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Message
Financing for raw land
Posted on 5/5/23 at 8:19 pm
Posted on 5/5/23 at 8:19 pm
I have an opportunity to buy 334 acres of raw land planted in loblolly pines.
Does anyone have any good ideas on financing a purchase like this? At $3500/acre it's roughly 1.169MM and the best I've been quoted so far is 10% interest from a bank I've dealt with in the past. Are there any ways to deal with a bank on this and not get killed in Interest?
Does anyone have any good ideas on financing a purchase like this? At $3500/acre it's roughly 1.169MM and the best I've been quoted so far is 10% interest from a bank I've dealt with in the past. Are there any ways to deal with a bank on this and not get killed in Interest?
Posted on 5/5/23 at 8:27 pm to BillWilliamson
First, your will need 20% down, second, raw land always carries a higher rate. Rule of thumb is 2% above average 30 yr mortgage rate. Land/farm banks and credit unions are your friend.
Stay out of LA, already too many city assholes buy every stitch of something green.
Stay out of LA, already too many city assholes buy every stitch of something green.
Posted on 5/5/23 at 8:56 pm to BillWilliamson
Land banks are your answer
first south farm credit has been good ( much better than 10%) to me
first south farm credit has been good ( much better than 10%) to me
Posted on 5/5/23 at 10:55 pm to BillWilliamson
quote:
Are there any ways to deal with a bank on this and not get killed in Interest?
Not on raw land unless you’re coming with 40% or more in cash.
Posted on 5/5/23 at 11:17 pm to BillWilliamson
Id reach out to First South Farm Credit at their Thibodaux office (Ben or Tommy). I've dealt with them a few times for timber/hunting land purchases. Good people to work with and I closed with them recently, it'll be better than 10%, but keep in mind that interest rates in every loan sector are terrible right now and raw land financing is higher risk in the eyes of the banks, so set your expectations accordingly. The days of 3% interest land loans are a few years in the past.
Posted on 5/6/23 at 5:23 pm to BillWilliamson
I just financed a farm and sent a loan package to 4 different lenders. The company that had the best rate and terms was Prudential. Their lending arm is called PGIM. I would sure give them a call. The guy I dealt with is in Jonesboro, Arkansas
Posted on 5/6/23 at 6:50 pm to BillWilliamson
Timber sucks financially. I would be tempted to pay the seller $4000 an acre if he will clear cut the pines and pile the limbs.
Posted on 5/8/23 at 3:57 am to BillWilliamson
I have a couple of guys that would attend the LSU Football signing day Bash. They are in the timber business. They know timber sales. If you could get a little money out of the timber, that would offset your cost.
Posted on 5/8/23 at 5:09 am to BillWilliamson
I’m interested to know why the OP is so interested in getting a tract of land that covered in loblolly pines.
Posted on 5/8/23 at 8:54 am to BillWilliamson
quote:
raw land planted in loblolly pines.
quote:
At $3500/acre
And you said it is in a rural community? Geez. Sounds like you are paying recreational land prices not timber investor prices. Have you had a forester look at the land to see what you would have in timber? How far is it away from mills?
1. As mentioned before, call your local Land Bank, First south farm credit or Southern Ag and see what they have going. They will provide you with various financing possibilities. I know Louisiana Land Bank has been providing a patronage check back of at least 1% of your outstanding loan balance every year.
2. Someone mentioned an LLC getting a better rate, I have never seen that. If you did buy it in an LLC, they would base the loan on your credit and you would have to sign a personal guaranty as well. However, there MAY be some added tax planning opportunities available by putting it into an entity. Ask your cpa.
Remember, if you are buying this from a large company like Weyerhaeuser, they are selling the land for a reason, i.e. they think they can get more money than it is worth.
This post was edited on 5/8/23 at 9:02 am
Posted on 5/8/23 at 8:58 am to BillWilliamson
First South Farm Credit
Ask for Jeremy Clostio
Just finished a raw land deal, 20% down, 8.2% interest, 15 years, plus patronage refund yearly which would effectively lower your interest rate about 1%.
Ask for Jeremy Clostio
Just finished a raw land deal, 20% down, 8.2% interest, 15 years, plus patronage refund yearly which would effectively lower your interest rate about 1%.
Posted on 5/22/23 at 4:27 pm to BillWilliamson
Did I miss where you were buying? $3500 is pretty cheap unless it is a cutover.
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