Buying Country Acreage and Rural Properties, To Buy or Not To Buy
By Mr Jody Hudson
Almost anyone can become a rural property owner; if you are willing to set goals, establish what your purposes are, plan ahead and set targets that are all aligned toward the same result. And, if you can be patient instead of requiring instant gratification.
There is no more $50-an-acre land; unless you count some of the inaccessible and unusable properties that are sometimes available in blocks of 10,000 acres or more; and even these properties are rare. But you can get rural properties more reasonably now than in the past IF you are willing to be creative in your expectations and in the ways you use and modify the property.
If you are in a big hurry to find rural property, you will likely not be able to find what you are looking for. Rural properties have fewer buyers who want to purchase them, but there are plenty of dreamers who have not considered the realities. There are seldom bargains available because most folks who own rural properties know exactly who to call first when they want to sell. If the property really is a bargain it is gone with one of the first ten phone calls the seller makes. However, if you are willing to "think outside the box" of convention you may end up with what is a bargain property for you.
Twenty and thirty years ago thousands of folks bought into the "live on a farm and make a fortune" dream of owning a chicken house, home and acreage in Sussex County Delaware -- the chicken capital of the world -- where there are several million chickens for every person who lives here. For a short while it was possible to take the "contract" from a chicken plant to the bank and with only that as collateral, get a loan for about 10 acres, a home and at least one chicken house. Many folks soon discovered that the so called contract had fine print and clauses that were all in favor of the chicken plant and none in favor of the chicken grower. Soon most chicken growers were working full time to help support the chicken business they had bought, along with it's mortgage of $200,000 or more, sometimes much more.
Now when I appraise a chicken farm with house and acreage I appraise the working chicken farm at zero -- and that is really too high a value in some cases. There are lots of easier, better smelling and cleaner jobs you can purchase with $200,000 or so. If you want to make a living growing chickens you should prepare to spend at least a million dollars, you can finance it of course, and get several chicken houses built around your home on 15 to 20 acres, if you don't mind the smell, and then the best bet is to lease the business to someone who is running 20 or thirty chicken houses at least.
There are some sensible things you can do in contemplation of moving to and living in the country. First among those is to start by renting a small home in the area you want to live -- and either move there or at least visit there often enough to get to know the area. If you already live close enough to drive to your dream area daily, start doing that and start frequenting the shops, churches and restaurants there. Stop at yard sales and to check into cars, trucks and equipment that is for sale in people's front yards. Be honest, tell them you are planning to move into the area and want to learn about your neighbors and only stop to shop if you are really interested in what they have for sale and are willing to purchase it at your price. Rural folk have a built in truth-detector and it is usually accurate. Don't try to BS them or your reputation will precede any other data about you.
I suggest that you can subscribe to a good magazine on rural living, or two or three. One of the best to begin with is Backwoods Home Magazine; www.backwoodshome.com Start by visiting and reading EVERYTHING on line, then get a subscription, then purchase ALL of the back issues which are bound into soft cover books.
If you yearn for the simple life of old fashioned living, in a log home for instance, and away from the downward pull of civilization, check out: www.homestead.org
If you are able to take your income with you, to maintain your current income, and don't need a job where you are going. Then I recommend you just rent a place first and start spending more and more time in a good area as you begin to test your transition resources. While renting get to know the people and see if you fit in with them. They are not planning to change to meet your parameters, I assure you. MOST of the folks who come from the city to the country start by trying to change the area they have moved to and the new neighbors, to be more like where they left. They should not have left or they should get on back there -- and most of the neighbors will tell you so.
If you move to an area as a renter and find the people to your liking and they find you to their liking, you have probably found the right area. However, in rural areas ten miles can make a huge difference in lifestyle and area ethnicity. Please don't move to a resort town, like Rehoboth Beach where I work, and then without checking try to move into a place like Oak Orchard (the little rural waterfront town where I live) or you will experience some near terminal culture shock. I love where I live and the people who live here but hopefully not one of them thinks that I have some intention of changing the way they live here!
Once you have zeroed in on an area and visited it many dozen times or better yet rented a place there and started living there for short stays; I suggest that you start joining various groups and organizations as a part-time member and let them know that you are not full time yet, but hope to be. They help. Don't try to instruct them or help them do what they are already doing better; just try to help them on their own terms. You need to learn the rules of this new game, it's their game and their community. At most you will be a welcome member of the community. You will never be the equal to those who have four or ten or thirty generations of family buried and established there. For instance in our area those who have only been here for sixty years are still not considered "from here" by those who have been here since the 1500s or soon after.
Once you have looked at several dozen properties that interest you, and that may take a year or two or more; you will begin to appreciate different micro-cultures in the area. You will begin to notice differences in soils, roads, well water, septic system functionality and road access; not to mention the differences in governmental rules and enforcement of same. Each time you find the perfect property; put a contract on it "pending research and discovery" and during that time check the neighbors and professionals about the property. You should check the neighbors first, lots of them, they already know everything the professionals are going to charge you to tell you.
Hopefully by the second or third property you put a contract and deposit on; you will have the one that is right for you. Remember, if the property is a bargain price, you have missed something in almost every case. What you need to do is figure out how it is a bargain for you; because you have an unusual use, ability, or way to change the property easily to suit your needs.
Buy through a Realtor if at all possible. Sign a buyers agent agreement with your agent so that his allegiance is to you -- otherwise, by law his allegiance is ONLY to the seller and by law, you are in an adversarial position to the seller and the Realtor. With a buyer's agent agreement signed, your agent is now on your side, by law, and is an opponent of the seller and the seller's agent. Ask your agent then to provide you with all the comparable sales data from the multi-listing service if there is one. If not hire an appraiser, once you have the property under contract, (make the contract contingent upon a satisfactory appraisal) and pay to have the price evaluated. If you have contracted for too high a price, renegotiate the contract; if you find you have a real bargain; you of course double check with your agent and the appraiser to find out why. It may be that the reason for it's "reasonable" price the reason that keeps it from selling is not that important to you -- and you do have a bargain.
Possibly your employer or the consulting work or your self employment activities may allow you to telecommute. But if you can't telecommute to maintain your current income; before buying in an area, find out if you have a marketable skill, one which is in demand in that particular region. This will give you some assurance that you will not become a financial fatality. Most of the folks who move to rural communities, without checking into how they will make money in the new location, have to sell their property at a loss within 5 years, due to lack of income.
If you are retired, be certain that hospitals, doctors, stores, restaurants, etc. are suitable for you in the new location -- or be very certain that you will be able to comfortably reside in the new area regardless.
Some of us are not be able to save enough money for a cash purchase of our rural dream property before we reach retirement age. It is however likely that we can provide a small sum for a down payment, and we're reasonably certain that we can market our skills locally to meet payments and put bread on the table (but please don't just guess about this, check it out).
Even if you find small acreage (10 to 50 acres) for $5,000 or less per acre that has good soil, good water available and a good prospect for an inexpensive, workable septic system -- many banks and mortgage companies are not optimistic about financing raw land. BUT, seller financing is often a alternative and easily structured method of purchasing raw land. In fact it is not unusual to get twenty, thirty or even forty year financing at 10% or less interest -- from the seller. Of course, in order to build on the property, you will normally have to pay off the seller's mortgage with your home financing loan. Any of the money you have paid on the price of the land, down payment as well as principle payments during your ownership period, and any appreciation of the land value will be considered as part of your down payment on your home owners loan.
Be careful to set your payments so that you can afford the land payments along with your current cost of housing. You can save thousands of dollars in interest by keeping your loan to as short a term as possible. Also, make sure that there is no prepayment penalty on your seller financing note.
You can however often purchase an existing home on acreage for a lot less than the cost of acreage and building a similar home. You can also often rent out the property to cover part of your expense while you arrange your affairs for your eventual relocation to rural bliss. If you are interested in purchasing a 100 acre horse farm complete with buildings, fencing, paddocks, etc. you can often save nearly 50% of the reconstruction cost; but there is little market for renting such a property.
If you find "more than five acres" with a home and buildings that need work but are structurally sound, you may save 30% to even 60% of the reconstruction cost. Be certain in this area, Sussex County Delaware, that you get more than five acres as five acres or less falls into a nonagricultural zoning classification that you may not wish to be involved with as you develop your rural lifestyle.
Most people ask me for 20 to 30 acres, or more. But let's take a look at reality here. A football field is three quarters of one acre. Thus 5.1 acres or more is a very roomy place to live acreage wise. If you want horses however think 15 acres or more. Each horse will need an average of 5 to 9 acres depending on how you decide to raise the horse; that acreage is in addition to the land that your home, driveway, out buildings, garden and other non-fenced areas take in. Many people are thinking of one, two, three or four horses for the family enjoyment; if so they need about 3 or more acres for the home and other human related improvements and should figure an additional average of seven acres for each horse or pony.
If you have a dream of self-sufficiency; living off the power grid, being away from it all... this is virtually impossible in reality yet most prevalent when you are in the dream stage. Coming to terms with what you can realistically afford and what you can realistically live with before you buy can save you a lot of headaches later.
Solar power is far more expensive than buying electricity from the power company, wind power is unreliable, water power is expensive and hard to arrange; now I expect to get a lot of argument on this from those who have read all about it but have no real experience -- but I won't get any valid argument from anyone who has done it (unless they are simultaneously trying to sell the idea to others).
There are many good articles in Backwoods Home Magazine; but most of them leave out the initial expense, maintenance expense and almost always the expense of replacing worn components of these so called money saving off-the-grid systems. You can however design a passive solar home, one with most windows facing south west and few facing other directions. Most older farm houses are already designed like this, not all of them are well insulated however.
Location: is paramount. We Realtors are wont to chant"location -- location -- location" like a mantra. It isimportant, just learn what it means as location hasdifferent parameters for different purposes. Location on a main road is imperative for commercial activity; location near pleasant living and good jobs is imperative for residential property; location regarding rural principles is a matter of sometimes life and death or at least a matter of doable and undoable for a rural home.
I suggest that the proper location for rural living is NOT usually closest to the best beach, ski slope or lake but the more sensible location is near to a rural town where many or most of the locals are living on rural acreage. In our area everyone wants ten to thirty acres near the beach; after finding out the price, they dream about 1 to 5 acres but seldom end up getting it and if they do the difficulty of finding it, using it for rural purposes and enjoying it when your neighbors complain about your rooster, tractor noise or fertilizer odors will often make this semi-rural location less than your dreams.
If you're not rigidly set on purchasing land in some popular or scenic wonderland, some good buys can still be found in the less "romantic" parts of the county, particularly on the edges of small farming communities. In Sussex County, I suggest the south west part of the county, west of Millsboro, nearer to Gumboro, Delmar, etc. for the best rural surroundings and lowest prices. There are few properties available in that area but even fewer buyers who have faced the reality of where rural living is better lived.
If you are independently wealthy, that is a different matter. There are some lovely farms on the cliffs overlooking the Pacific near Carmel California; where the movie stars reside and if you can find a hundred acre farm you may be able to get it for a hundred million dollars or so, plus the value of improvements. That is about what you can expect to pay for acreage near Rehoboth also; and it's a little easier to find. The farther you go away from the "ideal" locations the fewer people are looking to purchase it and the lower the price is. An interesting anecdote here; I had a couple come to me a few years ago looking to purchase a hundred acres or so on the oceanfront near Rehoboth, for horses; they could easily afford the price of a million an acre or so, but they ended up purchasing land twenty minutes inland after they did more reasonable research.
Before you go out looking for property, sit down with paper and pencil and any partners or family that will be involved. You may find numerous surprises when you all start writing down importances, desires, and things not wanted. It is most important that you know what you must have, and what you can do without. Make a list of the features you feel an area MUST have in order for you to consider relocating there. This might include things like climate (and, thus, growing season), being within a certain radius of a population center (or maybe a certain distance AWAY from one), and availability of certain facilities or services. Being within 20 miles of an airport or hospital may not matter to one family, but could be of vital importance to another.
The most important item on this list is consideration of the social and economic climate of the area, and how you will fit into it. Even if you're independently wealthy, the economic circumstances of an area can affect how you will fit into it. Will a well-heeled but bored-with-society person be able to move into an economic Appalachia and truly find contentment? Perhaps, but first consider the "necessities" of the life you'll be leaving. Do you need to regularly attend the symphony or visit a high-quality library? Is high quality clothing shopping or other shopping important to you?
MAKING A REASONABLE INCOME AND LEARNING ABOUT RURAL IMPORTANCES: IS PROBABLY THE MOST IMPORTANT PART OF LEARNING TO LIVE IN THE STICKS.
Those of us who aren't independently wealthy need to consider some means of supporting ourselves in our new surroundings. "Living off the land" is certainly NOT all it's cracked up to be, and isn't even legal unless you become a vegetarian; year around hunting for meat is illegal everywhere. Even gardening or collecting wild edibles is not legal either, if you try to do it on public land.
Before moving to the country... One of the important questions to ask (and find out for sure the answer) is; "Does the area have a large enough population base to give a person a good shot at finding a job? Another is; "Does it have a diversified economy? Many communities seem to have good employment opportunities, but on closer inspection they all turn out to be based on the same industry, such as recreation, chickens, fishing camps, skiing, ocean swimming and water sports, timber or mining or farming. If the bottom falls out of a single industry, or suddenly there is no snow or the water becomes polluted and is posted against use... as folks from many towns can attest has happened, the economy of the entire area falls apart -- FAST... to fast to get out with your investment.
If an area's economy is primarily based on tourism, such as ours in the Rehoboth, Lewes, Dewey, Bethany, Fenwick area, there may be many jobs available in the service sector (motels, restaurants, etc.) But most of these jobs pay very low wages, and often these jobs are seasonal. Land prices tend to be inflated in many resort areas, and ours more so than most.
I was surprised a few years ago to find that the most expensive areas of California were not all that expensive compared to Rehoboth and surrounding areas.
Minimum wage income is not likely to enable a person to live comfortably in a resort community, much less enable a person to purchase property! An extreme example is the city of Aspen, Colorado. This beautiful ski resort community is an extremely expensive place to live. The local fast-food restaurants have trouble getting employees because there is no reasonably priced place for them to live. Some of these businesses actually have to provide housing in order to get employees! It is somewhat like that in Rehoboth area. As you may know, Grotto's Pizza, our largest employer in the area, at one time provided space for many of their employees. Now, a lot of our resort help lives communally in "three bedrooms, sleeps twenty) type apartments and homes. Many more of our seasonally employed folks are imported from Ireland and elsewhere -- and come to live in dormitory style, often sleeping in shifts.
If you are a computer professional, you are very fortunate as the "Information Age" has created a class of professionals who can survive in depressed rural areas -- the computer entrepreneur. With reasonably good dial-up ISP service, perhaps a cable modem (in Millsboro and some areas of southern Sussex County) a cell phone, computer, printer, modems and fax, people can now roam across the country and the world by phone and the Internet. Some folks, and this is a fast growing segment of our buyers, can either work at home for a distant company (perhaps commuting once a week or once a month or even in the case of one of my clients twice a week) or create a new business as a consultant, doing the same job for the same company they are currently employed by. With a business card and digital tools one can appear to have a large conventional business, albeit a laptop and other portable digital tools, and it can be quite profitable.
Computer-based businesses are ideally suited for rural living. They are becoming increasingly more important as a means of breaking loose from the grind of commuting to work in big cities that are fast becoming too dangerous to live in. If you're not yet into computers, you'll have to consider whether you have a skill that's marketable in the area you're interested in.
Make sure the place you choose (a) has a use for that skill, and (b) isn't saturated with unemployed people who have the same skill. One of my best friends is a fabulous carpenter, home builder, cabinet maker, and skilled in many other fields such as welding, auto mechanics, gunsmithing to some degree and perhaps a couple of dozen more marketable skills. He moved to a rural area of Virginia to his dream home on over a hundred acres and his income plummeted. He is back here now and I'm glad he is even though I don't see him very often; it's just pleasant to drive by his business and know he's back in the neighborhood.
Please, please, please... before you move to an new rural area; subscribe to the nearest newspaper for the area you are considering and read the economic and community sections as well as the help wanted ads. If there is a skimpy "help wanted" section in the local paper... beware. On the other hand, could this "depressing" state of affairs regarding employment news probably means that real estate is bargain priced in that area?
OTHER THINGS TO CONSIDER
What about your health and age? Do you now or do you expect to have frequent need for the type of medical services mostly found in large cities?
Although they're necessary, think seriously about staying at least 25 miles away from the nearest freeway system. These "conduits of crime" that cross the country not only carry law-abiding citizens but solitary criminals and gangs as well. The gangs and other thugs tend to use the corridor towns in proximity of the freeways as their "banks" and they excel in "withdrawals on the run." One small town the writers lived in was only a few miles from a freeway exit. One night, two men left the freeway, robbed a motel and got back on the freeway a short time later. They were never caught. Imagine what these corridors may become as our cities and suburbs continue to deteriorate!
WHEN YOU FIND AN AREA YOU LIKE . . .
Once you've decided generally where you'd like to relocate, visit it several times, preferably at different times of the year. Learn which areas are desirable and which have problems. Check for flood plains, areas with access problems, water problems (not enough, too much or poor quality), noise problems (yes, even rural areas can have noisy spots), or other problems peculiar to a given area. Some rural "neighborhoods" have earned a bad reputation. Find out why before buying there. If the price seems too good to be true, maybe somebody's trying to unload a problem.
If you're looking for undeveloped land on which to build your retreat, find out about the water tables: depth, quality, and reliability. Find out what it costs to drill a well to the necessary depth for that area. Water should be one of the most important considerations in any land purchase. In Sussex County we are fortunate that we have generally good water (no matter what the press and Pseudo-envoronmentalists say) and wells are relatively cheap to drill.
Find out the proximity of utilities and costs to bring them in and hook them up, if they're not already in place. In some areas, costs to hook up to the power lines grid are prohibitive. Some of those same areas may not be conducive to an inexpensive well or septic either. BUT that can be an advantage if you are able to think outside of the norm. For instance our Fowler's Beach property is not conducive to running electric wires, getting good water from a shallow well or building and inexpensive sewer system. As a result you can get waterfront acreage for little money on a private beach and the cost of electric, water and sewer when added to the cost of the property is minuscule!
Once you've narrowed your search to a few areas within your target community, look at several properties! Realtors such as ourselves, can be a big help, not only by showing you individual properties, but by telling you about the area in general. It's not necessary to restrict yourself to one Realtor. But as soon as possible you should choose ONE to work with, get their allegiance and preferably sign a buyer's agent agreement with them so that they are looking out for your best interests!!! If your Realtor is too pushy for you or isn't showing you the type of properties that interest you, find another one; make sure you void the buyer's agent agreement if you have one (in writing) and get a Realtor who will listen to what you want and provide you such.
And don't forget to watch the newspapers and check out properties in your price range and area of interest being offered for sale by owner. Sometimes the best deals can be had by working with owners; and if you have a buyer's agent, the agent can make certain that you are well informed and protected even after you view the property with the seller.
You will also need an attorney in Delaware to assist you with the closing on the property. It is important to know that all attorney's CAN do real estate settlements but only a handful are worth using. Attorneys specialize and only three to five of them specialize in real estate -- for the rest of them, real estate settlements are awkward and no matter what they say... they usually make errors and those errors can be horrid.
When you do find a property you like, don't let it blind you to its drawbacks. Whether or not you're working with a Realtor, do your homework. Remember, unless your Realtor is a buyer's agent, he or she is working for the seller. Most Realtors will be up front with you about all your questions, but they are also bound by contract to get the best possible price for their client, the seller. And, by law -- when they are working for the seller there are numerous things they may NOT divulge to you even when they know about them.
First, ask the seller or Realtor all the questions you can about the property. For an older dwelling, this might include questions about the age of the wiring and plumbing, type of foundation, and in some parts of the country, when it was last checked for insect problems. This is particularly important near the beaches and regarding wooded properties -- where termites are prevalent.
Then talk to the neighbors. In the rural sense, the "neighbors" are folks living within a five-or-so-mile radius of the property; sometimes even more, if the property is down a long road without intersections. Ask them about the area, its people, any problems with the area, and particularly if they know of any drawbacks with the property you are considering purchasing. If they seem reluctant to talk to you, this might be a red flag you shouldn't ignore: maybe they'd like to buy the property but can't afford it, or maybe they don't like outsiders buying property in their area. If you run up against this in several conversations, you might have a hard time getting along with the neighbors. Buying -- and holding onto -- that chunk of land, with or without a home and buildings on it will take creative planning, patience, and caution on your part!
IF YOU MUST HAVE A DEAL OR ELSE . . .
Today's expensive properties will be tomorrow's bargains. Don't be discouraged by short term obstacles. Land prices seldom go down in the long run. Obviously, there are a lot more things to consider when buying rural land as opposed to buying a house in a city. One of them is the possible problems of buying in a "boom town" area when you don't want to be part of the boom.
It is important to consider whether your dream location will become less desirable as more people relocate there. For this reason it is not uncommon for people who move to a rural area to want to "close the gate" after they get there. They realize that if too many people move to the small community they have chosen, that it will eventually lose the qualities that drew them there in the first place. Unfortunately, people WILL find these wonderful places, no matter how hard some people try to keep them a secret. Some communities handle growth well, others don't. Check to see what kind of planning and zoning is present in your chosen area. A community that looks ahead and plans for growth fares much better than communities that keep their heads in the sand, thinking "it can't happen here." Growth not only can happen, it will.
But short of a natural disaster or a devastating man-made calamity, land won't come down in value. Buy it, use it, live on it, improve it, and love it. Land is the best investment you'll ever make, for yourself and posterity.
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