This week’s focus has been all about National Ag Week, and today is National Ag Day! So, I’ve compiled a some options for those of you wanting to purchase farms and ranches.
Ideally, we would all pay cash and life would be grand, right? But for most, that’s just not possible when farmland easily surpasses $1M in Ventura County.
When it comes to financing farms and ranches, the options aren’t as simple as your typical home loan.
Seller Financing
In some cases, a seller is able to offer financing on part or all of the purchase. This can be beneficial to the seller because it offers tax benefits and enables him to sell the property to a buyer who may not qualify for other financing. It’s also an opportunity for the seller to generate cash flow.
For buyers, this option can mean a lower interest rate and an easier qualification process. If you are interested in purchasing a property, it never hurts to ask if seller financing is available.
In my opinion, one of the best advantages of seller financing, is that almost all of the loan terms are negotiable. The interest rate, payment frequency, down payment, etc. must all be agreed upon between the buyer and seller.
Farm & Ag Credit Banks
These banks specialize in lending for rural real estate and agricultural businesses. They’re familiar with the nuances of local farmland, often offer a variety of loan options, and have connections with service professionals such as rural appraisers.
Local Credit Banks:
Commercial Banks
Typically, commercial lenders are more stringent and reluctant to offer financing on rural land. Their lending experience is primarily focused on vehicles, houses, and commercial businesses. They may not have the resources readily available to process a rural loan and likely are not as comfortable assessing the risk and value of the property.
Because of these differences, commercial banks are often more rigid with their loan terms and may require other forms of collateral to secure the loan. Don’t be quick to write off these banks, however, especially if you have a strong relationship with one. It never hurts to ask a lender what kind of financing they can offer. Here are a few local commercial banks that offer agricultural/rural financing:
Local Commercial Banks
Other Banks
If you want to exhaust your options, go online. There are more banks available that may not be in Ventura County, but might offer the kind of financing to suit your needs.
Just to name a few:
Exploring your financing options isn’t always easy. But if you dream of owning a farm or ranch, this will get you one step closer. Of course, I’m always here to help too! Please reach out if you have questions or want to start searching for properties in Ventura County.
Happy National Ag Day!