All Topics / Help Needed! / Rural property

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  • Profile photo of synericsyneric
    Join Date: 2005
    Post Count: 9

    I’m thinking on buying a rural property.

    I did the maths, it seems to fit the CF+ equation.

    I have heard that banks won’t lend to these sort of properties. Is this true? If not, what sort of percentage would I be expecting?

    Naturally, the property is not too expensive, I have enough cash to buy it. If it doesn’t workout, I could always sell it back off.

    Profile photo of Kerri-67Kerri-67
    Join Date: 2004
    Post Count: 37

    hi syneric

    Why don’t you approach several different lenders and see what they say. If none of them will come to the party on it, you could always buy it for cash, then use the immediate equity to borrow for more properties. Even in the most outback of country areas, I imagine it would be easier to get an LOC or something like that on a property you already own, than borrowing for initial purchase.

    Just some thoughts


    Kez :)

    More investment strategies —>

    Profile photo of procureprocure
    Join Date: 2004
    Post Count: 6

    Commonwealth Bank will lend anywhere in Australia so I would start there.


    Profile photo of investroninvestron
    Join Date: 2003
    Post Count: 92

    Westpac would only lend me 50% of value, if it has a house on it they may go to 60 or more, if it’s more residential than rural, they may go to 80%.

    Profile photo of crjcrj
    Join Date: 2004
    Post Count: 618

    If there’s a bank branch near the land try that bank.

    Profile photo of DazzlingDazzling
    Join Date: 2005
    Post Count: 1,150

    What’s the CG been on the prop for the past 10 years ??

    What are you expecting for future CG ??

    If the place is really cheap, I imagine the “ins and outs” would be a large percentage of the purchase price…growth would have to cover that as well otherwise aren’t you going backwards ??

    Have you factored in your ‘time’ costs, or does the place run on automatic pilot ? My experience with rural places is that they are quite time intensive…that’s fantastic, as long as you don’t have anything else going on in your life like family commitments / business oppotunities etc.

    If it is time intensive, and you placed say a low $ 30 / hr value on your time, would it still be CF+ ??



    “Go hard or go home”

    Profile photo of pfsfinancepfsfinance
    Join Date: 2004
    Post Count: 171

    Its depends where the property is and the size of the land. Lenders go on postcodes.

    Expect a lower LVR anything from 50%-80%.

    If the property won’t be accepted by conforming lendings (such as the banks) you most likely will have to go to the non conforming lenders so expect to pay a higher interest rate.

    Financial Wellbeing Coach
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    Profile photo of FFCommFFComm
    Join Date: 2004
    Post Count: 627

    Usually it’s the mortgage insurers who restrict the loan size.
    Use to find out how high you can borrow and how much they will lend.


    Profile photo of annpannp
    Join Date: 2004
    Post Count: 13

    If you’re thinking of renting the land to a farmer, usual return is 6% of land value and they can flog your soil if intensive farming with potatoes, poppies etc. (I’m from Tassie.) If you’re going farming, the best farmers in the country average a 6% return on their capital. The national average is only 2%! If this is a lifestyle decision, GO FOR IT!
    Ann [baaa][baaa]
    Former sheep farmer

    Profile photo of feet firstfeet first
    Join Date: 2004
    Post Count: 3

    Hi Seneric,

    You didn’t specify size or type of rural property and/or what you intend to do with it- eg. rural residential, possibility of sub-division, hobby farm or working farmland?
    There is a big area of difference, and, depending on this you could try approaching “rural banks”- there are several of them (internet) look for those in your area. I have found them competitive and geared to rural lending, but you do need to go prepared.
    If this is you first rural investment, may I suggest check out fences + public liability, if you are intending to agist/run livestock.

    “Feet first”[blush2]

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