People with unrealistic expectations

[bdog]

I have a good friend who makes about 25k a year. Married and two kids. They get by. He is renting a place and wants to buy a place in the country someday. I think it is great and want to help him anyway possible he is a good person. The problem is he has no concept of reality. He has been looking at places in the 100k+ range just for bare ground and then says he is going to build a house there. Many of these places are deed restricted to 2500 sq foot brick homes and construction must start within one year of purchase. Ain't no way he is coming up with 100k for the land and 250k for the house not to mention the well, septic, etc on 25k a year and no substantial savings.

The scary part is the bank has approved him for 100k and I worry he will blow it all on land and then not be able to build and lose it all.

We all have to start somewhere heck my first house and five acres cost me 47k about 12 years ago I just don't get his lack of understanding on this. I have tried to talk to him with no luck he thinks if the bank approves him he is good to go.

 

[DuckSlayer1017]

I thought that the banks were really cracking down on the risky loan business that caused the recession. I guess they are loosening up a bit. I hope your friend makes the right choice and finds a house in the country for under 100k.

 

[MossRoad]

If he only makes 25K per year with a wife and 2 kids, I'd be leery of any bank that would loan him 4X his annual income. Perhaps he has more income or assets then you know about or he's telling you bogus info.

 

[justinramani]

Why buy land that has deed restrictions? You may as well just buy a house or mobile home that it situated on some land. What part of TX are you in?

 

[EddieWalker]

He might be pre-approved to buy a house for $100 grand, but there is no way they would approve him to buy raw land without a huge down payment.

Eddie

 

[MossRoad]

Yeah, we needed 25% down to buy vacant farm land. Don't know about land in developments and deed restricted areas, though.

 

[RKJeepXJ]

Yep... No way they'd approve 100k land loan unless there's more to his financial situation than you know.

 

[justinramani]

You should tell your friend that buying raw land is risky business, especially if he won't have the money to do a survey, perk test, utility connection, well, etc. I got REALLY lucky when we bought our land - but I am still dealing with the "I wish I would have known" issues....

Has he looked at the ag credit/banks for foreclosures?

 

[smstonypoint]

I agree with others that things aren't adding up.

The USDA does have a loan program for low-income rural housing, but I have never heard of that program making loans on land alone.

Steve

 

[EddieWalker]

For me, I could only get a 15 year loan on my land when I bought it and like the others have said, it was 25% down

Eddie