Buying acreage, what do I need to know?

[Redneck in training]

If you own a home and have decent equity in it, you may be able to get a blanket mortgage that ties the home and the new land to one mortgage and avoid putting any money down at all.

Lets say you have a $100,000 house that you have $75,000 paid off. And lets say the new land is going to cost $50,000. And the bank wants 25% down on the new land, so $12,500 down. If you tie the $100,000 house to the $50,000 land under a blanket mortgage, you now have a $150,000 property that you already own $75,000 worth (you own 50% of the property). So you don't need 25% down, because you already own 50% of it! Its just that simple and its worth asking the lender about.

We did it twice. Once when we bought our vacant land and again when we bought our 2nd house. It worked very well, we avoided putting any money down on the land or the 2nd house, and we didn't have to get mortgage insurance because we owned more than 20% of the value of the house. Again, its worth checking out.

Good luck with your land purchase. As they say, God isn't making any more land (volcanic islands excluded). :thumbsup:

We did that too not for land but for our PV system. Small local banks familiar with the area are more likely to do it. All the usual bank choices (big banks) wouldn't even want to talk about that. First small local bank we walked to had no issue at all. The guy drove around our place on his way home from work and saw it well maintained and called next day to come and finish the deal. There is also tax advantage to add it to your mortgage.

 

[Redneck in training]

When we decided to buy land for retirement 10 years ago I went to county assessor web page and looked for what similar properties were sold for within about 30 miles around. We bid on a property that was on the market for some time. The guy wanted 2000/ac but we bid the average price 1100/acre. He took the offer next day.

 

[Redneck in training]

Excellent, thanks. I found that and it shows the ag exemption, and last 4 years property value and assessment.:thumbsup:



$50 for a trench and driveway? What kind of driveway? That sounds like a lot.

On the county assessor web page is a document (usually Excel spreadsheet) with all property sales for past few years. If it is not there or you can't find it go to city hall and ask for it. It is a public record.

 

[MossRoad]

We did that too not for land but for our PV system. Small local banks familiar with the area are more likely to do it. All the usual bank choices (big banks) wouldn't even want to talk about that. First small local bank we walked to had no issue at all. The guy drove around our place on his way home from work and saw it well maintained and called next day to come and finish the deal. There is also tax advantage to add it to your mortgage.

Tax advantage of a mortgage.... We've itemized every year for 30 years and we've NEVER EVER met the standard deduction even when we carried a mortgage. Once we came close but were about $250 shy. The only way a mortgage helps us is that we get a mortgage exemption on our property taxes. So we carry a home equity loan with usually zero balance. It counts as a mortgage and saves us about $600 on property taxes each year, but that's about it. It good to live in a small home in an older neighborhood! :laughing:

 

[MacLawn]

Whew, I didn't know just buying land was so dagnabbed complicated! Stupid me. I thought it just involved handing over some cold hard lucres for some thick dirt that went halfway to China.

 

[newbury]

Most "regular" banks and other lenders will not touch a loan on undeveloped land; it's something their underwriters just do not understand. So look for the local agricultural lenders like "Farm Credit". Interest rates will be higher than a typical home mortgage but should be only a point or so.

And many lenders will limit the acreage for home loans.

Make sure that one way or another you know exactly where the boundaries are! Your own survey is best but can be pricey.

First check Google earth. Buying a survey for 25 acres might cost about 1 or 2 grand. DEFINITELY get a survey before slapping the money down. My Dad bought "20 acres more or less" without a survey in Vermont in 1962. He sold it as 30 acres surveyed in 1982(?). Expanding universe.

If you plan to build a house there, pay someone to do a perk test in one or two likely building sites to be sure you will be able to have a functional septic system. Also be sure that electric and water service (municipal or well) are feasible ($$) if you plan to build.

A decent soil map should indicate if you have perkable sites.
But if you need to have a certain site definitely check it out further.
I and a close friend bought 150 acres in Vermont. He wanted the south half. Virtually no place to perc, I told him so, and he ended up building but not where he wanted to.

<snip>
Getting a good appraisal can be challenging. Mortgage companies now cannot select the appraiser, it goes to a pool and one is appointed. We got one that didn't understand acreage and ag operations, we have a stables and outbuildings, so we had a real problem getting a decent appraisal value. I spent $150,000 on my outbuildings but he valued them at $75,000. He told me cost of construction had nothing to do with the value, an outbuilding was an outbuilding.

Good luck. I hope you get the property you want.

Appraisals can be a real pain. The dipstick that appraised my present house valued my 5,500 sq foot of shops WITH a 1 bedroom apartment, running water, bathroom, electricity, etc. at about $8K. I don't think he even walked down to them.

Raw land is even worse. They may go by the lowest they have found recently, even if you have gold showing.

Road frontage and utility access are critical.

Good luck!

 

[KiotiKowboy]

I didn't see mentioned .... Are you planning to build a house? In order to get a construction loan, we had our new home,on vacant land, appraised prior to construction. We found the appraisal fairly close to what we expected. After 1 year, any balance is converted to a mortgage.

 

[Pilot]

I can only relate my experience. Cost of power & phone if buried in a trench was quoted about twice what we paid. The phone company plowed in both lines (coordinating with the power co.), started work at 7 am, buried both lines, 1250 ft. by noon.
Well drillers have access to all the wells in the ares. In our area they are all about 110 ft and that's exactly where ours was. BUT, at the residential airport where I keep my plane, some residents went 600 ft and other about 200.
Mark your property corners very well, with a pipe or rebar at least a couple feet high. I knew where all ours were, but one has disappeared somehow. When we bought the property, we measured from another corner & went right to it. Doesn't work now! Now I have to get it resurveyed for about $400-$600.

We put our house in the back corner where we have a Mt. Hood view and the highway is 600 ft. away. In the distance we hear noisy trucks and kids with their rock music, but we are a lot better off for quietness and seclusion than if we were just 50 ft. off the road.

 

[buckeyefarmer]

Here in MD, if it's sold as a "lot", it has to be surveyed, have an existing well and valid perc. If it's sold as land, then you have the responsibility to perc, wells, etc...

Wish I could have built further back on my lot, but the existing well was in the front, the perc was already determined, so there was only 1 place logically to put the house, without a long drive, and using gravity feed to septic.

I got a combined lot/construction loan. First draw paid the lot, and I was on the clock to get the construction done in 6 months. I got a couple extensions and built it myself in 9 months.

 

[Steppenwolfe]

Wow ... That's a pretty tall order. I can only recall 2 or 3 instances in my lifetime where someone was able to acquire mineral rights.

Quite common here in the East, but not so much for you out west. If you don't own them, they can come get them..