How Do I Go About Financing That Tract Of Land?

Many people are aware that it is important to diversify your investment portfolio. For some that may mean investing in land (timberland, agricultural, recreational or maybe that old farm you have always thought about retiring to). But, how do you pay for it?  Most people  do not have the cash.  Although interest rates on homes and land differ, there are correlations.  The trends are similar but it is unusual to get as low of an interest rate for rural property as you can get for a home.  The conventional banks tend to have tougher standards for land loans and usually require a higher down payment.  I decided to talk to a loan officer with AgSouth Farm Credit to get the facts. Russ Stewart is located in Greenville, GA.  These Farm Credit banks are located all over the state. They were formerly know as the 'Federal Land Bank'.

The Farm Credit banks will lock in fixed rate financing up to 20 years. On loans under $200,000, they will lock in a rate for 15 years with a 15% down payment + closing cost. On loans over $200,000, they will require a larger down payment. One interesting fact about these bank, they rebate approximately 25% of the interest portion of the payments at the end of the year in the form of a dividend check. Whether it’s for recreational land, timberland investment, or a combination of the two, these institutions have money available to lend.

For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF at  

    (706) 457-0090

Is Now The Best Time To Buy Land?

If I knew that answer I would be retired on my own private island! But I can give you my professional opinion and the answer is YES  and here is why. I have included a chart as a visual aid to this article. To begin with, the land prices are average prices for a 3 county area located between Columbus and Lagrange. Columbus is the third largest city in the state of Georgia. Therefore these prices may be much different than the area you live in. The numbers are important but trends are what we are focusing on. The graphs covers Price Per Acre and Interest Rates (30 Year Fixed Mortgage) from 2007 to 2011.

Let’s discuss interest rates…with our national debt at a all time high and our printing presses running wide open, it is just a matter of time before the rates start moving up.

Many areas are experiencing improved activity in their housing market (this is a localized phenomena). Many areas maybe most areas are experiencing flat prices. Some have predicted we are at the bottom, it seems that way to me!. Housing will lead the way and land will follow later. Everyone needs a roof over their head and a bed to sleep in, you do not have to own land. Land is an investment and the buyer has a very different profile from the home buyer.

From a trend analysis it truly looks like the stars are aligned. I believe it is time to “jump in”. Land prices are at a 10 year low and interest rates are at a historic low. What are you waiting on?  I will promise you one thing, we will all look back and recognize that we had a historic opportunity. You never know you are at the bottom until after the prices start on the way up !!

For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF at      (706) 457-0090