Land purchase. Any chance?

Mcdelboy

Lads,
First post on here so bear with me.

The plan:
Interested in buying a bit of land in KK/LS area. Somewhere in region of 25-40 acres with plans to contract rear dairy heifers for an expanding dairy farmer. Will be very much part-time as I'm full-time employed in a good job. Grew up farming & haven't lost the bug! Would be looking for a bit of land with a house on it, prob quite run down, but liveable, to make it affordable. Could renovate in a few years.

The problem:
While I have a well paid job, I have no other assets & v little deposit, poss 10% of est price of residential 30 acre farm.
There won't be big profits from the heifer rearing but salary will cover repayments. At least won't need a stocking loan for the heifers.

Questions:
Will the bank lend me any money for land with so little deposit, even tho good income?
Would I have to do farm loan for land or mortgage, or both?
What interest rates/repayments would you expect on 300/400k?

Thanks in advance.

john_cappa

Mcdelboy wrote: »

Lads,
.
There won't be big profits from the heifer rearing but salary will cover repayments.

Whats the point so? If you have to use your salary to cover repayments then you are running at a loss?

400K is a massive investment. On a mortgage it would be the bones of 2K a month for 35 years. Rate may well be higher given that a farm is not a residential loan.

Also remember you can only borrow prob max 3-4 times your salary these days.

You may well still have the bug but there has to be a better way of getting back in the game. From the information you have provided it sounds like lunacy.

Mcdelboy

john_cappa wrote: »

Whats the point so? If you have to use your salary to cover repayments then you are running at a loss?

400K is a massive investment. On a mortgage it would be the bones of 2K a month for 35 years. Rate may well be higher given that a farm is not a residential loan.

Also remember you can only borrow prob max 3-4 times your salary these days.

You may well still have the bug but there has to be a better way of getting back in the game. From the information you have provided it sounds like lunacy.

Thanks John. Some good points there.
To be fair, I totally understand that it will be 'hobby farming'. Small farm = small profits. I believe that the rearing will make a profit, but I know that it won't buy the farm.

For me it's not about big annual profits, but a way of life choice. I could spend 400k on a really nice house in KK city, feel claustrophobic as hell, and (I believe) have a much lower ret on inv/appreciation over the next 10-20 years.

You mentioned better ways of getting back in the game. What are the options? Leasing, renting? I can't see many residential small farms up for rent on daft at the minute. I would want to live on the farm & wouldn't want to be putting a load of work into tidying up someone else's land/yard/house. Very few farms to let are ready to go...

epfff

Mcdelboy wrote: »

Thanks John. Some good points there.
To be fair, I totally understand that it will be 'hobby farming'. Small farm = small profits. I believe that the rearing will make a profit, but I know that it won't buy the farm.

For me it's not about big annual profits, but a way of life choice. I could spend 400k on a really nice house in KK city, feel claustrophobic as hell, and (I believe) have a much lower ret on inv/appreciation over the next 10-20 years.

You mentioned better ways of getting back in the game. What are the options? Leasing, renting? I can't see many residential small farms up for rent on daft at the minute. I would want to live on the farm & wouldn't want to be putting a load of work into tidying up someone else's land/yard/house. Very few farms to let are ready to go...

Best of luck with project
I ffully see where your comming from
Its only price of a City house and much more enjoyable without neighbours in on top of you
Just be carefully that you don't take on too much work and lose your passion for it
If . Was going to bank for that I wouldn'. Mention farming just the land renatal value(200 acre)on reasonable wage they should lend just remember repayments and where do you find this land

whitebriar

Yes,in your shoes,Rent for a year or two and then decide if you want to commit to this.

I think you are mad by the way.

If you love farming lifestyles that much,why don't you just contact the FRS and do some contract work on some farms for a while and see how you feel then.
At least that way you are not committed and actually making money.

Mcdelboy

epfff wrote: »

Best of luck with project
I ffully see where your comming from
Its only price of a City house and much more enjoyable without neighbours in on top of you
Just be carefully that you don't take on too much work and lose your passion for it
If . Was going to bank for that I wouldn'. Mention farming just the land renatal value(200 acre)on reasonable wage they should lend just remember repayments

Thanks epfff. That's prob a good plan when talking to the banks. At least there would be 5-6k/year income off 30 acres so they would be happier with lending & I know that I will have a fallback option if life gets busy with kids etc.

For me, the number of acres/farm size is a balance between affordability/commitment to amount of work as a hobby/whether it is worth bothering if it was too small an enterprise. On a daily basis, I can look after 60 heifers just as easily as 30, but other tasks will be much bigger with more animals/land.

The plan would not be to return the heifers to the owner for the housing period. Keep 1st grazers May-Oct & 2nd grazers March-Nov, thereby getting the winter off Contracts would be renewed on an annual basis, at least 6 months in advance by both parties, so I could get out & just rent if it isn't working out. Will still own the appreciating land tho.

stanflt

400k will cost you 38-40 k per year over 15years

Plus a tax bill

tommylimerick

op I don t think you are mad
I saw a flat for sale overlooking the London eye for 20 millon
that's crazy

Farmer Pudsey

Been there could write the book. You have to run as a business certain tax advantages. Would be slow to go down the heifer rearing route unless Dairy farmers start paying proper rates. Stocking with lower value animals will cost in the region of a25-35K.

However that is not what you asked. We will assume that you manage to find 30 Acres. With a fairly decent house it will cost 370K maybe a bit with it. If you have a 50K deposit and can cover stamp duty(2%) and other fees that will leave you borrowing 320K

It will be hard getting money from bank try to get all as a farm loan it has tax advantages. Assuming that you manage to get this money for 4% it will cost about 22.5K/year. However beware if Interest rates go up 3% add another 5K/year. This is repayments over 20 years any longer and you are fooling yourself.

Beware of a few pit falls at present Interest rates are quite low and banks are charging excessive rates over ECB/Interbank about 3.5% at the height of credit boom it was about0.75% over ECB/interbank. 2% should be a medium term target however as banks now demand separate solicitors cost of moving loans is prohibitive so bargain hard if you can get the money.

On a feasibility basis you would want to be getting money at 2% over ECB/inter bank rate about a rate of 2.5% at present but I would imagine that 4% is the least you will get.

In 10+ years you will see the benefit as it can be very tax efficient. Most lads that will tell you are mad have only ever bought a half dozen eggs. Do not try to do a cost/benefit analysis.

The other thing I will say at present I think(I may be wrong) land is at the edge of a price bubble so it may well stand to you to sit and wait for 2-3 years and save a bit more but I could be wrong.

It took me about 7 years to buy a place it is a learning curve.

Muckit

epfff wrote: »

Its only price of a City house

What city is that? ? O connell st maybe but plenty of houses in Galway city ASKING for less than 200k.

OP l was dreaming like you but the calculator and herself set me wise :-)

jersey101

LEASE!
we bought a farm here and it was run into the ground. Would never do it again, its too much work. We got the loan just for the land nothing else and it was a mistake i feel. Its eating all our spare cash, we should have built everything day 1.
Id only buy if you have land to sell like we did.
A dairy farm maybe 30 min from where we used to live came up for lease during the summer and if i wasnt so commited at home with bills i would have leased it for the 20yrs, fully set up all i had to do was bring cows and cash.
Try lease if you can. Best option i feel.

kerryjack

you have got the bug man start off by walking into a bank whats left of them and see how much they will give you buy you plot of land and stick a mobile home on it You have got the rest of your days for fixing it up If that's what you want go for it.

Milked out

jersey101 wrote: »

LEASE!
we bought a farm here and it was run into the ground. Would never do it again, its too much work. We got the loan just for the land nothing else and it was a mistake i feel. Its eating all our spare cash, we should have built everything day 1.
Id only buy if you have land to sell like we did.
A dairy farm maybe 30 min from where we used to live came up for lease during the summer and if i wasnt so commited at home with bills i would have leased it for the 20yrs, fully set up all i had to do was bring cows and cash.
Try lease if you can. Best option i feel.[/Q

Getting a loan to buy land and cover the infrastructure investments needed on it is a lot easier said than done. I agree that if you could set up everything first day twud be the job but getting the finance to do that is nigh on impossible I'd say.. OP if you can meet the repayments and work on your deposit you may get a loan to buy as the property itself may do as security. However given that as you say the farm won't pay for itself work on a plan for a time when things may go wrong as well as right. i.e. being out of work for a while, etc. as this will not only be a farm but your home.

quader

milked out how much did that farm cost to rent just out of currosity ?????

Muckit

kerryjack wrote: »

buy you plot of land and stick a mobile home on it You have got the rest of your days for fixing it up If that's what you want go for it.

Yes indeed and pray for mild winters

kerryjack

Muckit wrote: »

Yes indeed and pray for mild winters

or the love of a good women to keep you warm. houses are over rated I spent the best years of my married life well the first one anyway in a mobile home while we were building our house did us no harm.

Milked out

quader wrote: »

milked out how much did that farm cost to rent just out of currosity ?????

That was jersey that mentioned the farm there, I only quoted his post

Muckit

kerryjack wrote: »

or the love of a good women to keep you warm. houses are over rated I spent the best years of my married life well the first one anyway in a mobile home while we were building our house did us no harm.

Your prob right. They only depreciate. You should have saved your money and bought land instead of building that house!

1chippy

Muckit wrote: »

Your prob right. They only depreciate. You should have saved your money and bought land instead of building that house!

at first glance there muckit i thought you were on about a good woman, then i realised it was houses.

9935452

Mcdelboy wrote: »

Lads,
First post on here so bear with me.

The plan:
Interested in buying a bit of land in KK/LS area. Somewhere in region of 25-40 acres with plans to contract rear dairy heifers for an expanding dairy farmer. Will be very much part-time as I'm full-time employed in a good job. Grew up farming & haven't lost the bug! Would be looking for a bit of land with a house on it, prob quite run down, but liveable, to make it affordable. Could renovate in a few years.

The problem:
While I have a well paid job, I have no other assets & v little deposit, poss 10% of est price of residential 30 acre farm.
There won't be big profits from the heifer rearing but salary will cover repayments. At least won't need a stocking loan for the heifers.

Questions:
Will the bank lend me any money for land with so little deposit, even tho good income?
Would I have to do farm loan for land or mortgage, or both?
What interest rates/repayments would you expect on 300/400k?

Thanks in advance.

Im in a very similar situation to yourself. grew up with a farming background, good job, work with a contractor/farmer in my spare time.

nearly bought 25 acres a few months ago but the price went way too dear.
was actually somewhat relieved when i dropped out of the running.

If i went farming in my spare time my life would have changed.
i would have gone from having a few quid to spend to watching money. the nights out would be limited as a result, and i have a good few quid saved already.
financially it wouldnt pay for itself, i would have to buy cattle to stock the land , vets bills, feeding for cattle , contractors fees, diesel, water charges, fencing etc
start doing accounts , pay the accountant
finish work before going home to another few hours work at home, i know working for the contractor its gets tiring, on the wettest day of the year , you will find cattle broken out / in trouble, up til all hours of the day.

All that said i probably still buy land if it came up. its better than money in the bank.

my advice to you would be the same as the other lads here is to rent some land and get set up in a small way and see how you like it, work the land for a few years and if you are still up for it then look to buy.
One other reason to rent is if you ever want to go abroad there is very little holding you here

As regards your questions ,you should talk to the bank, make a appointment with the financial advisor and apply for a loan. i was told to apply even if i didnt need it . you dont have to take a loan , its only yours when you sign on the dotted line. interest rate on land was 5.5%.

Pacoa

One thing about buying land is "How long is it going to be in your family?"
Your great grand children could own it one day and what will it be priced at then?
you have to pay for it first though so don't go over stretching yourself and best of luck with whatever you decide.

kerryjack

Pacoa wrote: »

One thing about buying land is "How long is it going to be in your family?"
Your great grand children could own it one day and what will it be priced at then?
you have to pay for it first though so don't go over stretching yourself and best of luck with whatever you decide.

you are thinking well down the road there lad.