Recreational Land Loans

Recreational land loans are exactly what they say they are...loans on land or financing that will be used for recreational purposes.  Everyone needs to have some fun every once in awhile and sometimes the confines of city spaces just won't satisfy that itch.  Getting away to the country to enjoy creation and all it's beauty is sometimes just what is needed.  

This article is going to share some different types of recreational land loans and things to think about for each one, and very briefly discuss the challenges and caveats to recreational land loans.  

To begin, there could be as many different recreational land loan purposes as there are people but there are about 5 or 6 main activities or purposes for recreational land.  

Hunting and Fishing

Yep, there's nothing like getting out in nature and enjoying some hunting and fishing for sport.  Hunting and fishing go back to the very root of humanity and some great bonding and fellowship can be had among men and women alike while chasing that common goal.  At the end of the day, you may even bring home dinner...it's not only enjoyable but could help you save some money on food too!

But before you go and lock yourself into a land loan, you might ask yourself if you need to purchase land iwth a loan in order to enjoy hunting and fishing.  First, you should talk to your network of friends and family and see if they can grant you access to some prime hunting or fishing locations.

If you don't know anyone that can hook you up for free, then you might consider leasing land for hunting and fishing.  Many farmers and ranchers would entertain the idea of a hunting or fishing lease if you approached them.  In some areas of the country, hunting and fishing leases are very common while in other areas, they aren't very common.  

Areas where hunting and fishing aren't as common might be due to social fabric being closer knit and people freely hunting as they wish with their landowner's permission.  But it's always good to offer to lease first as a sign of goodwill toward the landowner...unless you know them well.  Leasing can be an attractive option too as you can generally lease a larger quantity of land to hunt and fish compared to purchasing the land outright.  

If you do decide to buy land for hunting and fishing, it may be advisable to find land that can be considered multi-purpose.  For example, it may be possible you can find land that can be rented out for farming or ranching.  You'll have to decide if this defeats the purpose of having the land for hunting, as farming and ranching activities can sometimes be disruptive to wildlife, but conversely they can also be a boost to wildlife.  It simply depends on the kind of game you are hunting and the kind of farm you are farming.  For example, crops such as milo, corn, and soybeans can be a great food source as well as cover for certain game birds such as pheasant and quail.  Or winter wheat can be a great food source for white tail deer in the winter time.  

When it comes to fishing, land with lakes and rivers can also be ideal land for livestock so that they have a constant source of water.  And livestock can help create a great ecosystem for fish.  Livestock manure is great for bugs, and bugs in turn are great food for fish.  Some of the largest bass I have caught came from farm ponds where livestock grazed the surrounding pasture.  On the downside, livestock may muddy up the water that is otherwise clear and depending on the type of fish you are fishing for, clearer water may be your preference.  

Hiking, Biking, & Four-Wheeling

Hiking, biking, and four-wheeling is just another reason someone may want to purchase recreational land.  The good news about buying land for hiking, biking, and four-wheeling is that some of the most "un-usable" land is sometimes the best for hiking, biking, and ATVs.  This could potentially make the land less expensive per acre however it will limit your ability to use the land for any income producing activity.

Before you purchase land for these activities, we recommend you check out your local parks, or even consider traveling to a destination park that is good for these activities.  Taking out a land loan in order to purchase land for this, may be considered expensive and ill-advised.  Going into debt for a hobby might just take the enjoyment back out of your hobby.  Besides, the change of scenery that public parks provide can be ideal when exploring on foot, bike, or on an ATV. 

Camping Spots, Vacation Homes, and Getaways

Do you like to camp or have you always wanted a vacation home that you could get away to?  Then this the the recrational land loan for you.  

However, in the event there is already a vacation home on the land you plan to buy, you probably wouldn't get a land loan but rather you'd just get a conventional home loan.  But in the event that you don't, you might start off buying raw, vacant land.  If you like camping, it could start out as a camping spot which could later turn into your dream vacation home spot when you can afford it.   

But again, if you are thinking of purchasing land just for camping or a private getaway spot to park your RV, we would encourage you to talk to your network circle and see if they might know someone who knows someone.  

Similar to purchasing land for hunting and fishing, it may be possible to find multi-purpose land that you could rent or lease to farmers, ranchers, or even hunters and fishermen as mentioned above.  

Things to Consider Before Buying

Before you dive in and purchase land for your hobby or recreation, we recommend considering a few items very carefully. 

1. Location - Location is important with any real estate transaction, but if you're purchasing land for recreation, it would be nice if it was close enough to be able to get to in a short weekend drive.  otherwise, you might end up not using it very much.  Location may also affect the way your bank approaches financing.  
2. Consider Income Generating Property - As we've said previously, income generating property could take some of the pressure of land loan payments off of you.  You may have to pay more for property that can produce some form of income, but it may be worth it.  
3. Size - How big of a piece of property do you want or need?  Be aware that certain lenders will have limits on the size of th property you can buy with a land loan.  Some of them may also have minimum land sizes they will provide loans for.  It just depends on the lender.  Size will obviously also affect the price of the land and what you are able to do on the land.  
4. Should I Use a Realtor? - There are pro's and con's to hiring an agent as the buyer.  Life is busy on the one hand and wouldn't it be nice to have someone to locate the land, negotiate the price on your behalf, and help with paperwork and closing in order to take the weight off your shoulders?   On the other hand, you'll have to pay them for it in fees.  It's important to weigh the cost/benefit.  
5. Insurance - There will be different types of insurance that you should consider including title insurance as well as liability insurance.  Title insurance insures against the title not being free and clear after you buy the property as well as other potential insurance benefits.  you'll need to consult with your title insurance company to determine the bells and whistles you want on your policy.  After you purchase the property, depending on how you use the property, you may consider liability insurance in the evenet someone were to become injured on your property and seek damages.  
6. Neighbors - It may be good to know/meet your neighbors before you buy the land.  You never know!
7. Property Borders - Become familiar with your property's borders.  Examine it on a plat map and if you believe something isn't right, get a survey.  Also be sure to locate fences and other boundary markers.
8. Zoning - This becomes important when applying for a land loan.  Most lenders will require the land to be zone free or zoned agricultural or residential.  

Land Loan Financing

When you decide to pull the trigger and buy some recreational land, you'll have to decide how you are going to pay for it.  We have written an article on that already but we will list out some items to think about.  

1. How's your credit?
2. What do you want your loan length to be?
3. What are land loan interest rates?
4. How much will your down payment be?
5. Will you try to pay it off early? Are there prepayment penalties?
6. Will you be required to pledge collateral for the land loan?
7. If you can't get a land loan through a bank, what other methods are available to you?
8. Are you offering the right amount for the land?
9. Do you have an appraisal on the land?
10. Does your lender offer supplementary financing for adding buildings to your land?

Conclusion

If you're thinking of buying recreational land, hopefully this article has been helpful.  For other helpful resources, check out our blog or our calculators.  

If you're thinking of financing your land with a loan, then check out our land loan calculator.  Before you leave, be sure to leave a comment in the comment section.