If you’re coming at homesteading as we are, from a history of single-family home loans, your first little shock along the trail may stem from the fact that the bankers don’t want to touch your “perfect” property with a 10-foot note.
For our purposes, we’d like as much land as we can afford, but it looks like that’s going to come in at probably less than 20 acres, maybe a lot less. It depends on what comes with it. Raw land prices may seem cheap, but then you consider: How much work and money does it take to clear 10 acres of dense woods? (A lot.) Just for starters, we need cleared land with some trees remaining (not worn-out chemicalized old row-crop property), an excellent water supply, fenced and cross-fenced, and with at least one barn or building with electricity, which can be securely locked up.
We realized up front that it’s unlikely we’ll find property that meets all of those requirements. But the more, the better. So we were pretty excited the other day to find that something new had gone on the market, something with most of the above criteria.
The centerpiece of the property was a medium-sized metal building. Around here they’re known as “barndominiums,” and they’ve become pretty popular. A barndominium often combines a horse barn with a living quarters. The living space can be very spartan or luxurious depending upon the builder’s whims and budget. These buildings generally cost significantly less per square foot than a traditional house.
The one we were looking at never had housed animals, and was fitted out with a very large shop area, three roll-up doors, a living quarters and a south-side covered porch with an outdoor sink. It sat in the middle of 10 cleared acres that appeared to have been about a third woods and possibly had provided cow pasture at one time. Pond at one end, water lines extended at three or four points around the land. No real fencing yet, but a stout hot electric wire running close to the ground around the perimeter, to discourage hogs and cattle.
This place met a lot of our needs and, while we don’t really need a second home, having a living quarters in the building would be a useful bonus, especially on weekends. But, as we were soon to find out, FHA lenders and the banks don’t want to write a mortgage of any kind for no barn-doh-minium property, let alone a standard 30-year fixed-rate loan. They just can’t get their heads around the concept, whether it’s pitched to them as a weekend place, a future retirement home or an investment.
It appears there may be a credit union or two that’s willing to finance “metal building property.” And there’s the Farm Credit Bank, an interesting hybridized financial institution in its own right. While these places may be willing to lend, so far it doesn’t look like they’ll part with fixed-rate loans, at least not the 30-year variety. We’re talking adjustable rates a good bit higher than current standard mortgage rates. Maybe even balloon payments.
It’s like the words in that old Jackson Browne song: “Nobody rides for free… Nobody gets it like they want it to be.”
So you adjust your expectations, do the math and see what still makes sense.