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Unread 2016-12-09, 12:08 AM   #1
Diamond Star
 
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Default Looking into some property, unsure of where to start.

Few details:

Looking at a property that has 10+ acres, equestrian facilities, and a mobile home on the property that looks to be in good shape. The current asking price for the property I can easily afford if it were going to be a straight mortgage over 30 years. I want this property because it's only a few miles from where I"m at, and has what we need.

At this time we pay around 1500 in rent a month between our apartment and horse rent per month, and that will increase 100 bucks Jan 1. So instead of pissing away money, I'm looking into acquiring this property.

I would NOT be living on the property, and I'd want to get a loan for 50k more than asking price to build bigger/better barn facilities. A few years down the road I'd like to build a home on the land.

I have someone that said they would be interesting in living in the mobile home and pay monthly rent, they are family and I know they can make the payments.

We also have 2-3 clients that said they would board their horse with us, which is another 1k+ in cash flow a month, we just need the space. They currently board elsewhere and are unhappy with the experience they are receiving and have stated, multiple times, they would pay to board with us if we opened a place. This would likely increase because we would start advertising for lessons.

Problem is, I don't have large sums of cash for a down payment. But what I do have is another family member who said I could use their house as collateral, or in any way I needed, to get this venture going. Their house is paid for and worth 150-180k.

Even if none of the extra income comes in, we still make enough as a household to cover an additional 8-1000 in expenses and be ok.

TLDR facts:
- want to acquire land/property for 50k more to build barn and start business, home in 2-3 years
-property has mobile home on it that I already have interest for renting out
-already pay 700 + a month to board horses and want to build equity
-no/small down payment, but have generous family willing to help.

So, how in the world would I approach a bank/credit union with this scenario?
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Unread 2016-12-09, 08:44 AM   #2
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Originally Posted by Diamond Star View Post
We also have 2-3 clients that said they would board their horse with us, which is another 1k+ in cash flow a month, we just need the space. They currently board elsewhere and are unhappy with the experience they are receiving and have stated, multiple times, they would pay to board with us if we opened a place. This would likely increase because we would start advertising for lessons.
I'll let someone else give the banking advice since we have a few people in the business on this site. I just want to visit the equestrian part for a minute since my wife and I are active in the equestrian world. I'm sure you have already looked into it, but you will want damn good insurance if you are going to start boarding and giving lessons. Your own horses are covered under your policy but once you start accepting payment for lessons and boarding you have started a business and will need a special policy and a large umbrella.

Just food for thought in case you hadn't thought about it.
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Unread 2016-12-09, 12:00 PM   #3
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I think your family member would have to take the home equity loan and then gift you the cash.

some banks are weird about the gift of cash, though.
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Unread 2016-12-09, 02:06 PM   #4
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I know about the additional insurance required and such, or am aware of it. As for price, who knows what that will cost.
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Unread 2016-12-09, 07:05 PM   #5
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I think your family member would have to take the home equity loan and then gift you the cash.

some banks are weird about the gift of cash, though.
And potentially be listed on the new property as a partial owner/borrower.
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Unread 2016-12-13, 09:30 AM   #6
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Do you have a bank or credit union that you are in good with?

In all honesty, I would just set up meetings with a few, probably the more local the better, and ask them what they would require to make it work. You may get told to buzz off by some and others may make it easier than you think.

I only say more local, because I know we have had better luck with them on business related items. It tended to be more personal, and I knew who to call each and every time. They also made it a lot easier and did more hand-holding when required. Just my $0.02.

Good luck.
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Unread 2016-12-13, 09:26 PM   #7
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Originally Posted by Diamond Star View Post
I know about the additional insurance required and such, or am aware of it. As for price, who knows what that will cost.
You should know this 100% before moving forward in my opinion... if not exact numbers it should be very close.

Renting to family is a side of business you may want to shy away from and so is lending from a family member. Unless it's your parents... and even then i would shy away from that personally. Family and business in the world of real estate can get very hairy.

I think you're on the right track as far as though's go for investing in a property that could also produce income for you. If you could get your "friends" who want to board horses with you to sign a contract... you could show that to the bank. Typically they want 1-2 years of history for that income but you never know until you ask. How much do you need to get put down on this property? There are lenders doing less than 20% right now... I was presented an opportunity for 15% down on a strictly investment property.
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Unread 2016-12-27, 10:13 PM   #8
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Update.

Went with another property that had an actual house and horse facilities on it. A little more acreage at 16, but paid a bit more.

Inspections are due by January 11.
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