Buying Land

Madisonmenece

So a circa 20 acre parcel of land has came for sale near us but not bounding. it would interest me as we are on a block of 60+ acres and this would make for a better sized holding.

It's certainly something I had thought about looking at in a few years as we are only a few into our new home a few years which swallowed all the savings during build and not recovered yet. But the land is selling now.

For those how have bought land what sort of deposit was required, and any other fees encoutered (stamp, registration, solicitor, acquisition tax,)

In my head it is likely madness as there some very strong fellas that will buy it regardless of cost.

I think I will go through the process at least as it may be beneficial for the next opportunity.

K.G.

My experience is banks would require 25 % of the price at least and in my view if you havent that and the fees(stamp is 6% i think)and maybe 1000plus for solicitors forget about it.

Mooooo

Stamp duty is up on 7.5% now I think if over 35? Solicitors between the bank and your own and engineer if boundaries to check etc. may come to 2/ 3k. If you can comfortably meet repayments and offer extra security they may take a 10% deposit, otherwise higher deposit prob required

J.O. Farmer

Banks could look for 30% deposit though you have other land which could be used to secure the loan. Really what they want is security more valuable than the loan.

Best thing to do is call into your bank and arrange a meeting with the agri advisor. Costs nothing but your time and you'll know better where you stand.

Farm365

You can use your existing land as security which negates the need for a cash deposit as the overall loan to value is reduced with the security of your owned land.

Fine Day

Is it good land?? And is it a dairy area. If so and there is plenty of interest it could make €300k or more. You have to add it all up. I would be very slow to hand over deeds of other property as security. You sound like your a young man. If you are in a position financial then go for it. But if it put you under pressure then you will have to think carefully. As a wise man once told me you think with your head & not your heart. What ever decision you take you take I wish you well.

Dunedin

Theheff wrote: »

Is it good land?? And is it a dairy area. If so and there is plenty of interest it could make €300k or more. You have to add it all up. I would be very slow to hand over deeds of other property as security. You sound like your a young man. If you are in a position financial then go for it. But if it put you under pressure then you will have to think carefully. As a wise man once told me you think with your head & not your heart. What ever decision you take you take I wish you well.

Good advice

lalababa

If you told your average accountant you were buying agri land in Ireland @ 10000+/acre with a loan @ 5% he'd try to dissuade you.

Madisonmenece

Theheff wrote: »

Is it good land?? And is it a dairy area. If so and there is plenty of interest it could make €300k or more. You have to add it all up. I would be very slow to hand over deeds of other property as security. You sound like your a young man. If you are in a position financial then go for it. But if it put you under pressure then you will have to think carefully. As a wise man once told me you think with your head & not your heart. What ever decision you take you take I wish you well.

I would say it will fetch 15k an acre, small parcels around here have fetched 17k an acre which is mental.

I have been looking to rent some extra ground for a few years but very little ever comes up, I think you would rent twice as much land at 300/acre then you could buy with same financial output per year.

Fine Day

Madisonmenece wrote: »

I would say it will fetch 15k an acre, small parcels around here have fetched 17k an acre which is mental.

I have been looking to rent some extra ground for a few years but very little ever comes up, I think you would rent twice as much land at 300/acre then you could buy with same financial output per year.

Better tax benefits if you rent too. But you are farming another person's land. Works well in the majority cases but the odd case you hear of bad stories

Good loser

I'd say you won't buy but going through the motions is a good idea for the next time.
Buying silage is in my mind a better job than renting land.

Madisonmenece

Good loser wrote: »

I'd say you won't buy but going through the motions is a good idea for the next time.
Buying silage is in my mind a better job than renting land.

Agree , silage would certainly be the way to go but I suppose you could get in bother in a bad year but ther is plenty going the last couple years.

For some reason there is only top quality advertised on DD from young grass... unfortunately we all know there is plenty not rubbish

farisfat

Banks will give 100% depending on your earnings and current borrowings.

K.G.

Madisonmenece wrote: »

Agree , silage would certainly be the way to go but I suppose you could get in bother in a bad year but ther is plenty going the last couple years.

For some reason there is only top quality advertised on DD from young grass... unfortunately we all know there is plenty not rubbish

The problem with buying silage from now on is nitrates.better off buying ration than silage anyway

Donald Trump

I called a bank recently to get a tentative idea of loan rates for purchasing land. They quoted me around 5.5% secured. I told them that there might be a bit coming up close to me and that if I bought it at the price I would be willing to pay for it, then the loan amount would be well less than half the value..........lady I was talking to told me that that wouldn't matter and it would be still 5.5%.

K.G.

farisfat wrote: »

Banks will give 100% depending on your earnings and current borrowings.

They will give 100 % but they will need extra assets as security.maybe if you can show you can pay it back in an exceptionally short time frame due to strong earnings they might let it go but i doubt it.no way would i give the.assets of the home place as security against a loan for anything.if you havent gathered 25 % of what you are going to buy beforehand it will make it alot harder to gather it for the loan after.everyone circumstances are different but the home place is a red line issue for me

cute geoge

Why would anyone borrow 100% to buy land is beyond me .First going down bank are going to crucify you with interest rate Second if anything goes wrong and you can not make repayment bank are going to put the whole lot up for sale

farisfat

K.G. wrote: »

They will give 100 % but they will need extra assets as security.maybe if you can show you can pay it back in an exceptionally short time frame due to strong earnings they might let it go but i doubt it.no way would i give the.assets of the home place as security against a loan for anything.if you havent gathered 25 % of what you are going to buy beforehand it will make it alot harder to gather it for the loan after.everyone circumstances are different but the home place is a red line issue for me

No they dont need assets.
Repayment capacity

farawaygrass

K.G. wrote: »

The problem with buying silage from now on is nitrates.better off buying ration than silage anyway

Can you explain why please?

Mooooo

farisfat wrote: »

No they dont need assets.
Repayment capacity

Have you come across a bank that is willing to do that?

farisfat

Mooooo wrote: »

Have you come across a bank that is willing to do that?

Yes.

Madisonmenece

I suppose unlike a home mortgage the land "should" pay the loan and leave a profit, unfortunately that will not always be the case if the loan % is too high.

J.O. Farmer

farisfat wrote: »

Yes.

Do they not also require security unless it's a relatively small loan repayable within 7-10 years.

Donald Trump

J.O. Farmer wrote: »

Do they not also require security unless it's a relatively small loan repayable within 7-10 years.

You wouldn't need it for a personal loan. But that would be limited in size and you'd be paying a higher rate.

Donald Trump

Madisonmenece wrote: »

I suppose unlike a home mortgage the land "should" pay the loan and leave a profit, unfortunately that will not always be the case if the loan % is too high.

Ironically, a house mortgage could pay for itself (and it could be a passive investment with a good tenant.)


If you had a loan of 10,000 to buy an acre of land and you were paying interest of 5.5%, assuming you are paying 50% on taxes on the incremental income from it, then to pay it off over 30 years you would need to be clearing over 800 an acre profit (before accounting for interest cost) in the first year to pay it back within that timeframe.

Donald Trump

farawaygrass wrote: »

Can you explain why please?

For the first part? I presume he just means that the fella who rents 40 acres for silage has an extra 40 acres of maps to put in for his nitrates compared to the fella who just buys the equivalent silage by the bale.

farawaygrass

Donald Trump wrote: »

For the first part? I presume he just means that the fella who rents 40 acres for silage has an extra 40 acres of maps to put in for his nitrates compared to the fella who just buys the equivalent silage by the bale.

He said a lad is better off buying ration rather than silage for nitrates reasons. Just wondering

J.O. Farmer

Donald Trump wrote: »

You wouldn't need it for a personal loan. But that would be limited in size and you'd be paying a higher rate.

That's what I thought, can't see a bank giving many unsecured loans for land based on repayment capacity alone unless it was a personal loan as you describe.

J.O. Farmer

farawaygrass wrote: »

He said a lad is better off buying ration rather than silage for nitrates reasons. Just wondering

I think he meant ration would be better value. Ration would push up the P produced from a nitrates perspective.

Bass Reeves

J.O. Farmer wrote: »

I think he meant ration would be better value. Ration would push up the P produced from a nitrates perspective.

I think it no longer a fact with cost if rations. You probably buy silage bales at 22-25 delivered now unless you are along the west coast. You get decent silage for that with the amount about. A 750kg make at 32%DM is 240kgs DM or 10c/kg of DM. Rations are 27-30c/kg if DM.

However from this year on having to go into a derogation if exceeding 170kgsN/HA will encourage lower stocking rates. Last CAP reorganization had a condition of you were in a derogation you cod not enter GLAS. If that rules continues this time exporting slurry will not allow you to draw GLAS

K.G.

farawaygrass wrote: »

Can you explain why please?

To best explain ill exaggerate.we ll a fella with 50 acres has a 100 cows but buys in all his winter feed he wont the maps to cover himself for nitrates.if you are buying silage you are probaly tight for nitrates as well so if you rented the land it would help for nitrates whereas just buying silage dosent.as regards my comment anout ration, i think you are better off buying ration instead of buying silage as at least you ll have the benefit of extra performance whereas silage only really maintains an animal

K.G.

farisfat wrote: »

No they dont need assets.
Repayment capacity

I stand corrected.so you re saying they will give a 100 % of the purchase price with only the deeds of that purchase against it.my experience is that there are 2 separate things,you have to show repayment capacity to get the loan whereas the secuirty is to do with things going south.in my case i had the capacity to repay a higher loan near to the full purchase price but they wanted extra land to cover the security

farisfat

K.G. wrote: »

I stand corrected.so you re saying they will give a 100 % of the purchase price with only the deeds of that purchase against it.my experience is that there are 2 separate things,you have to show repayment capacity to get the loan whereas the secuirty is to do with things going south.in my case i had the capacity to repay a higher loan near to the full purchase price but they wanted extra land to cover the security

Yes they will.

Bass Reeves

K.G. wrote: »

I stand corrected.so you re saying they will give a 100 % of the purchase price with only the deeds of that purchase against it.my experience is that there are 2 separate things,you have to show repayment capacity to get the loan whereas the secuirty is to do with things going south.in my case i had the capacity to repay a higher loan near to the full purchase price but they wanted extra land to cover the security

I get very worried about lenders and people with there fascination with repayment capacity. The ability to make repayments is often down more to attitude that to capacity. While farmers would have a good history in general I think the way people have managed historical debt gives a better indication

Donald Trump

farisfat wrote: »

Yes they will.

farisfat, what kind of rates would you be talking about for these 100% loans?


I was quoted 5.5% from a bank not too long ago a loan that would be a lot less than half the value of the land. I didn't negotiate as it was only a very tentative approach to get an idea of the current rates out there.

jimmy G M

farisfat wrote: »

Yes they will.

Which Bank or lending institution is giving 100% loans to buy land (I assume you are talking about decent sized loan €100k+ over a terms of at least 7 years) My experience is that Banks look at repayment capacity AND security cover for loans of that size and nature. Please do share the info. Thx.