The Right 20 Questions for Land Buyers

May 20, 2020 by chorton Leave a Comment

What are the right questions for a buyer to ask when considering purchasing a piece of rural land for sale? It all depends on the objectives the buyer has in mind when making their purchase.

A recent article on LANDTHINK entitled, “Top 20 Questions for Land Buyers” garnered a lot of attention and created quite a bit of controversy among LANDTHINK readers. I read many of the comments, and started thinking about what my list of questions would look like as I perform due diligence for myself or my clients when considering a property. That list would need to be tweaked a little depending on the objective for the purchase. For example, a person considering developing a tract into a subdivision on a river would have some significantly different questions to answer than a person merely buying a rural retreat for their family. So the following list would be my jumping off point for most buyers of rural tracts:

How is the property accessed? (Road frontage, deeded easement, etc..)
Are there any water features on the property? (rivers, creek, lake, springs)
Are utilities available to the property?
What is the timber like? (stand types, age, planted or natural)
Has the property been surveyed? (Are boundaries marked?)
Who are the neighbors surrounding the tract?
Can I get a clear title to the property with title insurance?
Do the timber, mineral and water rights convey with the sale?
Are there any easements on the property? (adjoining owners, conservation, utility)
Are there any known environmental concerns or latent defects with the property?
How is this property zoned? (agricultural, residential, commercial?)
What are the annual property taxes?
Have the owners received notice from any governmental agency about possible assessments or actions in the near future that would affect this property?
Will the property be conveyed subject to covenant and restrictions? (If so, what are they?)
How does the land lay? (slopes, bottomland, elevation change, etc…)
Are there internal roads and trails?
Do all of the improvements to the property convey with the sale? (gates and fences, shooting houses, out buildings, etc…)
Does the land drain well or does it stay wet for much of the year?
If I had to sell this property again in a year, is it desirable to other potential buyers?
Can I pee off my porch in privacy?

Buyers that are considering purchasing land for growing crops would also be concerned about things such as:

What is the corn grain yield per acre?
Is it possible to irrigate with a center pivot?
Is an irrigation permit available from the Army Corps of Engineers?
What is the soil profile of the property?
Where are the nearest grain processors?

An investor purchasing timberland for their portfolio would ask questions like:

What is the site index of the land?
Is any of the timber merchantable now?
Is more than 70% of the property sloped suitably for growing and harvesting timber?
Where are the nearest wood outlets and mills?

The list could go on indefinitely for developers, hunters, farmers, investors, and survivalists. The point I am trying to make is that you need to know what your objectives for owning a rural property are before you can even know the right set of questions to ask. This is one reason a buyer should engage the help of a competent agent when purchasing a rural property. Having someone working for you that knows the right questions to ask can save you thousands of dollars and make your transaction much safer and pain-free.

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The Value Of Title Insurance In 2020

April 3, 2020 by chorton Leave a Comment

Innovation is all around us. It seems like every day, new products and platforms are being developed to change the way we look at virtually every process of our lives. One area where we are seeing rapid transformation is in real estate. Over the last few years, we have reimagined how we find properties, obtain financing, get to the closing table and even move into our new property. When it comes to title insurance, all these new innovative factors will affect how a property is insured in 2020 and beyond.

What exactly is title insurance? As a lifelong title insurance professional, I have heard this question more than any other in my life. Being the third generation of my family in the title insurance business, I was born into a world of deeds, mortgages, title commitments, liens and closings. When I say I have heard this question my whole life, I truly mean my whole life.

Title insurance is a unique form of insurance that protects what in most cases is the largest monetary investment you will ever make in your lifetime: your real estate. Whether you are a homeowner, a small investor or a large commercial landlord, obtaining a title insurance policy when you purchase your property can give you peace of mind that your investment is safe and that if there is a problem, you will not be on your own to fight it.

On average across the nation, title insurance costs roughly 0.5% to 1% of the purchase price when you get a policy protecting you as well as your lender (which is customarily required by the bank). On a $300,000 purchase, that only equates to $3,000 for a policy that will protect you as long as you own the property and your lender as long as they hold the mortgage.

Title insurance is unlike other insurance products such as homeowners, medical or auto insurance. It is a one-time payment as opposed to monthly or annually. It does not protect you from future incidents, but rather from what has already happened in the past. By researching the history of the property and the people selling it to you, the title insurance company knows and corrects any issues that could possibly come up in the future based upon these past events.

If the person who sold you their property was not who they said they were, or if there was a lien on the property that was not satisfied, you are protected. If someone knocks on your door one day and says they inherited and have a claim on the property, you are protected. If a bank tries to foreclose a mortgage from before you bought the property, you are protected. When talking about properties worth tens to hundreds of thousands or even millions of dollars, having that insurance for as long as you own the property can give you a level of comfort that is priceless.

There are myriad problems that might arise when purchasing or owning real estate. Even the most seasoned title insurance professional who could have been in the business for 50 years will tell you that new issues always come up that are unprecedented. There are the legacy issues that they have seen time and again, and then there are the “new” problems that typically crop up from new technology and processes being introduced.

Mortgage fraud and cybercrime are the newest threats to the real estate industry. Hackers have determined that real estate and settlement are an easy target and have moved into the space at an alarming rate. In the last year, remote online notarization and e-closings have gained traction across the country and introduced new sets of problems for the industry, such as proof of identity and security. With a move recently toward automation and machine learning, you gain efficiency, but lose the security of human oversight. With e-recording becoming commonplace and the possibility of recording documents on the blockchain, who does the final review of the documents, and how do they get fixed if recorded incorrectly?

With the advent of new technology and an ever-changing landscape of issues that could arise, title insurance is more of a necessity than ever before. The title industry uses its vast resources to pinpoint the issues and find ways to cure them. A title insurance professional spends countless hours staying on top of the trends and current environment of issues. If any issue comes back to haunt you, a national underwriter will have your back. They will defend you in a court of law or make sure you are made whole. No matter how the industry morphs over time, title insurance will make sure you are protected.

That, to me, is worth its weight in gold.

The Realtors at Preferred Properties of Texas in Stephenville in Erath county in the Cross Timbers area of North Central Texas are here to help you buy and sell real estate for over 25 years!

The Right 20 Questions for Land Buyers

April 1, 2020 by chorton Leave a Comment

Buying Land

What are the right questions for a buyer to ask when considering purchasing a piece of rural land for sale? It all depends on the objectives the buyer has in mind when making their purchase.

How is the property accessed? (Road frontage, deeded easement, etc..)
Are there any water features on the property? (rivers, creek, lake, springs)
Are utilities available to the property?
What is the timber like? (stand types, age, planted or natural)
Has the property been surveyed? (Are boundaries marked?)
Who are the neighbors surrounding the tract?
Can I get a clear title to the property with title insurance?
Do the timber, mineral and water rights convey with the sale?
Are there any easements on the property? (adjoining owners, conservation, utility)
Are there any known environmental concerns or latent defects with the property?
How is this property zoned? (agricultural, residential, commercial?)
What are the annual property taxes?
Have the owners received notice from any governmental agency about possible assessments or actions in the near future that would affect this property?
Will the property be conveyed subject to covenant and restrictions? (If so, what are they?)
How does the land lay? (slopes, bottomland, elevation change, etc…)
Are there internal roads and trails?
Do all of the improvements to the property convey with the sale? (gates and fences, shooting houses, out buildings, etc…)
Does the land drain well or does it stay wet for much of the year?
If I had to sell this property again in a year, is it desirable to other potential buyers?
Can I pee off my porch in privacy?

Buyers that are considering purchasing land for growing crops would also be concerned about things such as:

What is the corn grain yield per acre?
Is it possible to irrigate with a center pivot?
Is an irrigation permit available from the Army Corps of Engineers?
What is the soil profile of the property?
Where are the nearest grain processors?

An investor purchasing timberland for their portfolio would ask questions like:

What is the site index of the land?
Is any of the timber merchantable now?
Is more than 70% of the property sloped suitably for growing and harvesting timber?
Where are the nearest wood outlets and mills?

Looking to buy or sell land? Our agents are known for giving comprehensive and detailed service along with always putting the clients first. Contact us for any questions, we are here for you!

The Realtors at Preferred Properties of Texas in Stephenville in Erath county in the Cross Timbers area of North Central Texas are here to help you buy and sell real estate for over 25 years!

BENEFITS OF OWNING A HOME

February 28, 2020 by chorton Leave a Comment

I believe that many already know of some of the major benefits to owning a home but here are a few that you may have not thought of or considered.

TAX BENEFITS

One of greatest breaks that you’ll get on paying taxes will come from owning a home and they got a little better not too long ago.

For most of us (about 70%), we will need to get a mortgage when we buy a house. Well, there’s good news! A married couple filing jointly or an individual may write off their mortgage interest on loans up to $700,000. If a married couple is filing separate, the limit is $375,000. You can also deduct any points that you purchase to pay down the rate.

An individual or married couple filing jointly will also be able to deduct up to $10,000 of their property taxes each year. For a married couple filing separate, the limit is $5,000. Where I live and sell real estate in lower Alabama, property taxes are some of the lowest in the country but it is nice to know that you can even deduct that amount on your taxes.

There is also a “Standard Deduction” that covers everyone. Here are the standard amounts:

Single home owner – $12,000
Married couple filing separate – $12,000
Head of household – $18,000
Married couple filing jointly – $24,000

Plus, (and here’s a big one) you get to enjoy tax free capital gains when you sell your home with profits up to $250,000 for a single owner and up to $500,000 for a married couple. The only requirement is that you must have lived in the home as a primary residence for 2 of the last 5 years. Check out a more complete list of the benfits at the Tax Policy Center

HOME APPRECIATION

The real estate industry is cyclical – there are highs and lows. This is where someone usually says that we don’t have a crystal ball. However, for the long term home owner, history tells us that your home will appreciate and be worth more over time. Depending on your area and demand, home appreciation (or depreciation) can occur in a short amount of time.

There are so many factors that effect appreciation like the national economy, jobs, wages, and so on. But, by keeping an eye on current economic matters in the country as well as your town, you should be able to somewhat, “see the future”.

I often tell home buyers to consider purchasing if they plan on staying in the home for at least 3-4 years. Areas that show a slow and steady growth annually are usually a good place to buy a home because it shows stability. More on home appreciation in 2020 https://www.keepingcurrentmatters.com/2019/12/23/2020-forecast-shows-continued-home-price-appreciation/

PREDICTABILITY

Other what’s in your “one year” contract if you’re renting a home, there’s no guarantee that your rent won’t go up in the future. This could absolutely create some anxiety for a lot of folks.

If you’re buying a home, getting a mortgage, and part of the 96% of borrowers in the country, you will be getting a fixed rate mortgage. This means that your mortgage payment will be the same today as it will be 30 years from now or as long as you have the loan. Now that’s peace of mind. Yes, your property taxes and insurance could increase but if you have a fixed rate mortgage, your interest rate and premium will remain the same year after year.

Being able to predict what you have to pay in the future for your house is one of the biggest differences between renting and owning your home.

BUILDING SAVINGS

Every month that you make a house payment, you’re putting money away into a type of savings account. If you go with historical facts, your home will increase in value over the years so bi-proxy, when you sell, you will receive a nice paycheck at the closing table.

Better yet, you won’t have to pay any capital gains to the federal government on that money up to $250k or $500k.

As a renter, you’re a building your landlord’s savings account. It’s as simple as that. Do you want to build your own financial future or someone else’s?

FREEDOM

People love to make their homes their own but if they rent, there are obvious limitations since the they don’t really have a say in what can be done with the house.

Whether it’s choosing the trendy wall color that you’re seeing in all the magazines or wanting to knock down a wall to open up the space, renters aren’t really allowed to make any changes to the home without permission.

As a home owner, you have all the freedom in the world to create a living space that is perfect for you. If you want a privacy fence, you can have one installed. If you prefer handicapped toilets, go for it. The only things I can think of that would reduce your freedom as a home owner would come from your municipality or the home owner’s association. So, you probably can’t have a llama farm in your backyard. However, here again, you have the “freedom” to buy a house in an area that would allow a llama farm.

STABILITY

Stability is especially important if you have kids. By living in the same area for several years or longer, you get the chance to build long lasting relationships with the people around you. Also, your consistent existence over a long period of time in an area will help bring structure socially and in education.

How often have you heard that the kids were freaking out because they had to leave all their friends at school because they had to move?

There are so many joys and benefits to owning your own home and to many it’s the fulfillment of reaching the American dream.

Are you thinking about buying a home? Give our office a call and schedule an appointment to speak to one of our agents to discuss your home search. 254-965-7775 or Contact Us through our website

Are You A First-Time Home Buyer? Be Aware Of These Mortgage Programs

November 19, 2019 by chorton Leave a Comment

Are You A First-Time Home Buyer? Be Aware Of These Mortgage Programs

Image result for did you know? even if you previously owned a home you still qualify for first time home buyer

If you are shopping for a mortgage, you have probably seen all sorts of offers and advertisements aimed at first-time home buyers and wondered if these are really as good as they sound. In some cases, “first-time” programs are little more than attention-getting marketing messages from lenders, while in others they are actual assistance programs for people who may otherwise face challenges qualifying for a home mortgage or finding a home loan at an affordable interest rate. With this in mind, it is important to understand the difference between mortgage lender marketing programs, actual loan programs, and financial assistance programs.

You can be a first-time home buyer more than once

First of all, even if you have previously owned a home, you (or your spouse) may still qualify as a first-time home buyer. According to the U.S. Department of Housing and Urban Development, first-time home buyer status is not limited to people who have never owned a home before (although that criterion obviously applies). For lending purposes, a first-time home buyer includes anyone who fits one or more of these conditions:

An individual or a spouse who has not owned a primary residence for at least three years. This means married couples may qualify as first-time buyers even if only one of them meets this test.

A single parent who previously only owned a home with a spouse while they were married.
Someone who has only owned a primary residence that was not attached to a permanent foundation (e.g., a mobile home) in accordance with applicable regulations.

Displaced homemakers whose only previous ownership was with a spouse.
Someone who only owned property that was not in compliance with local building code ordinances and which cannot be improved to meet building code standards for less than the cost of constructing a new residence.

Types of programs

First-time home buyer programs can be broadly categorized as either loan programs or financial assistance programs. Both types of programs can be helpful to first-time home buyers. Loan programs, such as those backed by the Federal Housing Administration (FHA), are available to all borrowers through various commercial lenders, but they have features that may be particularly attractive to first-time buyers with lower credit scores or little in the way of cash savings. Private lenders may also offer attractive loan rates and terms for first-time home buyers with good credit and the ability to make larger down payments on a home purchase. Financial support programs for home buyers typically come from state and local government entities, although the federal government sometimes steps in to provide additional assistance during difficult economic times.

Loan programs

Mortgage loans are made by commercial lenders, such as banks, credit unions, or mortgage companies. These loans may be guaranteed by various organizations, to protect lenders against borrower defaults and also to make loans more affordable for borrowers.

FHA. The Federal Housing Administration does not make loans, although they do insure loans made by commercial lenders to protect lenders if borrowers default on loan payments. FHA loans are available to all qualified buyers, and they can be particularly attractive to first-time home buyers because the qualifications are easier. For example, a potential home buyer with a credit score of at least 580 may qualify for an FHA loan with as little as 3.5% of the purchase price for a down payment. Lower credit scores between 500 and 579 may also qualify with a larger down payment of 10%, though the interest rate on the mortgage loan will be higher.

VA. The Veteran’s Administration (VA) also guarantees portions of home loans provided by private banks or mortgage companies to active duty service members, veterans, and eligible surviving spouses. A home purchase loan guaranteed by the VA can help military vets and spouses purchase homes at competitive interest rates without the need to also make a down payment or purchase private mortgage insurance. Applicants must have satisfactory credit scores, along with sufficient income to meet expected monthly loan payments.

USDA Single Family Housing Guaranteed Loan Program. Similar to loan programs provided by FHA and VA, the United States Department of Agriculture (USDA) also provides loan guarantees to mortgage lenders so they can help borrowers with low and moderate incomes purchase homes in rural areas. The USDA program guarantees 90% of mortgage loan amounts for approved lenders to help offset the risk of offering 100% loans to eligible rural home buyers.

Freddie Mac Home Possible® Mortgages. The Federal Home Loan Mortgage Corporation (also known as “Freddie Mac”) makes it possible for lenders to offer home loans to buyers with down payments as small as 3% through the Home Possible® Although this program is not limited to first-time home buyers, first-timers must first participate in a borrower education program.

Home Buying Financial Assistance

Financial assistance programs exist across all levels of government: city, state, and federal. These programs may provide assistance with funds for down payments, closing costs, or other expenses tied to the home purchase process.

Fannie Mae’s HomePath Ready Buyer Program. In 2015 the Federal National Mortgage Association (FNMA or “Fannie Mae”) launched the HomePath Ready Buyer program, which provides first-time home buyers up to 3% of the home’s purchase price in the form of a rebate to assist with closing costs. Participants must complete an online home buyer education course in order to receive the 3% rebate.

State-by-state home buyer programs. Many individual states sponsor a variety of home buyer programs designed to help first-time home buyers and others qualify for home mortgages. Visit your state’s housing website to find details for your area. For example, first-time home buyers with low or moderate incomes are eligible for the Texas Mortgage Credit Certificate Program as a way to convert mortgage interest into a federal income tax credit. New York state home buyers can take advantage of the Conventional Plus Program for down-payment assistance up to 3% of the home’s purchase price.

City & county home buyer programs. Individual cities and municipalities can also offer assistance with home financing. For example, Miami/Dade County in Florida makes home financing assistance available to first-time home buyers through a loan program facilitated between Miami-Dade County Public Housing and Community Development and local mortgage lenders. Similarly, the Mayor’s Office of Housing and Community Development in San Francisco provides loan assistance programs for first-time home buyers. Consult with your city or county government offices for availability of similar programs.

As you review and evaluate the financial assistance or loan programs that may be a good fit for you, it is also a good idea to take inventory of your personal financial situation, such as checking your credit report (www.annualcreditreport.com), paying off credit cards and personal loans, and stashing more cash into your emergency fund. These tips and more are also available in this article: 5 Steps to Buying a Home.

5 Reasons for Investing in Land

October 27, 2019 by chorton Leave a Comment

5 Reasons for Investing in Land

reasons for investing in land

Investing in land is something that provides you, the investor, with a tangible asset. Property tends to increase steadily with the price of inflation or go up in value even more rapidly in rural and undeveloped areas. Investing in land with developments may be somewhat riskier. However, there are still plenty of regions where land investment is a safe place to put your money.

1) Residual Income

Cropland rents for 100 to 200 USD an acre, on average. Pasture rents for 20 to 30 USD an acre, on average, according to the USDA.

Hunting rights,
development rights, and
other opportunities can make investing in land a profitable opportunity.

It can also provide you with the opportunity to develop that land yourself in the future. It is relatively easy to find hunting property for sale or other undeveloped land parcels that are already perfect for many income opportunities with little to no development on your part.

2) Reduced Taxes Compared to Other Investments

With state and federal programs for land reserve and “set-aside”, it’s possible to not only have zero property taxes but even to be paid to leave the land you have purchased alone. You can still hunt, forage, and use the land in these programs as a grazing area in many cases.

This allows you to have a virtually hands-off investment that costs you nothing after your initial investment. Then you could sell hunting, grazing, or forage rights. Further, by setting the land aside for these purposes, you are helping bolster the local environment.

3) Protecting the Environment

Investing in land isn’t just good for your financial future or investment portfolio. It can also help protect and safeguard the environment.

By buying land and placing it in a set-aside program, or
by allowing a conservation agency to develop it on your behalf for a set number of years…

…it will help protect invaluable natural resources.

4) Land is Tangible Investment

People can buy and sell stocks, and even currency electronically, but property remains a tangible asset. It holds value and cannot lose that value due to a computer glitch or a new piece of technology. Land is the same as it has ever been. Though with the human population rising steadily and there being no “new” land creation, its value is steadily increasing over time with good care.

5) High Availability, Lower Competition, Great Potential for Value Increase

Farmland of all kinds has been going up in value, keeping pace with inflation and more, for the last two decades. Since 2003, a single acre of farmland is now worth, on average, triple what it was worth then. This is true for both crop land and the less valuable “pasture” land.

With the 1.89 billion acres of land that make up the United States of America having a total value of at least $23 trillion, investing in land allows you to take advantage of an asset that will never increase but may, in fact, decrease over time, driving up its value.

Are You Ready to Start Investing in Land?

Investing in land won’t make you wealthy overnight, but it’s often a much better investment than a savings account…even a high-interest savings account! And quite honestly, the risk might actually be less. No one can physically steal the ground, and there’s a very low likelihood of your property being damaged. Once you buy it, you know where it is and what it is. It’s pretty basic stuff.

The question now is, are you ready to start investing in land? Why or why not?

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