When the home you want to buy is merely a shelter to retreat to after a day spent ranching or farming the land surrounding it, you’ll find that the process is much more involved than buying a tract home.
While we don’t have space here to get into the fine details of this type of real estate purchase, here are a few basic steps to take when buying farm or ranch property.
1. Where will you get the money?
Not all lenders deal with ranch or farm properties, so you’ll need to find one who does. If you need help coming up with the money to buy a farm, contact the state’s Department of Agriculture about the Beginning Farm & Ranch Loan Program.
It offers beginning ranchers and farmers a reduced interest rate and a reasonable down payment. You can find the eligibility requirements here.
The USDA offers farm loan programs (including a special program for women and minority borrowers) and some conventional lenders, such as Janus Ag Finance (an outlet for Farmer Mac) and Compeer Financial, have programs for potential ranch and farm owners. (We do not endorse these lenders; the mention is for informational purposes only).
2. How much land and how many critters?
One of the first steps to take when you find a ranch or farm property you’re interested in is to figure out if it’s the right size for the number of animals you hope to keep. The easiest way to do this is to contact the USDA’s Farm Service Agency.
3. Zoning considerations
Next, you’ll need to ensure that the property is located in the proper zoning district (agricultural) and that it’s also zoned for the livestock you’ll keep there. You’ll find zoning information for your city or county on its website.
If you go in person, request a parcel map so you can look for easements. This is especially important if you’re buying property that has never held a structure before.
It’s not at all uncommon for vacant parcels to be landlocked and if there is no existing easement to allow for ingress and egress you’ll need to go about procuring one, which is not an easy project.
4. Water rights
Is there water on or running through the property? Your next stop, then is at the state engineer’s office.
Find out how they determine water rights (also known as “riparian rights.”) This is important if you plan on pumping water to store or use it for livestock.
5. Drinking water and waste management
Buying a ranch or farm typically brings with it the expense of having the well and the septic system inspected. Despite the expense, it’s important to have the septic pumped out and thoroughly inspected.
If you need to install a system, you’ll want to have the soil tested (a “percolation” test) to determine if the land will support the size of the system you have in mind.
Lenders often require water quality tests for farm and ranch purchases. Even if yours doesn’t, do consider hiring a professional to ensure the well’s mechanics work properly and that the water is safe to drink.
6. Are crops or grazing areas planned?
A soil test is a must for those planning on growing crops or providing a pasture for grazing. You’ll find invaluable information online with the Natural Resource Conservation Service’s Web Soil Survey.
Soil testing results are especially useful if you’re interested in organic farming. Cooperative Extension Services across the country often offer soil testing. Consult the list at gardenologist.org to find the one closest to the property you’re interested in.
7. Infrastructure considerations
Barns and other outbuildings on the property should be professionally inspected. If the property lacks the buildings you require, factor the cost of erecting them into your offer. Likewise with fences and irrigation that needs to be installed.
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