Buy Hunting Land Series: Can You Afford It?

Mike called me the other day. His question was the one that should be asked before the whole process begins.

“What can I afford to buy,” he asked.

Now that sets me up for the right discussion. And it has a lot of twists and turns. I don’t want anyone to make a mistake that puts them financially in jeopardy. I do not want them buying something that won’t suffice for their needs either. In either of those cases, I will be the one that pushed them into it—even if all I did was make it possible.

So once again I become the great inquisitor with a list of questions. Most of the time we must work from “I don’t know” because that question had not come up prior. Once I have a good idea of what we are working to get to and how much we have to work with, we can figure out what to buy, if anything.

There are a number of mortgage calculators out there you can use free from some lender’s websites. But that only tells you part of the answer to the question of what you can afford.

Are you considering all the options and variables? Probably not, and most important, are you being realistic and honest about all the numbers?

And finally, what is your fallback position if there is a problem?

Let’s say Gary wants 200 acres so he and his son can hunt whenever they want. He wants to set it up for deer and turkey. He wants it to be within an hour’s drive—maybe slightly more—but close to that. In his case he will go it alone. Within an hour’s drive, land is between $3,500 and $5,750 per acre. At $3,500/ac, 200 acres is $700,000. A 20% down payment is $140,000. Land loans at 5.25% (not 2% like houses) for 20 not 30 years. The payment would run about $4,000 a month. I did include a little for taxes, but still $4,000 a month.

Land is not financed by all lenders. Back in 2008 there were a lot of financial institutions that had loans out on raw land. Then the bubble burst, and way too many banks were left holding land as collateral that was worth about thirty cents on the dollar. Today, some local banks are beginning to make loans on smaller parcels up to 40 or 50 acres, without a home and if the borrower is solid.

AgGeorgia and AgSouth, basically the same world of lender, are agricultural lenders in Georgia and do make land-only loans.

FSA loans can help get the loan guaranteed, lowering the down payment and the rate of the loan for farming in particular, first-time farmers.

Who else loans money for land purchases? Owners—although not as often as in the past, but we still have landowners who own the land outright and can become bankers and lend the money themselves. It can be advantageous to the seller regarding taxes as well as puts them in the position that if you fail to maintain payments, they get the land back and get to sell it again. But it also gives them the interest the bank was going to make, which is more than they would make selling it and putting the money in the bank.

Another question is how much land do you really need? Hunting, fishing, dog training, just what is your need? Open, cleared/cut-over land or pasture? Or do you prefer wooded, with a creek or swamp? Archery-only can reduce the total acreage needed for obvious reasons and put you in some more urban or suburban spaces.

Will friends or family be coming to hunt with you? Would any of them be worthy of including in the deal with you? Think about this long and hard—and when you come to agreement, work out 100% of the agreement as to how you break up and split up the land before you sign anything. I would like to say friendships last forever, but that is also why there are so many divorce lawyers. Splitting the expense can certainly make it happen sooner. In Gary’s example, splitting it four ways makes the payment $1,000 a month per person. That sounds a lot more possible. Fifty acres at $3,500 split four ways, and $250 a month starts getting you there! You decide ahead if your shares are undivided use of all the land and right of survivorship.

These are also more good reasons to find an acreage realtor to work with you.