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Re: Owning / Financing Your Own Land
[Re: blumsden]
#1445717
09/10/15 08:14 AM
09/10/15 08:14 AM
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Joined: Nov 2005
Posts: 1,515
droptines
8 point
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8 point
Joined: Nov 2005
Posts: 1,515
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I've used First South Farm Credit, but will never again. They won't let you cut timber without using the money to pay towards the principal. The next 2 times, i used Farmers Merchants bank. 20% down and would go 15 years, if they didn't know you, 20 years if they did. The banking practices changed in 08, so i'm not sure what they do now. I'm sure each loan is different, but I've used First South Farm Credit and cut timber with no problem whatsoever.
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Re: Owning / Financing Your Own Land
[Re: 257wbymag]
#1445721
09/10/15 08:19 AM
09/10/15 08:19 AM
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Joined: Jul 2005
Posts: 10,024 Hampton Cove
foldemup
Booner
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Booner
Joined: Jul 2005
Posts: 10,024
Hampton Cove
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Please don't do that Casey. Like others said you just never know. I've seen farmers and others do this and when the bank comes calling it's not good for anybody. I'm not going to, but had thought about it about 2 years ago. Then my wife quit her job so that I couldn't afford the land anyway, so now it is a mute point.
If you want to always win, never play anyone better than you!
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Re: Owning / Financing Your Own Land
[Re: droptines]
#1445724
09/10/15 08:22 AM
09/10/15 08:22 AM
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Joined: Jun 2013
Posts: 5,690 Lincoln, Alabama
blumsden
12 point
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12 point
Joined: Jun 2013
Posts: 5,690
Lincoln, Alabama
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I've used First South Farm Credit, but will never again. They won't let you cut timber without using the money to pay towards the principal. The next 2 times, i used Farmers Merchants bank. 20% down and would go 15 years, if they didn't know you, 20 years if they did. The banking practices changed in 08, so i'm not sure what they do now. I'm sure each loan is different, but I've used First South Farm Credit and cut timber with no problem whatsoever. Did they know you cut the timber?
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Re: Owning / Financing Your Own Land
[Re: blumsden]
#1445751
09/10/15 08:51 AM
09/10/15 08:51 AM
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Joined: Nov 2011
Posts: 21,947 USA
Remington270
Freak of Nature
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Freak of Nature
Joined: Nov 2011
Posts: 21,947
USA
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I've used First South Farm Credit, but will never again. They won't let you cut timber without using the money to pay towards the principal. The next 2 times, i used Farmers Merchants bank. 20% down and would go 15 years, if they didn't know you, 20 years if they did. The banking practices changed in 08, so i'm not sure what they do now. I'm sure each loan is different, but I've used First South Farm Credit and cut timber with no problem whatsoever. Did they know you cut the timber? That's what I was thinking too. How the heck would they even know? I doubt Debbie the bank secretary is doing timber cruises on the weekends!
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Re: Owning / Financing Your Own Land
[Re: blumsden]
#1445814
09/10/15 10:14 AM
09/10/15 10:14 AM
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Joined: Nov 2005
Posts: 1,515
droptines
8 point
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8 point
Joined: Nov 2005
Posts: 1,515
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I've used First South Farm Credit, but will never again. They won't let you cut timber without using the money to pay towards the principal. The next 2 times, i used Farmers Merchants bank. 20% down and would go 15 years, if they didn't know you, 20 years if they did. The banking practices changed in 08, so i'm not sure what they do now. I'm sure each loan is different, but I've used First South Farm Credit and cut timber with no problem whatsoever. Did they know you cut the timber? Yes. I discussed cutting the timber at closing. They knew all about it.
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Re: Owning / Financing Your Own Land
[Re: Remington270]
#1446048
09/10/15 02:57 PM
09/10/15 02:57 PM
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Joined: Oct 2003
Posts: 25,692 South Alabama
Rebelman
Freak of Nature
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Freak of Nature
Joined: Oct 2003
Posts: 25,692
South Alabama
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I've used First South Farm Credit, but will never again. They won't let you cut timber without using the money to pay towards the principal. The next 2 times, i used Farmers Merchants bank. 20% down and would go 15 years, if they didn't know you, 20 years if they did. The banking practices changed in 08, so i'm not sure what they do now. I'm sure each loan is different, but I've used First South Farm Credit and cut timber with no problem whatsoever. Did they know you cut the timber? That's what I was thinking too. How the heck would they even know? I doubt Debbie the bank secretary is doing timber cruises on the weekends! Debbie doesn't but Denson does. I know him personally.
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Re: Owning / Financing Your Own Land
[Re: hydraporter]
#1446365
09/11/15 01:18 AM
09/11/15 01:18 AM
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Joined: Jun 2013
Posts: 5,690 Lincoln, Alabama
blumsden
12 point
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12 point
Joined: Jun 2013
Posts: 5,690
Lincoln, Alabama
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All i know is, at the Oxford office, i discussed cutting the timber on my 40 acre parcel and using the money to buy another 40, and they told me, that the timber was part of the value of the land and that any money recieved would need to go towards the principal. I refinanced thru Farmers & Merchants bank and they told me, it was my timber, i could do what i wanted with it. I would ask, or get it in writing from First South Farm Credit, before i finaced my land with them.
Last edited by blumsden; 09/11/15 01:19 AM.
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Re: Owning / Financing Your Own Land
[Re: droptines]
#1446541
09/11/15 04:16 AM
09/11/15 04:16 AM
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Joined: Nov 2011
Posts: 21,947 USA
Remington270
Freak of Nature
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Freak of Nature
Joined: Nov 2011
Posts: 21,947
USA
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The way I look at it is really simple, the mortgage is on the land not the timber. The timber is a crop just like cotton, beans or corn. I would never work with a lender that wanted to tie a mortgage to the timber. The land should be appraised for the value of the dirt, any improvements (buildings, ponds, etc) and the value of recreation that the land provides. Timber should never be part of the equation. What if a tornado comes through and destroys 75% of your timber? Are you suppose to come up with the cash to pay for it? That's ridiculous. You did the right thing by finding another lender. Yeah, but your mortgaged amount will have the timber factored in, and will likely be well over the amount of the dirt. I agree though, that doesn't make much sense because a tornado is a very real possibility.
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Re: Owning / Financing Your Own Land
[Re: Remington270]
#1446917
09/11/15 10:28 AM
09/11/15 10:28 AM
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Joined: Nov 2005
Posts: 1,515
droptines
8 point
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8 point
Joined: Nov 2005
Posts: 1,515
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The way I look at it is really simple, the mortgage is on the land not the timber. The timber is a crop just like cotton, beans or corn. I would never work with a lender that wanted to tie a mortgage to the timber. The land should be appraised for the value of the dirt, any improvements (buildings, ponds, etc) and the value of recreation that the land provides. Timber should never be part of the equation. What if a tornado comes through and destroys 75% of your timber? Are you suppose to come up with the cash to pay for it? That's ridiculous. You did the right thing by finding another lender. Yeah, but your mortgaged amount will have the timber factored in, and will likely be well over the amount of the dirt. I agree though, that doesn't make much sense because a tornado is a very real possibility. The timber may be factored in, but it is not actually mortgaged. At least not in any of the farms I have bought. I guess it all depends on the lender and the risk.
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Re: Owning / Financing Your Own Land
[Re: timbercruiser]
#1446926
09/11/15 10:32 AM
09/11/15 10:32 AM
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Joined: Nov 2005
Posts: 1,515
droptines
8 point
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8 point
Joined: Nov 2005
Posts: 1,515
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When we look at a tract of land the timber is one of the first things we look at. Access, soil, internal roads, location, contiguous owners and everything else is considered. I have seen unscrupulous people contract/buy a tract of land with good timber with little or no down payment, then sell the timber and let the land go back to the whoever financed the land. I agree that the timber is certainly a variable in determining the value of a piece of property. But to actually have it mortgaged as part of the purchase is a totally different matter. The lender's job is to underwrite the risk appropriately and avoid making loans to people who will hang them out to dry. If they are forcing timber continences on people who are actually quality risks, those people should be looking for another lender.
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Re: Owning / Financing Your Own Land
[Re: hydraporter]
#1446940
09/11/15 10:50 AM
09/11/15 10:50 AM
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Joined: Mar 2011
Posts: 841 Baldwin County
walt4dun
6 point
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6 point
Joined: Mar 2011
Posts: 841
Baldwin County
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I guess Im not understanding what the fuss is about.
I can certainly understand the lender's point of view.
Example 100k property w/ 50k of timber value.
20% down = 20k Loan = 80k
You clear cut it & don't apply the proceeds to the principal. Property's market value is 50k.
Bank is upside down on their collateral. You are 30k in the black if you walk away.
Last edited by walt4dun; 09/11/15 10:54 AM.
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Re: Owning / Financing Your Own Land
[Re: walt4dun]
#1446981
09/11/15 11:29 AM
09/11/15 11:29 AM
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Joined: Nov 2005
Posts: 1,515
droptines
8 point
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8 point
Joined: Nov 2005
Posts: 1,515
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I guess Im not understanding what the fuss is about.
I can certainly understand the lender's point of view.
Example 100k property w/ 50k of timber value.
20% down = 20k Loan = 80k
You clear cut it & don't apply the proceeds to the principal. Property's market value is 50k.
Bank is upside down on their collateral. You are 30k in the black if you walk away. Your scenario describes one of the risks of lending. It's part of the deal and their responsibility to underwrite risks appropriately. The "fuss" for me is that I do not want a lender to tell me what I can or can not do with my property because someone "might" clearcut a property and walk. Yes, I could cut the timber and reduce the overall value, but a tornado could do the exact same thing. Are these lenders requiring crop insurance on the timber? I doubt it. Look, everybody is certainly free to choose who they do business with. I prefer to do business with lenders that do not put any requirements on my timber. Why anyone would choose a lender that does is beyond me.
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Re: Owning / Financing Your Own Land
[Re: STALKER8]
#1447128
09/11/15 02:43 PM
09/11/15 02:43 PM
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Joined: Jan 2009
Posts: 7,780 central ala,
centralala
14 point
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14 point
Joined: Jan 2009
Posts: 7,780
central ala,
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It's not "your" property until it's paid off.... It's never paid for. Miss that tax payment and see. You never quit paying...unless you are a senior living on the property. But if they will tax a nursing home bed, this is short lived also.
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Re: Owning / Financing Your Own Land
[Re: STALKER8]
#1447175
09/11/15 03:23 PM
09/11/15 03:23 PM
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Joined: Nov 2005
Posts: 1,515
droptines
8 point
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8 point
Joined: Nov 2005
Posts: 1,515
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It's not "your" property until it's paid off.... I disagree. The bank has no rights to my property unless I fail to pay. They can't hunt it, they can't access it and they sure as hell can't tell me what to do with my timber. So as long as I pay on time like I am suppose to, the land is mine and I'll cut the timber if I want to. Unless some of you work for the banks, I really don't know why we are arguing about this. If you want them to control your timber, fine by me. I'll keep working with the banks that don't.
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