Buying & Selling

Thinking Outside the Box to Buy Land

There was a time when the value of land was based mostly on the quality of its soil, timber, water, farmable acreage and minerals in the ground. But that was then, before deer hunting was so popular. Today, many of us who are looking to purchase property must realize that we’re also buying the animals that live on the land. Or vice versa, if a seller is growing big bucks, well, he might just increase the price because somebody is going to want those deer heads on their wall.

I like to say there are two kinds of hunters: those who own land and those that wish they owned land. And hey I’m not knocking those who are extremely successful on public grounds. That’s awesome. I’m only telling those that would like to own a piece of ground to call their own that it may be more possible than you think.

If you’re the one dreaming about owning property, leverage your resources. Start small and build from there. Like the old saying goes “you gotta crawl before you walk.” In time, with patience, you’ll get there. Here are a few ways to look at it. You just have to think outside the box.

Contract for Deed

This type of deal benefits the buyer because the terms are negotiable. You’re dealing man to man, so to speak, with the landowner, rather than a financial institution that may not negotiate the terms of a loan. A contract for deed, on the other hand, could mean the seller will allow you to make a lower down payment for a higher interest rate. Your available credit limits won’t be affected like they might be if you use a bank. In fact, buying directly from the seller allows you to do so with little to no credit. Just make good on your interest payments or that contract will be yanked right back out of your hands and all the equity you’ve built will evaporate into thin air.

On the other end of this type of deal, the seller benefits because he can earn interest while holding on to the deed until the land has been paid for in full. In most states, foreclosure is quick, easy and enforceable. The seller can also defer income tax, budget and plan for expenses much easier with his new source of income.

Spacing Closings

Spacing closing dates allows a buyer to spread out payments. What you’d do in this situation is get the seller to allow you to purchase his land by splitting it up into tracts and close on each one on a different date. The time frame is up to the buyer and seller.

Here’s what that would look like. Each tract of land will be on a separate contract with its own legal description and earnest money deposit. The buyer puts down earnest money, this way the seller knows he’s committed, for the first tract, and closes 30 days later. Twelve months after that, he closes on the second tract. And another 12 months after that, the third tract. By spacing closings to purchase hunting land, you, the buyer, can afford a bigger place. It’s also a great deal for the seller if he doesn’t need all the money at once.

Option to Purchase

Here, the seller’s goal is to pay off an existing mortgage. And the buyer really wants this particular piece of property but can’t afford to commit to the entire tract. Just like a contract for deed, the seller can split up the land, and the buyer could purchase the first tract right away because it’s an income-producing property that can help with payments.

Again, the buyer can’t commit to purchasing tracts two and three, but he can purchase the options for them for $1,000 each. Then, after 12 months, if he’s able, he can commit. If not, he still has tract number one to his name.

Self-Directed IRA (SDIRA)

This last one is beneficial to you (the buyer) if you already own some property. What you can do is invest in hunting land rather than the stock market. This is an investment, so you’re not supposed to hunt it but can turn the land into a refuge. And if you own the land that borders this investment property, then it becomes a sanctuary and that’s a pretty good benefit to you.

We like to think that anyone who wants to can purchase land. If you find yourself dreaming about growing and harvesting bucks on a piece of hunting property with your name on the deed, give us a call. You might have to crawl before you walk, but we’ll be there to lend a helping hand throughout the process.

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