Thinking of moving slightly west

6 posts
Sat, 08/09/2014 - 20:50 #1

Member for

10 years 3 months
jk
Last seen: 03/08/2018 - 21:05
Joined: 08/06/2014 - 14:24

Thinking of moving slightly west

Hi Farmstytle, enjoy your site and decided to join. My wife and I have been talking about moving from our current location and have started looking at rural properties around our area. The criteria we have set is a little vague at the moment as there seems to be quite a range in price and properties on the market at the moment, we are keen at looking at property that will be producing a supplementary income and include all the family for the investment. We are fortunate enough that we have funds to invest in a property but like most people we still need a loan, I've been to our bank and they not keen on anything over 25 acres. We have been looking at 100 acres, so where does one go for finance such a project? Cheers jk

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Mon, 08/11/2014 - 10:37 #2
barb
Last seen: 09/17/2019 - 18:07
Joined: 11/23/2011 - 09:38

Hi JK,

I'm no finance expert as my field is animal husbandry, but if my bank wouldn't give me a loan I'd go to another. They will of course want collateral. They might also want a business plan on how you intend to make an income from the property because they always want to ensure that their investors money is secure. If you don't know how to make a business plan there are often TAFE courses available to teach you how to do this.

Personally, I would always go for a larger block every time as a smaller block will limit your options as to what you can do with it. I suppose if you were growing high value fruits in green houses or breeding very valuable stud animals then 25 acres would be adequate to make some supplementary income.

Regarding water in property dams. Some states allow free use of water held in property dams for livestock consumption but charge land owners for water used for commercial fruit and vegetable growing. I would check this out with your local water authority.

There are a number of things to consider when buying your land. Fencing if intending to run livestock. If this is in poor condition it is very expensive to replace. I'm speaking from experience on this. It has cost me thousands of dollars to replace almost 4 kl of fence after the 2013 floods here in Queensland.

Is there electricity available? Is there telephone service or mobile reception in the area? What is the zoning of the land? This will influence the rating and thus how much the rates will cost you each year. For instance rates on Rural Residential (usually small acreages) are much more expensive than Rural zoned land - Broad acres. Are there dams on the property and if so how much water do they hold. Livestock drink more than you think especially if it is hot and dry or they are lactating. If there is not enough water available on the property it can be expensive to have them put in. You will need permission to put the new dams in from your local council. You must get approval for new dams as the penalties for not doing so can be high.

These are just a few thoughts on it and I hope some of them may be useful to you. Don't let the potential negatives above put you off,  as there may be no problems whatsoever, but it is good to be aware of all the pros and cons of something beforehand.

Cheers and all the best for your tree change,

Barb

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Thu, 08/14/2014 - 11:22 #3
jk
Last seen: 03/08/2018 - 21:05
Joined: 08/06/2014 - 14:24

Hi Barb,

Thank you for your reply, my checklist has most of the things that you have mentioned

except the finance at the moment. On banking matters I'm in abuilding society member and 

their cut off is 25 acres, what I've found so far is that some lenders have a minimum amount they will

loan e.g $ 250000 or I have not had a reply from the others. Is the banking sector not interested or am I

looking in the wrong places?

 

Cheers jk 

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Sat, 08/16/2014 - 13:24 #4
charlie
Last seen: 12/26/2018 - 09:21
Joined: 05/31/2011 - 09:44

Hi JK,

Nice to have you as part of the forum.

My first piece of advice would be to talk with another bank. There our banks out there that will do a home loan on farms up to 40 hectares or 90 acres in size. I have also heard of people getting home loans for larger sized farms where the sole source of the income is off farm.

Will you be relying on farm income to service the debt? If this is the case, this may be why you are getting a lack of response from your bank.

Regards,

Charlie

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Mon, 08/18/2014 - 11:13 #5
jk
Last seen: 03/08/2018 - 21:05
Joined: 08/06/2014 - 14:24

Hi Charlie, 

Thank you for your response, at this moment I can't see our skill levels  being up there to produce a income to service a loan, so the day jobs will still have to stay. We are still looking into what type of farming that we will pursue, according to my daughter  it has to be more than one thing  to be a farm. In approaching the banks/lenders is it an advantage to produce a business plan before finding the right property or should that come later once things like soil type,water and size are known, so the ratio mix of farming can be determined? I have heaps of other question to ask, they can wait for the moment.

 

Cheers jk

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Wed, 08/20/2014 - 19:18 #6
charlie
Last seen: 12/26/2018 - 09:21
Joined: 05/31/2011 - 09:44

Hi Jk,

I wouldn't worry about a business plan at this stage. The bank will not require or request one as you are keeping your off farm income, this will be used to service the debt so any income / profit from the farm will be a bonus.

I would work out the maximum amount that you are looking to spend on the farm purchase and get an approval from the bank for this amount of finance. Remember that you will also have your additional costs like loan establishment fees, mortgage and stamp duty, and property valuations which will all need to be factored in.

Regarding the farm purchase, it would be helpful to have an idea of what you would like to farm, that way you can ensure that you the farm you purchase will meet these future requiements.

Regards,

Charlie

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