View Full Version : Mortgage & Loan options for 40acre property
Looking for some advice/feedback from some of you guys who own a little land to stretch your legs on. Wasn't sure if this should go in the DIY or preparedness forums or not, so I dropped it here. Feel free to move if appropriate.
We are looking at a property - it is about 40 acres and zoned agricultural (cattle grazing lease). There is a house on the property. Not sure if it is worth the money yet or if we'll end up doing it or not, but I started looking into financing options to run the numbers and see.
I am getting conflicting info.
First call was to the bank that holds my current mortgage. The agent was super helpful until he found out that the property was over 20 acres and zoned ag, told me I can't get a normal mortgage and needed to talk to another group (gave me another phone number). He may or may not have been right.. Called that phone number, was the ag lending group, and they say they only do commercial ag loans for a minimum of at least 60acres.
Someone suggested I talk to an independent bank local to that area. Someone else told me that a local bank would have much higher rates and probably only a 10 year window to buy out or refi (on the 30yr mortgage, you'd have to refi or pay-off in 10 years)
Have been told I should talk to USDA, but it might be 25% down instead of 20%
Anyway, I'm happy to do my own research here, but I'm curious if any of you who might be in a similar situation can at least give me an idea which direction to point - what did you do? Ag Loan? Traditional Mortgage?
Are you aware they could be property tax issues if you don't run the required Ag and let it fall into residential zoning? I guess if you're leasing it out for someone else's cattle to graze on you'd be ok.
I'm sure there's a lot more to it, but a friend with ag zoning has had issues maintaining the zoning without running livestock, etc. There were sme waivers granetd in years past due to drought conditions, and apparently some counties still don't have the necessary funding or staff to check and enforce zoning, but if there's a land transfer you may come under the wrath of some gubmint inspector...
120 acres.
He told me that if he didn't run livestock or farm they could pull the ag zoning for tax purposes and charge residential property tax rates.
Like I said, I'm sure there's more to it like leasing hay production or cattle grazing, it's just what I heard.
Elbert.
Like I said, I think he's getting a pass for now. He's also downsized and sold off two 40acre plots so things have changed for certain.
Just laying it out there as a consideration.
I have a buddy who is a mortgage broker in Elbert County. I am willing to bet he is savvy to your questions. He's retired military as well and very pro-gun. So I like to support him when I can.
Let me know if you want his contact info.
Great-Kazoo
10-29-2014, 17:38
Or pm chunkymonkey
Douglas and Elbert both do the 1 cow/horse per year thing to maintain an agricultural tax rating. That basically means 1 cow for 365 days, 2 cows for 183 days, 4 cows for 92 days.... All the way to 365 cows for 1 day kinda thing. There are businesses that will 'rent' you cows for x number of days so you can maintain your agriculture tax rates.
The numbers above were for 10 acres lots, I don't know if it changes for 40+ acres.
Holger Danske
10-29-2014, 19:22
El Paso will pull your ag status too. Happened to my neighbor.
wife and I just bought and built new on 40 acres in Elbert. Horses don't meet the "ag" requirement unless breeding, according to my new neighbor. Our 40 was zoned ag, but once we converted from a construction loan to the conventional loan, the ag zoning tax break went away immediately, and until I get around to building fence, we won't be able to meet the ag requirement with cattle.
I guess all that to say getting a conventional loan shouldn't be an issue. It wasn't for us.
As for this property, we would definitely plan to continue the current arrangement with the neighboring property, who owns the cattle. Yes, eventually we'd plan on having some of our own animals, but I'm not clear what would count to maintain the tax status, so we'd start with what was easiest.
Both of our last houses have been 80 acres or so and one was FHA (in my wifes name only) and this one is a VA loan, both no money down. Around 2.8% 30 year fixed. You dont need an ag loan. That will be more expensive. One of our loans originated with Wells fargo, one with USAA.
Interesting, as it was Wells who told me no. Guess I need to ask the right person. Glad to hear it should be simple - as I had originally hoped though...
Find out how many head of cats you need per acre. You can get those for free!
Find out how many head of cats you need per acre. You can get those for free!
My wife was a little afraid when they mentioned mountain lions... but I don't think those are the cats I'd want to raise. :)
... unless they're tasty???
Seriously though, do people with young kids (6-12) not let them play outside alone when there are big cats "around"? I'm worried I might be not cautious enough since I'd normally probably kick the kids outside to go play cow pie frisbee or something.
We did... :(
We will again.
Good point.
Great-Kazoo
10-29-2014, 22:47
We did... :(
We will again.
Good point.
That good neighbor who will lend you some cattle. let him graze a few in exchange for 1/2 side of beef. Our kid and her "boyfriend" do that out west. They graze 2 head for a friend, come butchering they get 1/2 side. Same for some hogs they run.
That good neighbor who will lend you some cattle. let him graze a few in exchange for 1/2 side of beef. Our kid and her "boyfriend" do that out west. They graze 2 head for a friend, come butchering they get 1/2 side. Same for some hogs they run.
You think like me. :)
blackford76
10-30-2014, 02:27
My wife was a little afraid when they mentioned mountain lions... but I don't think those are the cats I'd want to raise. :)
... unless they're tasty???
Seriously though, do people with young kids (6-12) not let them play outside alone when there are big cats "around"? I'm worried I might be not cautious enough since I'd normally probably kick the kids outside to go play cow pie frisbee or something.
We have a few 'cats' up here, and as long as the dogs are outside with the kids, we don't worry much. Two or three large dogs that are protective work fine, one dog is a snack. Our Plott hound has been to the vet twice after cat fights, she is pretty tough, and I haven't seen any evidence of the cat being back since this spring.
We're looking at a house on 45 acres near Steamboat in Routt County. I asked my mortgage broker down here and he told me the same thing about not being able to get a loan on a 20+ acre property with a house.
We called the Wells Fargo in Steamboat and they said that there could be an issue if the house isn't worth 75% of the entire property value and that we might have to bring more cash to the table if that's the case. She wasn't 100% sure though, since she's still a bit newer on the job.
I'm not an expert, but I did buy 40 acres with a house in Teller county last year.
Zoning and Land Type are separate.
Our property is Zoned as A-1 which allows for a variety of uses. Tax assessor lists our property's Land Type as Residential.
A Tax Exemption for Agriculture is a bit of a separate issue. If we raise live-stock or some other agricultural endeavor, we would get a big break on our property tax. However, if we don't, it does not change the zoning; we just have to pay more taxes.
Just make sure you purchase more than 35.0 acres. You have fewer restrictions on what you are "allowed" to do.
http://www.co.teller.co.us/CDSD/Planning/LandUseRegs/LUR%20Handouts/Zoning/A-1.pdf
I went through Freedom Financial - used them before - PM me if you would like my broker's info.
I'm not an expert, but I did buy 40 acres with a house in Teller county last year.
Zoning and Land Type are separate.
Our property is Zoned as A-1 which allows for a variety of uses. Tax assessor lists our property's Land Type as Residential.
A Tax Exemption for Agriculture is a bit of a separate issue. If we raise live-stock or some other agricultural endeavor, we would get a big break on our property tax. However, if we don't, it does not change the zoning; we just have to pay more taxes.
Just make sure you purchase more than 35.0 acres. You have fewer restrictions on what you are "allowed" to do.
http://www.co.teller.co.us/CDSD/Planning/LandUseRegs/LUR%20Handouts/Zoning/A-1.pdf
I went through Freedom Financial - used them before - PM me if you would like my broker's info.
This is super helpful, thanks. I didn't realize they were separate. Your situation sounds extremely similar to what we're looking at.
BladesNBarrels
10-31-2014, 08:47
That good neighbor who will lend you some cattle. let him graze a few in exchange for 1/2 side of beef. Our kid and her "boyfriend" do that out west. They graze 2 head for a friend, come butchering they get 1/2 side. Same for some hogs they run.
If you can get beef in exchange for grazing rights, jump on it. We had acreage by Westcliffe and the best grazing lease we could get was $1 per acre per year. It was well worth the lease to maintain ag. status. The property tax was less than $10 per year on 35 plus acres.
I had a friend that located bee hives on property in Jeffco that was ag. zoned. The friend paid $100 to lease the land for the bees and the landowner paid $100 to buy 1/4 of the honey packaged in bottles. They exchanged checks to prove there was a business transaction. The landowner maintained ag. status. That was 15 years ago, so I am not sure if it still works.
Powered by vBulletin® Version 4.2.3 Copyright © 2025 vBulletin Solutions, Inc. All rights reserved.