Tuesday, May 3, 2011

Buying the Farm

MontyB503 is going to be taking a break for much of the summer from posting. This is not a permanent farewell from posting here, but certainly a summer pause. Why?

1.) Newborn son at home

2.) Buying a farm property

3.) Moving three lives to acreage outside of Portland

4.) Three months to move (Jul-Sept) until it starts raining again

Why now? Why not wait for "the" bottom? Personally I think "the" bottom in residential real estate is still 2-3 years away. Farmland? It's yet another discussion all together. However we all have our own decisions to make. Sometimes one has to stop cutting bait and start fishing.

Personally, all I can say is that it's time. I'm purchasing at 2.7X my annual income, and borrowing at 2.0X my annual income (25% down with 3 years of payments socked away in savings). The very best part is that there is no bank involved in the transaction. The deed/title has been in the seller's family for decades and is owned free and clear. MERS has never touched it and it was never securitized.

I did a land contract instead of a bank loan. The seller gave me an interest rate well below what I could get from a bank (yet well above what they could earn in a savings account), and in return they got a nominal purchase price above what the market would have been willing to pay if there was a middleman (bank) involved securitizing the loan at a much higher interest rate.

Disintermediation.

If and when you purchase, do the math on the total cost of the acquisition (interest included). Lastly and most importantly: pay no mind to what central bankers SAY, just watch and learn what they DO.

I hope you all have a wonderful and sunny summer!


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