STEPS FOR OBTAINING FINANCING FOR RURAL PROPERTY

 

Welcome to the Rural KC blog, where we talk about all things country and living the country life. I'm your host Bill Gaughan, the luckiest man in the world, but a little more about that later. You can keep up with this, not only on this blog but also on our website, ruralkc.com, our podcast, our YouTube channel, the Rural KC channel, and find us on Facebook as well too. 

Today, we're going to talk about a topic that I think sometimes catches people by surprise when you're thinking about buying a rural property. I can't tell you how many people in the 20 or so years I've been doing this just assume that well, the fellow that gave me the loan in my home in Overland Park or Lees Summit, I'll just go to him and I'll buy 40 acres and a house, but it doesn't work that way. Today, we've got a special guest, a lady I've had the opportunity and blessings to have worked with for several years, Trisha Goodale of Landmark Bank.

Trisha is going to talk with us a little bit today about what are some of the issues when you are buying a rural property, particularly from a lender's perspective. Tricia, why don't you tell us a little bit about how you wound up in the business of making loans on rural property?

Trisha Goodale: Well, thanks for having me today, Bill. I appreciate the opportunity and I have been in the lending world for homes specifically for about 19 years and happened by happenstance. I was working at a bank opening up new accounts and there was a position open in the mortgage department and I jumped on the opportunity there. I grew up in Louisburg, Kansas, so very familiar with the farming communities and acreage, and that was just a way of life with how I grew up. Worked seamlessly and love helping people in those rural communities.

Bill: Now, tell me a little bit about Landmark Bank because my understanding is that Landmark Bank does maybe a bigger volume of business and rural loans than your traditional bank. Is that true?

Trisha: Yes. We are a Kansas bank. We are in a lot of the Western Kansas small towns, Dodge City, our headquarters are in Manhattan and so we are very versed with acreage and those rural communities and love serving those people.

Bill: Why don't you tell our readers, why is it that the fellow that you made a loan for him in a home in Overland Park is reluctant or refuses or is unable, maybe that's a fair way to say it, of making loans on rural property?

Trisha: Rural properties are just a little different. Typically, there is quite a bit of value in the land itself versus the house and that can be tricky for lenders who aren't used to doing it every day. What we find with our underwriters and the things we have available here at Landmark, because those are the communities we serve is that it's simple because we do it every day. There's a lot of gotchas that can happen with a traditional lender and we pride ourselves on being the expert and helping people with buying homes on acreage.

Bill: Now, are the loan terms similar or different to what people are used to buying a home in a subdivision for?

Trisha: They can be, but with the right property and the right borrower, we can do a 30-year fixed loan on a property with acreage.

Bill: Now, does the amount of land make a difference in how you would approach alone because you do make loans on homes and subdivisions? You're a full-service lender, am I correct?

Trisha: Correct, yes. Those are some of the questions we have when I'm first talking with a borrower about what their interests are before they even maybe even go out looking with you is what their goals are. Are they looking for something with 40 acres? Are they looking for something with three acres? Really anything in the smaller acreage, I would say 10 and under, not really a huge deal typically. Anything over that, you start to get into value issues because there's nothing that sold like it in the area or like I mentioned earlier, the value of the land versus the actual structure that can cause hiccups if you don't know what goes into it.

Bill: Even though the properties out in the country, if the value of the house is pretty significant and it's a smaller lot, three to five acres, am I right, you could probably make a traditional loan?

Trisha: Absolutely.

Bill: It's just when the value of the land starts to go up in value that it becomes a non-traditional loan. Is that fair to say?

Trisha: Correct.

Bill: Now, are there any special programs for people who want to buy rural property particularly that has a house on it?

Trisha: Yes. USDA has a great program that is available for little to nothing down and that works perfectly in the perimeter of the KC Metro area and I can get into details with that with borrower specifically, but there are definitely programs that help to encourage people to live in those smaller communities.

Bill: Now, if a person wants to buy a 20, 30, 40-acre lot and build a home on it, is that something you can deal with?

Trisha: We can. I would not deal with it personally, but we do have lenders here at the bank that would handle the construction loan piece of it.

Bill: Whatever it is that they needed, it sounds like you'd probably be able to help them with, is that correct?

Trisha: Yes, of course.

Bill: When people are trying to get a loan to buy rural property, what's the thing that probably surprises them the most or what's the most unusual thing to them?

Trisha: From a lending perspective, it's typically a down payment. When you get the acreage, lenders that are like I said, not used to dealing with it, typically want more money down because in the event that something would go awry down the road and they would have to foreclose on properties with a lot of acreages or typically take a little bit longer to market and so that goes into the risk evaluation of the property itself. Typically, the lender will want an additional down payment to mitigate some of that risk.

Bill: I see. Are the interest rates typically comparable?

Trisha: Depending on the program, yes, but there are two schools of thought in mortgage lending. You have just the traditional Fannie Freddie loan that you can get and then you have bank loans or portfolio loans. Depending on which track the borrower and the property would fit in, it can have a variance between rate and term.

Bill: Well, it strikes me that if somebody is thinking about getting a loan on a rural property, as you said earlier, they might want to talk to you before they even begin their search because you'd hate to see somebody go too far down the road with an assumption about what they could do on a loan basis and then be disappointed. Is that fair to say?

Trisha: Absolutely. We always encourage people to talk to a lender prior to falling in love with something and then having to figure out the hard way that it may be a little bit harder than they expected.

Bill: Now, do you ever run into situations where it's just too difficult to make a loan, I'm thinking now of a situation where somebody wants to buy a huge acreage, 80, 160 acres, and a house? Is that outside your purview or is it still doable?

Trisha: Outside my personal purview, yes, but like I said, Landmark would always be willing to look at that from an in-house portfolio standpoint with one of our other lenders.

Bill: Excellent. If a person were interested in doing that, probably what they ought to do is to call you first and you could help direct them depending upon what it is that they're trying to accomplish. Is that fair to say?

Trisha: Definitely.

Bill: Does Landmark make loans on just vacant land, where their intent isn't to build the house? I think you call them portfolio loans.

Trisha: Yes, we can. Especially, if you aren't going to build right away or don't have the intent of building, you're looking at a substantial down payment, probably 25 to 35%, depending on location and borrower qualifications and things of that nature, but yes, it can be done.

Bill: All right. Let's say, I'm thinking about I'm tired of living in the city. I want my kids out where they can run in the country and fish in the pond rather than spend all their time looking at screens, what should I prepare for from a financial point of view? Or if I was going to come talk to you, what type of information would you like me to have available so that you could help me?

Trisha: Typically, start most of those initial conversations over the phone, and then we can set up a time to meet face to face if they have time or want to but basic personal information names, social security numbers, date of birth, employment information, pay stubs. I will have you either drop those off to me or scan and e-mail them to me and try to make it easier on everybody's fast-paced lifestyles. That's typically what we use to get started and then we'll follow up with tax returns and more financial information as we get further in the process.

Bill: Could you tell us what's the best way to get in contact with you?

Trisha: My cell phone is usually the best way to catch me. That number is 913-220-6091.

Bill: Why don't you give us that number again?

Trisha: 913-220-6091.

Bill: Can they do this online or they have to come in?

Trisha: Absolutely. You can apply online at www.trishagoodale.com. It's T-R-I-S-H-A, Goodale, G-O-O-D-A-L-E.com and there's an "apply now" link. You can do that at midnight after you got the kids in bed and I can get to it the next morning and get back to you right away.

Bill: Now, that makes it pretty easy. To our readers, if you haven't picked it up by now, I'm a big fan of Trisha's. She has helped some of my clients through some really tricky situations. There are always surprises. When you do non-traditional loans like Trisha does, you have to be creative and you have to be very client-centric. One of the reasons I always ask-- can say that half of my clients use Trisha's because she's creative and she helps my clients do things well. Is there anything else that somebody thinking about getting a loan in rural land I don't know about Trisha?

Trisha Just feel free to give me a call anytime. Even if it's six months to a year or two years out, we'd love to just have those conversations and make sure we get the questions answered ahead of time. I love to plan. I love to help people reach for their dreams and be a part of that process. That's part of the reward for me. I would love to have the opportunity to talk about that.

Bill: That sounds like a perfect way to do it, and that'll be our blog for today. The reason I say today that I'm one of the luckiest guys in the world is that when you sell the kind of real estate that I do, it's not a matter of selling somebody a new home. When people move to the country, when they leave the city as most of my buyer clients do, they're really wanting to change their lifestyle. There are a lot of things that are about that change that is different. Lending is one of them. When I have the opportunity to work with people like Trisha that can take some of the anxiety and the surprise out of that, it gives me a pretty good feeling too.

That's our blog for today. We hope you enjoyed it and maybe learned something and had a little fun. If you have any questions about anything we have discussed, or maybe if you're just looking for someone to help you buy or sell your country property, give us a call at 913-837-0760, or send me an e-mail, bill@ruralkc.com. That's bill@ruralkc.com.

If you just want to keep up with what's going on in the country and especially country property and country real estate, you can follow us on our website, ruralkc.com, or you can go to our horse property website, kchorse.com.

As always, you can follow us on Facebook, LinkedIn, or maybe my favorite, YouTube. I say our YouTube channel might be my favorite because boy, you get a chance to look at some beautiful country properties, great scenery, wildlife. It's just a fun experience. We are affiliated with Keller Williams Realty Partners. We hope that you have a great day.