This is a two-part installment. For part 2 of this article, click here.
Sometimes the world moves so fast, it's easy to forget how you got to where you are.
Such is the case here in the Micro Manager series. We've focused so much on the here and now, that I've failed to share the “how.”
So let's do that. Because, judging by some of the e-mails and comments, it's a discussion many of you would like to have. So how did I end up with Noah's farm – the 17 acres of land that has been the focus of this series?
Well I suppose it was equal parts luck, planning, and old-fashioned stubbornness. Like many of you, I had dreamed of owning my own hunting land for a long, long time. For the most part, I figured it was just that: A dream.
But as I got a bit older and my career became a bit more solidified, I started to wonder if I couldn't actually make that dream a reality. It was a semi-serious thought to be honest. I knew if I found the right piece of land, at the right price, I might have an outside chance of owning it. But there were several critical factors at play, not the least of which was cash.
So let's start there. The focus of this entry will be on the process I followed to actually buy the land. Now, Noah's Farm had some very unusual circumstances involved. In fact, it was these circumstances that made the purchase possible because they led to a much lower selling price. Without them, I likely couldn't have afforded to buy it. But we'll cover those next time. There's plenty to start with here first.
Unless you're in a position to pay cash, you'll need to finance the land you buy and that means you'll need a down payment – and the going rate seems to be 20 percent. All but gone are the days of “no money down” financing.
It's the down payment that usually proves to be the biggest hurdle to overcome. It certainly was for me.
Think of it this way: In order to buy a piece of land for $100,000 you'll need to write a $20,000 check on the day of closing. That's a lot of cheese, far more than I could afford to part with at one time. While the monthly payment may have been doable, writing that $20,000 check wasn't.
And so I scaled back and started stashing cash into a savings account. I wasn't sure how much of a down payment I would need but I knew that if I didn't start saving, I'd never be in a position to purchase.
I also started to think about the type of monthly payment I would be able to afford. This is where you need to be exceptionally honest with yourself. Don't bite off more than you can chew. If you have a financial advisor, talk to them about your plans. They can help you set a realistic budget. If you don't have a financial advisor, consider hiring one for a few hours to discuss your plans. You'll thank me later.
In order to finance the land, you'll need a lender. While there are plenty of options for financing a house, there are far fewer institutions willing to lend for vacant land.
Here in Michigan, I could find only one: Greenstone Farm Credit Services. Most states have similar institutions. These lenders focus specifically on financing agricultural and recreational land. Most conventional banks will not finance vacant or recreational land, so finding a lender that will is your first order of business.
Getting pre-approved is a good idea. It makes the entire process faster and easier and it establishes a price range for when it's time to start shopping. There's little point to finding that ideal piece of ground unless you know you can get the funds to buy it.
And now we're at the most important step of the entire process: Finding a realtor. Not a realtor that's selling land you might be interested in buying. But a realtor that will help you deal with the buying process.
The best decision I made – by far – when buying Noah's Farm was reaching out to a fishing buddy who is a licensed realtor. Think about it. The realtor listing the property you're interested in buying works for the seller. That realtor will be paid a commission on the sale of the land.The higher the selling price, the higher the commission.
How hard do you think that realtor will work to get you the very best price? By bringing on your own agent, you will have a real estate professional to help guide you through the entire process and who will make sure you're asking the right questions and considering all possible issues with the land.
A good realtor can also help you consider things you haven't thought of such as how to generate income from timber sales or renting out tillable ground. A realtor that specializes in hunting land, such as the land specialists with Whitetail Properties, can be a major bonus.
Best of all, it won't cost you much, if anything, for the help.
I paid my realtor a flat $75 fee to retain his services. He also earned a portion of the sales commission once the deal was finalized – and that commission was split with the selling agent and paid by the seller. It cost me nothing.
That initial $75 fee was all that came out of my pocket and saved me thousands in the end.
So let's recap.
1) It starts with a dream and is followed by a plan.
2) To set that plan in motion, you'll need a down payment and then you'll need to locate a lender.
3) Find a realtor to serve as your buyer's agent.
4) Now all you need to find is some ground with good hunting potential that will work in your budget.
5) And don't worry if your budget seems too small.
6) With some work, some luck and a hefty dose of stubbornness, you can find that ground.