is a luxury. Doesn't seem like you are in an economic situation to afford such a luxury if you can't put more than 20% down.
Is there someone other than a real estate agent that can help me understand all the pertinent codes, zoning, etc, etc that comes along specifically with buying raw land or is the right person just a local real estate agent to the property who understands this already?
This is the work of land use planners. RE agents are a horrible source of land use information in my experience.
Other stuff:
- The county has a survey of the land on record from November 2011 and as far as I know there have not been any new easements or other things that would change it. I have never purchased raw land before... would something that "old" suffice?
In short, no. You want a title commitment and survey delivered during due diligence period. The title commitment will list easements and other encumbrances to the property and the survey will display those that are site specific.
- It is zoned as a Non-commercial seasonal recreational property, which is what I would want it to be
A planner could explain to your what that means, the implications of that zone, and what you would need to do in order to change that to allow residential or other uses.
Are there any good, comprehensive websites/books that have information to guide me through this? I can't seem to find what I'm looking for via Google.
You could start with the county website, reading the zoning district information and land use change process but a RE attorney or land use planner are going to be better at explaining what it actually means.
Also I realize that land is not really a hot market. It would take me a while to save the cash to buy it outright, but I think with a short period of saving I would have substantially more for a downpayment. At the time I'm not in the ideal economic situation, but after Labor day I'm staring a job where my salary will be 4x what I was previously making and has the potential to get a lot higher within a short period of time. I'm just worried that somebody else might jump in on this opportunity so I'm okay with the idea of financing it now knowing that I'll have the ability to pay it off faster than whatever term I get. Its ~80 acres of land with 1200' of lakeshore on a 40,000 acre lake that is great for all things outdoors and I've never seen a plot of land this size for sale there (its likely the last of its kind).
Re: How to buy raw (unimproved) land?
However, if you treat raw land as an investment, you can add that interest to the basis which creates a future tax deduction essentially
Re: How to buy raw (unimproved) land?
In fact I did contact an Ag Credit co-op and they have reasonable rates and terms for this type of situation. I'm going to contact some more similar outfits to see what other information I can get prior to proceedingWVbaron wrote: ↑Thu Aug 31, 2017 7:48 am I have done this several times in West Virginia and we have gone through Farm Credit of Virginias. They specialized in farm, equipment, rural/raw land loans, etc.
The terms usually vary between 15 - 20 yr and the interest rates are a bit higher than a regular 'mortgage' but that's because its raw land. Good luck!
Re: How to buy raw (unimproved) land?
There are several companies that due septic on this lake via barges. I wold get a land perc test if I proceed to see what type of installation is necessary and what it would cost . Given the size of the property I imagine there are several options.alpenglow wrote: ↑Thu Aug 31, 2017 6:46 pm I own about 40 acres of raw timberland in Vermont. A few thoughts:
* Septic is a big deal, at least in Vermont. Know your laws. Consider making an offer contingent on septic capacity. I had my land perc tested before I bought it. Also, be aware of different types of septic systems. My land perc'ed well and qualified for an in-ground system (the cheapest option). Other systems can be much more expensive.
* How far away is power? What does it cost to bring in a line? This can be costly.
* How deep are wells in the area? Again, well drilling can be very expensive.
* You mention lake frontage - that can add more complications in terms of development.
* You also mention lack of road access. Many times the timber easements will provide access for just that - timber. Don't bet on road access for construction, cabin access, power ROW, etc.
* Given boat only access, is there a public boat launch on this lake or some sort of deeded access?
* Is the land within three hours of your primary residence? My land is 6 hours away and that is way too far away.
The land I bought is probably worth the same or less than I paid 10 years ago, even factoring in timber growth. Over the last decade, I've spent enough on property taxes, timber management plans, brush hogging, etc that I could have spent better elsewhere. Don't even remind me of opportunity cost. Land like this probably isn't going anywhere. I definitely wouldn't finance something like this.
There are above-ground powerlines running across part of the property. Also an adjacent property already has "city" power running under the lake with a box literally within 10" of the property line.
There is 1200' of lake frontage, but it is approximately 80 acres with much of the property far from the lake as well. The ideal build sites are all well behind the county's setback limit for building
I'll dig more into the "possible easement for a road" advertisement on the listing. Right now it is boat access only, but there are dozens of public boat accesses (40,000 acre lake) and several within short distance to the property.
The property is approximately 3.5-4 hours away from my current primary residence depending on traffic. I live downtown in a large city, but currently working about 30 minute drive north and eventually plan to move closer to primary work site which would put me closer to the land.
I understand that it probably isn't going to increase in value (unless I get road access, utilities, and build a structure on it), but my biggest concern is that it will be sold and I'll lose the opportunity to purchase it. Fortunately with summer coming to an end, this type of property wont be in much of a demand until next year I assume, so I could sit on it and save some $$ to get more favorable financing options.
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Re: How to buy raw (unimproved) land?
Thinking about doing something similar to you in the far future. Small cabin, generator power, water driven in or filtered from rain, 50 gallon barrel septic...totally off grid.
If you can't get a decent loan and have equity in your home, what about tapping into that to make the purchase?
I saw you mentioned bringing in city power. Just a heads up, where I live tax on a recreational lot that assesses at $150,000 is ~$300/year. If you bring in power, it's not longer recreational and it jumps to ~$3,000. Not a huge sum, but something to think about.
Re: How to buy raw (unimproved) land?
Your best option is owner financing. It will be very hard to get outside financing with isolated property like this. If the owner is motivated to sell, he will likely entertain an offer. Make the owner a written offer with owner financing, a good down payment and an interest rate and a payment you can live with. If he is a motivated seller, he will most likely accept your offer or come back with a counter offer. Don't talk to a broker unless you know for sure he has a written listing contract with the seller. Some brokers will try to make a sale even though they don't have the property listed.kjdbonez wrote: ↑Thu Aug 31, 2017 9:48 pmIts owned by someone in the neighboring town. I have their name from the county tax documents, so I could probably even contact them directly to ask about this. It is currently on the market, so I could also contact their real estate agent.not4me wrote: ↑Thu Aug 31, 2017 8:25 am I didn't see any mention of who the current owner is, but is there any chance of seller finance? How did you find the property? Is it currently on the market? If so, there may be a broker involved from the seller side that might give advice to expedite the sale
I also didn't see mention of whether the land might flood during times of the year...
The land has some low "wetland" regions. I went to look at it after 6" of rain so could certainly see where those areas are. There are several areas that are on large rock upcroppings though, well above water level and far out of reach of a flood, and those would be the ideal build sites
Edited to add: There are certain terms and conditions that should be included in your offer such as requiring the seller to provide you with title insurance, proration of taxes, etc.
Slow and steady wins the race.
Re: How to buy raw (unimproved) land?
No. This is why you need the seller to furnish you with title insurance.
You don't want to get a real estate agent involved. Of course if a real estate agent already has the property listed with the seller then the seller will be obligated to pay a commission and the agent should be able to help you with the information you need. You could also go to a title company or a real estate lawyer for help. It's really not that complicated though.kjdbonez wrote: ↑Wed Aug 30, 2017 7:53 pm In this case if I already have the exact property in mind, does that change things? Is there someone other than a real estate agent that can help me understand all the pertinent codes, zoning, etc, etc that comes along specifically with buying raw land or is the right person just a local real estate agent to the property who understands this already?
Not that I know of. I would be happy to help you if you want to PM me. I'm not a lawyer, but I have had considerable experience buying and selling real estate.
You may want to go here and read:
Before Signing a Purchase Contract for Vacant Land: Terms to Negotiate
http://www.nolo.com/legal-encyclopedia/ ... tiate.html
Slow and steady wins the race.
Re: How to buy raw (unimproved) land?
I would check to be sure that there is drinkable water if you have a well dug, which I assume you would have to. I don't know how one does that check.
As to septic systems near water, my state now requires "advanced" septic systems in such cases. It is costing me about $35,000 to have one put in, for a three bedroom house. The rules in your state may be different of course. If you can place it far enough away from the water, the price drops significantly.
As to septic systems near water, my state now requires "advanced" septic systems in such cases. It is costing me about $35,000 to have one put in, for a three bedroom house. The rules in your state may be different of course. If you can place it far enough away from the water, the price drops significantly.
Re: How to buy raw (unimproved) land?
We have been very happy going this route w an Ag Credit. Over the course of the last 6 years, we have used Farm Credit of VA 3 different times to help with rural property that we purchased (adjoining property that became available for sale). It's just good to work with a bank / AG credit that understand rural property, raw land, etc. I agree with others who have posted about understanding what easement / right of way you will have access to prior to making the purchase.kjdbonez wrote: ↑Thu Aug 31, 2017 9:56 pmIn fact I did contact an Ag Credit co-op and they have reasonable rates and terms for this type of situation. I'm going to contact some more similar outfits to see what other information I can get prior to proceedingWVbaron wrote: ↑Thu Aug 31, 2017 7:48 am I have done this several times in West Virginia and we have gone through Farm Credit of Virginias. They specialized in farm, equipment, rural/raw land loans, etc.
The terms usually vary between 15 - 20 yr and the interest rates are a bit higher than a regular 'mortgage' but that's because its raw land. Good luck!
On the first 100 acre tract that we purchased to build a cabin, we had to work with utility dept to get power put out there. It would be worth checking the cost, in our case, it was only about $1,500 but depending on how close the next cabin, power lines are, etc it could be more. Best of luck!
Re: How to buy raw (unimproved) land?
It is zoned as "non-commercial seasonal recreational" which according to my state tax codes is:"ddurrett896 wrote: ↑Fri Sep 01, 2017 6:33 amThinking about doing something similar to you in the far future. Small cabin, generator power, water driven in or filtered from rain, 50 gallon barrel septic...totally off grid.
If you can't get a decent loan and have equity in your home, what about tapping into that to make the purchase?
I saw you mentioned bringing in city power. Just a heads up, where I live tax on a recreational lot that assesses at $150,000 is ~$300/year. If you bring in power, it's not longer recreational and it jumps to ~$3,000. Not a huge sum, but something to think about.
"Noncommercial SRR (Class 4c12) or cabins, have the same class rates as for non-homestead 4bb(1) property, which in
turn is the same as for homesteads. However, cabins and other non-commercial seasonal property (class
4c(12)) are subject to the state tax and, of those classes which are subject to the state tax, only cabins have
a different class rate for the state tax in that the first $76,000 of value has a class rate of 0.40%"
Right now the taxes are just over $4k. That being said, if I were to bring utilities and a road to it, plus build a cabin, the value of the land would likely increase quite a bit and taxes would go up.
Re: How to buy raw (unimproved) land?
Borrowing money for recreational use is not a Boglehead thing to do,kjdbonez wrote: ↑Wed Aug 30, 2017 7:53 pm I unfortunately don't have cash to buy it outright otherwise I would do that for sure. There is probably only enough for 20% down at this point.
- This would not be an "investment" or a rental income property - just recreational land for myself, my family and friends to enjoy.
Re: How to buy raw (unimproved) land?
I understand that - I'm not looking as it as an investment. The only reason I asked on this forum is because I assumed there would be someone who has gone through the process of financing raw land and other aspects that go along with the purchase.
Re: How to buy raw (unimproved) land?
This is the information I obtained from Compeer in my area:Bacchus01 wrote: ↑Wed Aug 30, 2017 9:18 pm Find a land specialist investor. I've done this.
I used a company that is now part of Compeer Financial. I got a 20 year with 10% down for like 2.75%.
There are options out there. Your local place is likely not great at it. BTW, my experience with Compeer has been EXCELLENT
"Here are some basic guidelines.
- We can finance between 65 to 75% of the appraised value of the land based on your credit strength and the size of the loan.
- Length of the loan can be upto 20 years
- Interest rates can be fixed or variable: todays rates(8/31/17) – 20 yr fixed 5.55%, 5 yr adjustable 4.65%, 1 yr adjustable 3.95%
- Closing costs are 1% of the loan amount with a minimum of $1,500. This covers appraisal, filing mortgage, and underwriting costs. It should cover everything unless there are title issues.
- Stock in Compeer - $1,000. Compeer is a member owned coop and when you take a loan out with us you need to purchase stock. We would hold the stock as long as you have loans with us but when all loans are paid off you would get the $1,000 back."
Not as good of a deal as the one you got, but not horrible I guess. What state did you buy land in if you don't mind me asking?
Also I've searched around for "land specialist investor" and it all seems to come back with essentially real estate agents that specialize in selling raw land (not necessary financing it). Is there a different title the person you got the loan through goes by? thanks
Re: How to buy raw (unimproved) land?
The current zoning of the plot of land allows people to live on the property for up to 250 days/year which is well above the use that this would get in my mind.alter wrote: ↑Wed Aug 30, 2017 8:20 pm I've literally just done what you've done. I purchased a 43 acre piece of property in the middle of nowhere, so to speak, and it was a challenge to find a bank to finance it. First thing is, don't think you'll get house-mortgage rates, you most likely will pay higher interest rates. Secondly, find a bank thats in the area of the piece you are buying, and try to contact a credit union for the best rates. My loan is a "balloon" loan, fixed for 3 years, at a 4.75% interest rate, amortized over 15 years, with the caveat that if no late payments were made, they will refinance at the same interest rate after the 3 year term. Expect to pay at least 20% cash down payment.
Also, very important, before you buy, research the land zoning restrictions, some types will not even allow you to live on the property all year round. It sounds like you already did but definitely research if it allows building buildings, and what types, etc. That can affect the value, depending on restrictions.
If you do build a cabin on it, running in utilities can be cost prohibitive so research solar panels/battery bank for power.
Good luck! They aren't making any more land.
I think electric could be brought in from an an immediately adjacent property at low cost (by the lake) or further away on property there are above-ground powerlines that run across in a region close to a likely future building site.
Re: How to buy raw (unimproved) land?
I bought in Wisconsinkjdbonez wrote: ↑Sun Sep 03, 2017 10:45 pmThis is the information I obtained from Compeer in my area:Bacchus01 wrote: ↑Wed Aug 30, 2017 9:18 pm Find a land specialist investor. I've done this.
I used a company that is now part of Compeer Financial. I got a 20 year with 10% down for like 2.75%.
There are options out there. Your local place is likely not great at it. BTW, my experience with Compeer has been EXCELLENT
"Here are some basic guidelines.
- We can finance between 65 to 75% of the appraised value of the land based on your credit strength and the size of the loan.
- Length of the loan can be upto 20 years
- Interest rates can be fixed or variable: todays rates(8/31/17) – 20 yr fixed 5.55%, 5 yr adjustable 4.65%, 1 yr adjustable 3.95%
- Closing costs are 1% of the loan amount with a minimum of $1,500. This covers appraisal, filing mortgage, and underwriting costs. It should cover everything unless there are title issues.
- Stock in Compeer - $1,000. Compeer is a member owned coop and when you take a loan out with us you need to purchase stock. We would hold the stock as long as you have loans with us but when all loans are paid off you would get the $1,000 back."
Not as good of a deal as the one you got, but not horrible I guess. What state did you buy land in if you don't mind me asking?
Also I've searched around for "land specialist investor" and it all seems to come back with essentially real estate agents that specialize in selling raw land (not necessary financing it). Is there a different title the person you got the loan through goes by? thanks
I got a better deal than that for sure. My closing costs were typical of a property closing. Nothing too high. I bought last fall before the company merged into Compeer. We have 820+ credit. I did have to put 25% down.
There are different rules if some of the land will be income generating. Part of my land was being famr d when I bought it so it qualified for a slightly different loan level I think. It is not farmed now. My loan officer said that didn't matter.
You may be able to designate some of the land as ag value (even tree harvesting) and get a better rate.
Re: How to buy raw (unimproved) land?
Wow - those taxes are no joke. Does your state have a property tax reduction program for keeping the land in timber growth or conservation? In Vermont, the program is called UVA (Use Value Appraisal) or more commonly, Current Use. It saves a lot on taxes but you have to opt in. There are some downsides, but it probably saves me at least $1k/year in property taxes. Just a thought.