Buying land

More of a dream post, but I am curious of things to look out for and consider when buying land? I am only 29, but I don’t want to reach retirement age someday and say, “I wish I did this 30+ years ago.” I would like to own land as a long term investment while slowly making conservation improvements to it over time, and eventually ending up with a nice piece of land for myself and family. I don’t know much about farm land and prices, but I do know a bit about enhancing and managing land for conservation and wildlife.

1. How does one go about purchasing land? Looks like lots of land purchases require a fair amount of cash down.
2. I’m not looking at making money, but also not looking at losing thousands per year. Tons of variables here based on the quality of land and price of crops, etc., but is it somewhat possible to have rent income from crops cover the expenses of loan, taxes, etc.?
3. What other expenses are out there I am not aware of? Insurance? Loans? Taxes? Equipment for enhancements over time?
4. I’m far from broke, but far from a millionaire. 3 young kids in daycare, house payment, car payment…
5. I don’t want to hit age 60 and say I wish I did this or this, it’s too late and not possible now… I am looking for some answers that either say, “Yes, it is possible to purchase land and over time create a dream a hunting property (pheasants, deer, turkey) and conservation project while not losing all your money.” Or I am looking for an answer of, “No, you are crazy, move on. It’s not possible without going broke.”

They don’t make dirt anymore and it will only go up in value.
Buy it now if it’s not going to take food off the table or cause you to lose your home.
Go for it you won’t regret it.

I just did something similar that I should of done thirty years ago, will post it later this week.

I bought 75 acres for $9500 in 1991 without ever seeing it and never regretted it! My brother has hunted it and overheard the owners talking in the bar that they were going to sell it for $10k, I looked them up and offered them $9500 over the phone. I closed on the land and then went to look at it, it’s a rare situation, but keeping your ears open may put you in a similar situation.

I have been dreaming/wanting to buy recreational land for years. The hard part for me is deciding whether I buy hunting land or do I buy lakeshore/lake access property with public land nearby.
My wife is a teacher so has the summers off and obviously my kids do too. I think we would get the most use out of a lake type property but lakeshore is not cheap.

For non-homestead land you will be required to put down more cash in most cases than if it were your home because it is more of a risk for the lender. I have seen/heard that many lenders dont like dealing with hunting/recreational land because its less secured financially should you default. The other thing is interest rates will likely be higher than a traditional mortgage.

Good luck in your search. Find a realtor and have them do the leg work for you. There are some websites where you can search yourself, but they can be suspect with how current they are. Apps like Zillow are in this fold as well, but your best bet is to find a realtor in the area you are looking to purchase.

CaptainMusky wrote:

For non-homestead land you will be required to put down more cash in most cases than if it were your home because it is more of a risk for the lender. I have seen/heard that many lenders dont like dealing with hunting/recreational land because its less secured financially should you default. The other thing is interest rates will likely be higher than a traditional mortgage.

I don’t want to add a 2nd mortgage so to say, which is why I am little curious about buying farmland and keeping it in crop production for a number of years to offset the cost. While adding small continuous improvements over time and getting some of the land paid off through rent.

And again tons and tons of variables here. Whether we’d want to build a home on it to someday. Or try to get a CRP payment on it a number of years down the road (who knows what future farm bill caps will be). I know most in MN are looking for timber land, I am looking more for crop land that can be restored to a native prairie for pheasants primarily, deer and turkey secondary.

Buying land that is already huntable probably is not going to be possible for me, I am going to need something to offset the costs initially and produce some sort of income for awhile.

The area you are looking at will greatly reflect the land prices. Land for instance in Brainerd/Ottertail Lakes areas will be priced completely different than areas with less “water.” When we were house/land shopping prices went through the roof the closer you got to the lakes areas. We ultimately decided on a nice chunk of land and decent house. Further drive to go fishing but every deer you kill off your own property sure gives you a warm fuzzy feeling inside.

I’ve started doing a little research on this as well and am interested in other replies. My brother bought 80 acres that has like 25 acres tillable with a storage unit on the property, and hunting lease that is nearly break even on the cost to own (aka tillable/hunting lease, and rental units pay almost all the loan payments and taxes) after a 20% down payment. His plan is to get it paid off, and then possibly start hunting it. I think you will have trouble reaching that break even point with just tillable land, especially if you want to turn a good portion of it into native prairie.

BigWerm wrote:

I think you will have trouble reaching that break even point with just tillable land, especially if you want to turn a good portion of it into native prairie.

What if I wait 20-30 years to turn the majority of it into prairie? Collect rent on it to pay off xx amount of it in the meantime. Then hit retirement and have what I want? In the meantime put in some tree lines, shelter belts, small strips of grassland.

mnrabbit wrote:

What if I wait 20-30 years to turn the majority of it into prairie? Collect rent on it to pay off xx amount of it in the meantime. Then hit retirement and have what I want? In the meantime put in some tree lines, shelter belts, small strips of grassland.

Possible, and hopefully some farmers or people who know the ag industry can chime in on lease prices vs property values. As I’m sure you know in southern MN ag land prices are thru the roof, so I’d assume the lease prices follow but not sure what the break even would be.

I check out land once in a while. I’m in the process of buying out 30 acres my family owns in the iron range but I’m interested in purchasing land in other areas down the road as well. A few takeaways from my limited searching thus far.

1. Wings financial said they would not loan out money for land if the loan would be less than 35k. Doesnt sound like that would impact you but as others have mentioned lenders dont seem to like land loans and so the interest rate would likely be higher.

2. Searching for land online is sort of difficult and nets varied results. It’s not like buying a house where everything is clearly listed on several real estate sites. Up north a realtor may also work at the hardware store and the local lumber mill too aka it’s not his main occupation so he may not be on top of things. Advice I was given is that when looking for land a trifecta approach is best

-Work with a realtor
-Search online
-Drive the state looking for property on your own

Most farmland renters want to rip out trees and plow under grass to maximize acres, not put them in. Expect your rent payments to go down proportionalty

mnrabbit wrote:

<div class=”d4p-bbt-quote-title”>BigWerm wrote:</div>
I think you will have trouble reaching that break even point with just tillable land, especially if you want to turn a good portion of it into native prairie.

What if I wait 20-30 years to turn the majority of it into prairie? Collect rent on it to pay off xx amount of it in the meantime. Then hit retirement and have what I want? In the meantime put in some tree lines, shelter belts, small strips of grassland.

There are some incentive programs you could pursue if you were not interested in developing land. We have a fairly large portion of our family property enrolled in an SFIA agreement (sustainable forest incentive act). For our situation it pays roughly half of the property tax. There are restrictions however and may have maintenance costs to consider. There can be other habitat improvement incentives as well via the farm bill, NRCS, etc. They generally aren’t money makers but can offset some of the cost of doing habitat improvements. Some of these things made sense to us because we were interested in making some habitat improvements anyway. Helps to get some of the cost back.

IMO Your best investment would be to buy tillable land near (10-20 mi) an area with high population growth.
Rent out the land till you decide to sell to a developer. You should look into how many acres the township or county require to build a dwelling also in the event you need to sell prematurely or divide due to “life” happening.

If you plan to keep the land in the family as a hunting area this plan may not be your best idea to buy near an urban sprawl area. But I do think this would be the best financial investment long term.

tegg wrote:

There are some incentive programs you could pursue if you were not interested in developing land.

All things to consider as I look more into this, depending on some answers I get through this thread. Most of the government incentive programs also don’t pay as much as tillable rent and they have a timeline on them. Ideally, I would like something along the lines of collect rent income for xx amount of years to pay off portion of it, then enroll in a program that will pay for xx amount of years. Then it is paid off.

Of course there are other options to, buying an area that is more of a slough or bad farm land where cost may be lower.

I bought 113 acres last year. Most heavily wooded. I wanted lakefront, but the cost vs what you get didn’t make sense to me. I had to put 35% down for it. I leased the logging rights to 40 acres which recoups my down payment and I make some off of it. I am looking into leasing the land for hunting next year.

One thing that made this place really attractive was the fact that it has septic and electrical ran to a 3 acre building site. That is a huge cost saver.

County extension agents and the DNR provide assistance in plugging in to wetland preservation/restoration programs. It’s worth checking in to if a portion of the land that interests you is or was wetlands.

mnrabbit wrote:

What if I wait 20-30 years to turn the majority of it into prairie? Collect rent on it to pay off xx amount of it in the meantime. Then hit retirement and have what I want? In the meantime put in some tree lines, shelter belts, small strips of grassland.

Decent hunting land in west central MN can be had for under $2,000/acre, but you’re not going to have much tillable land if any on those parcels to cash rent. Tillable ground that will get you more than $150/acre cash rent will likely be anywhere from $3500/acre for sandy non irrigated non tiled to $10K/acre for irrigated & tiled with high crop index.

Cash rent isn’t going to pay for your mortgage unless you find a great deal on tillable ground in an area with good cash rent rates. And even in this downturn in the ag economy, you’re not going to find a “deal” on tillable acres in an area paying $175-$225/acre cash rent, as there’s lots of farmers still sitting on “2012” money and buying land.
Let’s just say you find around 80 tillable acres for $3,000/acre in a central MN area; rolling hills, good deer & ok pheasant populations. You’re likely going to have to put at least 20% down, and you’ll be lucky to get 15 years on the loan w/o committing to building a residence. So you put 50,000 down, and finance 190,000. You get really lucky and get cash rent for $200/acre. 15 years at 5% you’re paying $1500/month, $18,000/year. Cash rent will gross you $16,000, but taxes will be $2,000-$4,000. You’re out of pocket for $4,000-$8,000 per year; not bad.

More likely numbers would be paying $4500-$8000/acre for ground that will earn you $200/acre cash rent though. and you’ll likely find that you have to put closer to 35% down, and 5-10 year finance terms.
I’m sure somebody can chime in with real world examples of recent recreational land purchases and their rates.

When you’re ready to move forward, if you don’t have a current connection to the area you’re looking at, I’d suggest trying to get a local feel by spending time doing some of the recreational things you intend. Visit any area businesses you might use. Maybe camp nearby, or if possible, even on the land you are considering.

I don’t have a ton of specifics for you, but my in laws still Farm in West central MN. I’d imagine it would take a big chunk of cash to get any sort of prime farmland. Then it has to be big enough to be desirable to lease.

Like someone else said, they want to till every possible inch.

Also we do have some CRP. It’s great for prairie grass, but I even contacted their local office and some pheasant forever offices and we could not add trees or shelter belts because they wanted it burned every 3 years.

Not saying it’s not possible… but a lot of hurdles when it comes to farmland IMO

lindyrig79 wrote:

I’d imagine it would take a big chunk of cash to get any sort of prime farmland. Then it has to be big enough to be desirable to lease.
Like someone else said, they want to till every possible inch.

I guess not looking for prime farm land. My ultimate goal is to get hunting land and I was unsure if over time, turning farm land into hunting land would be a way of paying for some it via rent. In my current situation, essentially paying for another mortgage isn’t an option. Curious on ways of offsetting costs or producing some income. And if it was easy, everybody would be doing it. So I know there are probably no easy answers. The easy answer may be that MN is abundant in decent public land as is, and I already get to enjoy that.

I appreciate everyone’s responses so far. I am young, and don’t want to get 30 years from now and wish I did something. Realistically, I am probably a few years away from seriously looking into anything. But want to start getting the wheels turning a bit.

tornadochaser wrote:

<div class=”d4p-bbt-quote-title”>mnrabbit wrote:</div>
What if I wait 20-30 years to turn the majority of it into prairie? Collect rent on it to pay off xx amount of it in the meantime. Then hit retirement and have what I want? In the meantime put in some tree lines, shelter belts, small strips of grassland.

Decent hunting land in west central MN can be had for under $2,000/acre, but you’re not going to have much tillable land if any on those parcels to cash rent. Tillable ground that will get you more than $150/acre cash rent will likely be anywhere from $3500/acre for sandy non irrigated non tiled to $10K/acre for irrigated & tiled with high crop index.

Cash rent isn’t going to pay for your mortgage unless you find a great deal on tillable ground in an area with good cash rent rates. And even in this downturn in the ag economy, you’re not going to find a “deal” on tillable acres in an area paying $175-$225/acre cash rent, as there’s lots of farmers still sitting on “2012” money and buying land.
Let’s just say you find around 80 tillable acres for $3,000/acre in a central MN area; rolling hills, good deer & ok pheasant populations. You’re likely going to have to put at least 20% down, and you’ll be lucky to get 15 years on the loan w/o committing to building a residence. So you put 50,000 down, and finance 190,000. You get really lucky and get cash rent for $200/acre. 15 years at 5% you’re paying $1500/month, $18,000/year. Cash rent will gross you $16,000, but taxes will be $2,000-$4,000. You’re out of pocket for $4,000-$8,000 per year; not bad.

More likely numbers would be paying $4500-$8000/acre for ground that will earn you $200/acre cash rent though. and you’ll likely find that you have to put closer to 35% down, and 5-10 year finance terms.
I’m sure somebody can chime in with real world examples of recent recreational land purchases and their rates.

I appreciate this response laid out with some numbers to view. It at least gives me a few ideas. Thank you!

First off, absolutely do it!

I bought 7 years ago and have never regretted anything except not buying sooner. I’m a food plot seed dealer, so I talk to recreational property owners all the time. Everybody who does it, loves it. The land becomes their pride and joy and a legacy for their children and grandchildren.

How to buy?

All decisions stem from WHERE you think you want to buy based on what you want to do on your property and how long of a drive is acceptable. If you want pheasants, then the big woods of northern MN is not for you.

MAJOR FACTOR: Commuting time. Do NOT over-estimate how far you are willing to drive on a consistent basis. A 3-4 hour drive may SEEM ok when you’re all excited about seeing a property, but can be a major drag on the amount of time you can spend there. Also, all time spent in the truck is time you do NOT spend working on and enjoying the property.

This is the #1 thing I hear from landowners. They love their property BUT wish it were closer so they could spend more time there. Time is the most valuable commodity. You are younger and you will likely see your income rise over your life, but you will NOT get more time.

Once you have identified possible areas that suit your purpose and are within a driving distance that you believe is reasonable, only then can you start looking at prices, income options, expenses, etc and start formulating a plan.

It all starts with identifying areas based on what you want to do.

But get busy! You will only regret not doing it sooner.

Grouse

We just bought 57 acres in SW Iowa that had 12 acres of tillable ground that we negotiated a new lease on for cash rent. Tornadochaser was spot on with his numbers, as we are getting $185/acre. At $2200 a year it pays just over half of our taxes.

For a tillable farm (prime or not) you will most likely take it in the shorts. Around here we are $8-12k per acre of tillable depending on location. Unfortunately, timber isn’t far behind either.

We found that most banks wanted a dwelling on the property within 48 months for a decent rate, and without a home it was 30% down. We were able to refinance the house and get a lot of equity out of it, but we built the home ourselves about 10 years ago too.

Don’t forget taxes and Ins. On the land. Taxes are high

I have done this and maybe you can learn a bit from my experience.

There are some pretty good real-estate search tools out there. They vary widely in how useful they are for things like this. There are some where you can put in fairly detailed characteristics of the land you want. i.e. minimum and maximum acreage, min and max price, which counties you want to search, tillable, water view, waterfront, trees, etc. It may take time to find what you want. Or you have to make adjustments to what you want. But if you are patient and reasonable you can find what you want.

As far as financing, some banks will not write a mortgage for land without a residence. You will find more success with small town banks than you will with the large banks. The mortgage rates for 2nd homes are higher as are the down payment requirements. For bare land it is even higher for both rates and % down.

Has anyone purchased land enrolled in the RIM program? From what I’ve read, the value is significantly diminished…

This 60 acres has RIM enrollment. It’s prone to occasional flooding, and I don’t think you can put a food plot on any of it, which is why I think it’s been on the market for around a year w/o selling. You could see some nice bucks on this ground and pile wood ducks moving up and down the river though.

https://www.hughesrealestate.net/homes-for-sale-details/1935-30TH-STREET-NW-APPLETON-MN-56208/5154302/36/

We just became land/lakeshore owners this past spring. Wasn’t even looking just stumbled across a ad on Craigslist while searching for a used wheel house at the end of last ice fishing season. Somehow the land ad got mixed into my search. It’s 3 acres with the lake directly across the road. With the 3 acres comes a 1/13th interest in another lot 1/2 mile down the road where we have a dock and access to a 5000 acre reservoir. The property is cleared with a driveway put in. A 200 amp electrical service was already in. A 10X15 storage shed and a 16X24 pavillion or car port was already existing. Some additional dirt work had been done as a dirt pad large enough to park a large camper was put in as well as where the pavillion was located.

To me it was the best of what I would look for had I even been looking at property. The 3 acres gives us lots of privacy and space to our closest neighbor. My turnoff to lakeshore property was the close proximity your neighbors always seem to be. We still own lakeshore access. Just received our proposed land taxes and they went up slightly to just over $300 a year.

It’s just over a hour drive from our house which is well within reason. Seems most people are driving 2 hours plus to cabin property.

We may one day build on it one day we will give it a few years. Right now we have a 40′ destination camper parked there with a big deck. might have a well drilled next year but our camper holds 45 gallons which isn’t a big deal to keep up with as far as fills so the well expense may get put on hold.

If you’re young like you are be patient. Sometimes the best things come along when you are not even looking.

With all due respect to the poster above, waiting will cost you more money. I am on my 3rd piece of land in the past 8 years. I bought 15 acres, sold it 2 years later for $10k profit, bought a 20 and sold it after 3 years for $15k profit, bought my current 24 and have it up for sale and have turned down offers with more than $20k of profit (I have my eye on a 44 that I can get in my price range). I bought and sold these pieces all off CL (however Facebook Marketplace is surpassing CL). Find a piece you can buy right and will meet your minimum needs and put in some sweat equity then turn it for a bigger and better piece. Basically I am buying bigger pieces using just equity from the sale and my loan stays about the same. It ain’t going to get any cheaper…. People are lazy. If you find a piece that looks promising, clean it up, put in a small food plot and build a cheap blind to make it a turn-key hunting property. Some cityslicker will think he got a steal and you make coin off of a little labor and some fuel.

Ice Cap wrote:

If you’re young like you are be patient.

I would agree to be patient, but don’t stop looking and always be READY.

A younger guy who has to borrow money needs to be ready with a good lender relationship and a cash down payment or any good land will be long gone before he has time to get finances in order.

I talk to a lot of owners of exactly the kind of land the OP is looking for. The common story is that they start looking and then their search changes as they discover the pros/cons of different areas and what they can get for their budget.

I started looking in the big buck country of SW WI and SE MN. I didn’t like what I heard from actual owners down there. Prices were high, trespassing and theft are significant issues, and building restrictions/suburban encroachment presents possible future problems. I ended up buying land that is a closer/easier commute, more than twice the acerage, and for less money. I probably sacrificed big buck potential, but I gained a lot of other things.

IMO start by looking somewhere and then let the search lead you.

Grouse