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First time land purchase

180class

180class

Well-Known Member
Well, my wife and I went out to look at a piece of property this past weekend. It looks great, and we are very interested in it. The only thing is, I don't have a clue where to start in this whole process. I've never purchased recreational land before. It's 20 acres of mature timber, and 7 acres of tillable. It also has a 3 bedroom farm house, and a barn. The barn is in excellent shape, but the farm house is junk. The sellers are very negotiable on the price. The realtor and I both agree that the the house is more of a detriment to the land than a selling point. I can't even figure the house in, when thinking about an offer. The tillable is being cash rented now for around $160 an acre. What is timber and crop land going for in Central Iowa? Also, how does the cash renting of the crop land work? Is it monthly, yearly, ??? Like I said earlier, I'm going into this completely blind and have no idea where to start. What other questions should I be asking before even thinking about making an offer on land like this? Any advice would be greatly appreciated.
 

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180,

Looks like a great piece of property. Good mix of timber and tillable. First, I like to see some road frontage. It's hard to tell if you have frontage on the aerial. Unimpeded access is a must in my opinion. I also like to ensure utilities are there or nearby. It sounds like they are due an old homestead being on the property.
Secondly, your realtor should be able to pull up "comparables" or recent sales of recreational land to get a handle on what the market is doing in that area; which provides you an idea of how much to offer.
Thirdly, the cash rent should be a one time payment of X amount per rented acre per year.
Lastly, most lenders like to see 20 or 25% down on rec land. I know many have different opinions, but I have had a good experience with Farm Credit.

Good Luck
 
With tillable ground, there is usually federal farm programs money. You will need to check who is currently getting the money (usually the person who is renting it) and how much these payments are (helps determine rental rates).
 
Thanks guys. I requested some more information from Farm Credit. Is a loan on recreational land like this, similar to your regular mortgage? Interest wise and length of loan? Sorry for the stupid questions, but I honestly don't have a clue how this stuff works. Are there any programs that I can enroll the property in, to where I could make some additional income off of it to help make the payments?
 
180,

Your tillable can be rented, like it is now, or enrolled in the CRP program if it qualifies. Normally, renting pays a little more per acre. You can also enroll your timber acreage in the timber reserve program which reduces your taxes on the property significantly. You can inquire about the CRP program with your county FSA office, and I believe you must talk to the county tax assessor about the Timber Reserve program, maybe someone can help me with that contact. I know you can ask your FSA office about Timber Reserve and who to talk with.
Farm Credit, and other lenders, offer a variety of loan options ranging from 10 to 25 years; providing the option to pay monthy, like most mortgages, a one time annual payment, or semi-annual payment.
 
Good luck on the purchase!
Usually the rent is an annual payment. I would check into enrolling it in crp. We just got a "quote" for $180/acre on fifteen acres that we will be putting in later this year. The program we are enrolling in is a CP38. Talk you your Accessor for the Forest Reserve program, this will make the acres that are in Timber tax exempt.
 
Lance,

That is a great property. I have even picked up sheds all around that place. You will be set for big bucks for sure!! Goodluck!!
 
Sounds like well kinda be neighbors, it across the road from my dads. Me and a couple friends have hunted that farm and all the surrounding ones for years I was really sad to see that it was finally for sale this year, I figured it would be there for awhile though as high as they had it listed for. Does the property line go to the high fence or does it stop at that old fence line just short of it
 
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We just purchased some ground also. It was cheaper getting a second mortgage than a loan on bare ground. I too had been waiting 10 years to get this purchased. I have been busy clearing bad trees-locust and getting it ready for some areas to put in some late season food plots. Good luck!
 
Good gosh, how do all you guys know where this place is at? I thought I was being sneaky by blacking out the parcel numbers. You guys should be detectives! LOL
 
I didn't read through all the posts BUT....
Buying hunting land is one of the coolest things to buy, I am so thankful each day I am on my land and I just continue to wonder why I keep buying stocks.

10-20 (maybe 25) year loans usually. 1st farm buyers USUALLY need 20-30% down. monthly, bi-annual or annual payments. Cash rent around there depends on Corn Suitability rating and how farming-friendly it is. I would guess 150-160 maybe.

Timber Value OR do you have a trusted source that could tell you???? Income from timber, Timber Stand Improvement pays around $140 net per acre of timber if you decide you wanted to do that, tree plantings and other NRCS programs provide income.

Tax write off's of interest, traveling, farm supplies, etc are SUBSTANTIAL!!!!! I TRY and work it out to have a farm pay for itself for 3 years and I think I could get creative enough to make this one CLOSE to it depending on the price. A lot of homework, math, hardwork and art can make this thing be an awesome place for an investment but far more importantly, an awesome place to call your own! Good luck!
 
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