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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Farmland Posted by BILL H on August 15, 2006 at 8:57 AM In Reply to: Farmland posted by Sara_CA on August 14, 2006 at 9:33 PM : My buyer of a vacant 40-acre farm land wants 100% financing. I understand most agricultural lenders will finance 50%. I will agree to finance the other 50% to get this deal done. But I am not experienced in this. What interest rate to charge for a second mortgage on a farm land? How long? I am thinking of 9.8% interest only loan, balloon at end of 5 years. He does have good credit. Owns a house and other farmland. Am I charging reasonably? Are there any other possibilities or ideas to do this deal? : Land is in Tulare County near Kings County in CA. $6.5K per acre. Alkaline soil, but terrific for building a big country house. : Thanks in advance. Sara: Joseph, BigMike and Damien all have given sage advice. Here are a few other things that you should consider. If he is going to subdivide and "Spec Build" homes that can be a long time consuming money burning situation. He has no $$ in the deal and less incentive to remain if something goes awry. Will he be asking you to subordinate to his construction loan(s)? Most lenders will require this, adding addition risk to your position. What is the housing market in your area for the type homes that he anticipates building? The market has cooled considerably in the past few months and there could be a long dry spell between building and sales. You sound new to the business and as if you do not have the resources to carry or recoup if he goes under. Therefore in your situation if he cannot pay cash...I'd probably advise extreme caution if you do the deal at all. Good Luck, Bill H Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : My buyer of a vacant 40-acre farm land wants 100% financing. I understand most agricultural lenders will finance 50%. I will agree to finance the other 50% to get this deal done. But I am not experienced in this. What interest rate to charge for a second mortgage on a farm land? How long? I am thinking of 9.8% interest only loan, balloon at end of 5 years. He does have good credit. Owns a house and other farmland. Am I charging reasonably? Are there any other possibilities or ideas to do this deal? : : Land is in Tulare County near Kings County in CA. $6.5K per acre. Alkaline soil, but terrific for building a big country house. : : Thanks in advance. : Sara: : Joseph, BigMike and Damien all have given sage advice. Here are a few other things that you should consider. If he is going to subdivide and "Spec Build" homes that can be a long time consuming money burning situation. He has no $$ in the deal and less incentive to remain if something goes awry. Will he be asking you to subordinate to his construction loan(s)? Most lenders will require this, adding addition risk to your position. What is the housing market in your area for the type homes that he anticipates building? The market has cooled considerably in the past few months and there could be a long dry spell between building and sales. You sound new to the business and as if you do not have the resources to carry or recoup if he goes under. Therefore in your situation if he cannot pay cash...I'd probably advise extreme caution if you do the deal at all. : Good Luck, : Bill H Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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