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I need help brainstorming financing options, please!

 
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We found a small acreage that ticks all our boxes. It's in the right location, the right size, and has the basic infrastructure we want in place - excellent well and septic, big barn/shop, and a good condition 1950s mobile to serve as a small home while we plan out a possible future build. It's pretty much selling for the cost of the land. The parcel next to it sold for the same amount last year, and that parcel is the same acreage, same basic character, but completely undeveloped with no installed services other than electric at the road.

It's hilarious. I have a preapproval for a conventional, but can't seem to find an option for this property -- which is a third of the cost of any other acreage we can find. We've figured out why. No one lends on land with a mobile on it. Even all of the land lenders we are finding locally won't lend on the land if it has a mobile on it. The owners will not carry the note, they are being very clear about that.

We can comfortably put 15% down, anymore and moving and getting the place going will be difficult at best. Good bordering on great credit.  We aren't high or even really middle income, just good savers. Is there something I'm missing when it comes to finding financing for a place like this?
 
pollinator
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In my part of the world, a mortgage broker will shop around to get you the best deal on financing. Have you tried such a service?
 
steward
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Hi Jen, welcome to Permies!

Have you looked into Farm Credit for a loan? My wife and I almost bought a parcel of land with a mobile home on it 4 years ago, using Farm Credit, but the sellers rejected our offer. Mobile homes have no value in the eyes of bank lenders, but some may loan money for the value of the land with other permanent structures. If that value they perceive falls short of any agreement between buyer and seller parties, the buyer is responsible to make the difference in cash if they really want it.
 
Douglas Alpenstock
pollinator
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Yes, a lender will appraise the value based on sales in the local area, and will only lend what they think they can reasonably recoup if the loan goes sideways.

It's odd that land with improvements would not be eligible for financing. Something in local/state laws perhaps? If they won't lend against a hard asset, it means they've been burned in the past.
 
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James Freyr wrote: Have you looked into Farm Credit for a loan?



Might need a viable business plan that shows intent to make money as well as rezoning the land as ag. But much of that depends on where that property is located.

Where is this property Jen? Which State and County? Is the land currently zoned as Ag (agricultural use)? Is it even possible to get it rezoned as Ag and if so, at what cost? Then you also have to consider water rights because residential wells are separate from Ag wells, etc.

Oh... Most important question, do you even want to farm or use this land for an “acceptable” agricultural use? Cus that takes the farm loan option away if that’s not what you want. There are big tax breaks and benefits that go with the Ag classification but there are also obligations and regulations to go with it, and those are going to vary by state and sometimes by county.

Good Luck!

 
Jen Harrin
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Douglas Alpenstock wrote:Yes, a lender will appraise the value based on sales in the local area, and will only lend what they think they can reasonably recoup if the loan goes sideways.

It's odd that land with improvements would not be eligible for financing. Something in local/state laws perhaps? If they won't lend against a hard asset, it means they've been burned in the past.



I'm in Washington (state), and every land lender I've looked at has had stipulations about no mobile homes on the land. Frustrating!
 
Paul Eusey
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Jen Harrin wrote:I'm in Washington (state), and every land lender I've looked at has had stipulations about no mobile homes on the land. Frustrating!



Washington State has really good farm loans at very very low interest rates. But they will require a business plan and everything I mentioned above... But again, that’s only viable if you plan to farm and can show intent to make money. If your land is the same price as an undeveloped comp, it might be easy.

http://www.wshfc.org/farmranch/index.htm

Good Luck!
 
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