Owning a large farm that overlooks scenic valleys has always been a dream of mine. One day I will get there.
Present day, I've shifted my focus on building a strong foundation of rental properties that produce cash flow every month and have the potential for large appreciation. This will eventually lead me to be able to buy my dream farm with the money my other properties produce. On top of that, I've also bought and sold some other pieces of land.
Your situation is probably different from mine. You might have your primary residence and a steady job and some money building in your retirement accounts. But you most likely have the same type of dream - owning some rural real estate.
The good news about buying and selling real estate is that it's a free market. Whatever your dream is, there's a property out there that can make it come true, it's just up to you to put the pieces together.
Let's say you're living in the first home you ever bought and you're ready for some more room and privacy. You want a minimum of 5 acres in the country. You plan on building a custom home and hope to have an all in budget of $500,000. Building right now isn't a main priority with an ideal window of 5 years.
So you have the dream, but what steps should you be taking to make it reality?
Here are steps you can take RIGHT NOW to put all the pieces together.
Step 1 - COMMIT - You need to be committed to starting RIGHT NOW to make this happen. All too often I'll have Buyers that really want to make a move on something but they're not 100% sure of what they want or they believe they'll act when they see it. The problem is they're not committed. You need to believe you're going to find what you're looking for and start outlining what areas you want to be in. You need to take inventory of what's been selling, the prices, the acreages, and just become obsessed of where you want to find this piece of land and what it looks like.
Step 2 - CURRENT - Your current situation will dictate what kind of action you can take. If you're low on cash reserves or credit, rather than looking at property you need to be looking at ways to increase your financial strength. If you're solid in the finance department you need to start having deep conversations with lenders, attorneys, and accountants to map out the best financial path to structure this deal. Land is viewed as a second property that doesn't produce income. On average you'll need a 20% down payment and be able to afford the monthly payments. For a $200,000 property this would mean putting $40,000 down plus closing costs and an estimated monthly payment of $959 for principal and interest. Far too often I've seen Buyers with really great jobs but they have too much revolving debt that it knocks them out of qualifying for loans.
If you're stuck at Step 2, you know what you need to do (read the beginning of Step 2 again if you forgot). Let's say you're solid financially and can comfortably afford a property worth $200,000. You've made it to Step 3.
Step 3 - SELECTION - Now that you can be confident about your commitment and finances for this purchase it's time to get to work on finding your dream property. Where I am in Washington County, Wisconsin, good properties sell fast and often times don't even make it to the open market. This is where your commitment will be tested the most. You'll be competing with many buyers on a small selection of properties. You can do this step alone by searching tax records and online sites or even sending out letters. The quickest and most effective way will be to identify which brokers in the area are doing all of the deals and to get on their radar. I'm not talking about sending them one email requesting to keep you in mind if they come across something. I'm talking about regular follow up with them, knowing what properties they're selling, sending emails and texts weekly, and calling to check in. If this all seems like too much work then you need to hire a broker to do all of these things for you. How to hire a broker is for a different day.
Step 4 - ACT - Let's say you come across a property that is what you're looking for. Now is the time for action to secure that property with an accepted offer. It's not the time to go spend 2 weeks wondering about your house plans or what color the paint will be, or worrying about if you can afford it. You need to get this property under contract. If you're working with an experienced broker, they'll recommend you have contingencies in the offer to make sure all the fine details are looked into so once closing happens you're confident this property will work for you. The people that lose out are the ones that try and find all of the answers before getting an accepted offer. Act now to get control of the property with a contract. Look into details and confirm later.
All of these steps are important but COMMIT is number on for a reason. There's so many highs and lows in finding the right property. If you're not committed you won't take the right actions to make your dream happen. Action takers will beat out the dreams any day of the week.