Blog :: 11-2014

Owner Financing Maine Land

If you are interested in buying Maine land with owner financing find some great land parcels at our listing page. Are you trying to sell your land? Maybe you should try financing your Maine land sale. Why should you consider this option? Because owner financing can help get your land sold faster and earn you more money. Here are a few reasons why and other things you should know.

Most Banks Don't Offer Land Financing

When a buyer for Maine land is looking for options to finance their purchase they usually start with the bank that holds their checking and savings accounts. In many cases, if the acreage of the parcel is larger than a simple house lot, the lender will not consider the loan. If they do interest rates may be high, or worse, the down payment requirement is not reasonable.

Specialty property types such as Maine timberland investments, hunting/fishing/recreational land, larger waterfront land parcels, farmland and other large acreage properties can be difficult to secure financing for. In Maine there are traditional banks and credit unions that offer attractive terms for land. However, the average buyer looking to purchase land will not know who those lenders are and will often get frustrated with the search. They will naturally look for ways to make the process cheaper or less complicated.

Buyers Prefer Owner Financing

Many buyers prefer the ease and speed that owner financing allows them to purchase land, so they search land for sale with such offers. This gives the land owner who is offering financing terms competitive advantage over other sellers. Although owner financing interest rates are usually higher than a bank rate, the lower down payment requirements, fewer required fees and closing costs combined with a less hassle process are often preferred by potential land buyers.

Amortization

Not only does it help get your land sold faster, another good reason to finance your land is the interest you can earn. When your Maine land sells, what will you do with the proceeds? If you said "put it in a savings account" why? Unless you need the liquidity cash, your money could be working better for you with amortized payments for the land. The front end of an amortization is mostly interest. Even if the borrower pays off early, you will be assured to collect a return on your investment. Looking at all of the options out there, owner financing can be hard to beat.

Less Risk than other investments

If done properly, holding a first mortgage on your land is a safe position to be in. Should the buyer/borrower default on repayment, you will have the land as security. There will be costs to pay for the foreclosure action should the borrower default. To reduce your risk, require enough down payment to cover your legal expense of recovering the property.

Things to consider

How much down payment should you require? That depends on many factors. Among others these are a few: how much risk are you willing to take, the interest rate you will receive, the buyers qualifications and standing timber values that could be removed.

The process for lending has become more complicated for the land owner than it was just a few years ago. The reason is the need to be in compliance of new federal regulations on lending. You will hear a lot of different opinions from lawyers, land owners, buyers and others about these regulations. We advise our clients to consult with legal counsel and private lending loan originators regarding owner financing to be sure that all legal documents, lending processes and disclosures are complete.

 

Rule of Thumb for Valuing Maine Land

One of the most common questions we receive at the Land Brothers regarding selling Maine land is "Do you have a rule of thumb for pricing Maine land?" Great question, but before answering we should look at factors that affect the value of land in Maine.

Factor 1: Access If the property is not on a state/county/town maintained road does it have legal deeded access? Is the access to the land title insurable? Is the access to your Maine land clearly defined on the face of the earth?

Factor 2: Waterfront Does the land have frontage on a brook, river, stream, pond or lake? Is the frontage easy to get to and does it have good building sites near the water? What are the building setbacks for your Maine property?

Factor 3: Deed Restrictions Are there deed or association covenants that restrict certain activities, building limits, Maine land divisions or other uses of the property?

Factor 4: Ownership Rights Do you own all rights to your Maine property above and below the surface? Otherwise known as the complete bundle of sticks. It is not uncommon on large tracts of land in Maine to have the mineral rights severed from ownership. There are different types of mineral easements and reservations in Maine and we will cover these in future articles.

Factor 5: Legal Description Does your deed contain a good metes and bounds property description? Do you have a survey map of your land? Are all corners marked with survey pins or posts? Are your property lines well defined with blazes? Are any of your boundary lines in dispute with your neighbor?

Factor 6: Neighborhood When you are driving to your property what condition are the neighboring properties in? Are there any environmental conditions nearby that may concern a potential buyer?

Factor 7: Soils Has the property been soil tested? What are the soil types?

Factor 8: Timber When was the last timber harvest? Is the property in tree growth tax status? What product class of Maine timberland do you have? Do you have a current timber cruise?

Factor 9: Location This is a broader factor then neighborhood and is based on what county in Maine or town in Maine your property is located.

Factor 10: Internal Roads Do you have access roads or trails throughout the property? Is it easy to take a walking tour of the property?

Factor 11: Points of Interest Does your Maine land have any unique and desirable features? The sound of a waterfall or babbling brook, cave, mountain views, and mature forest that's easy to walk through.

Factor 12: Utilities Are electricity, phone and high speed internet available at or near the property? Is there a utility line installment contract in place? Is 3 phase power available?

Factor 13: Demand Are there currently a lot of buyers in the market looking for property like yours? Does the property size, location and other features appeal to a large or small buyer pool?

Factor 14: Competition How many competing properties are for sale? A review of the asking prices of comparable competing land parcels will show you the approximate ceiling of market value.

So as you can see, there are too many variables to have an accurate Rule of Thumb for estimating land value. The factors above are not a complete list of issues to consider when valuing Maine land but are a good start. Every property is unique, so a thorough investigation of all factors is required to accurately estimate a value for your Maine property.

Top 5 Things to Consider When Buying Maine Land For Sale

You have been searching on the internet on numerous websites and perused dozens of catalogs, newspaper and trade journals with land for sale in Maine. You have your plans for building your new home, getaway cabin or developing your Maine recreational site. You narrowed the search of parcels, made a trip to your favorite part of the pine tree state and found your perfect spot. Now what?

Assuming you have done your homework, understand the local property values, have arranged appropriate financing or better yet, saved the necessary cash, it is time to write an offer. Most good real estate contracts or purchase and sale agreements have a due diligence clause that you can fill in items of concern.

The following is a list of our top 5 due diligence items. There could be other issues depending on your intended use such as building permits, soil testing, environmental assessments and more.

1. Survey - This is an item that is often overlooked but is one of the most important issues when purchasing Maine land. Questions answered will be where the boundaries are located, what is the true acreage, are there any encroachments and easements to name a few.

2. Title - I thorough title exam is just as important as the survey. Does the owner of the Maine land have merchantable or at least insurable title? Have a good Maine real estate title attorney do the research and provide you with an opinion and title insurance policy.

3. Access - Does the property front on a maintained state, county or town road? If yes access may not be an issue, or is it? Check the status of the road. Is it still maintained by the municipality? If it has been abandoned by the town there could be issues. If a private right of way, how well is it described? Be sure to add this item to the title search to be sure the access can be insured.

4. Entrance Permits - If the property fronts on a State of Maine maintained road or a road that receives state assistance, a driveway entrance permit is required. This permit requires ample line of site distance for entry onto the road. The distance is dependent on the speed limit. Be sure to add this to your list of due diligence when investing in Maine land. Maine's Department of Transportation handles this and there is no charge for the permit.

5. Taxes - Check with the Maine town that the land for sale is located in (or the State Bureau of Taxation if located in Maine Unorganized Territory) to see if the taxes are paid and if the property is enrolled in the tree growth tax program. If you hired a title attorney they will usually take care of this. Knowing the status of the taxes will help you better understand all potential future expenses such as change of use penalties and forest management plans.

If you have not yet found that special property in Maine, check out the many fine properties on this web site.

Maine land suffers early season storm damage

Maine balsam fir storm damage

Snow storms in early November 2014  have caused timber losses on land in Maine.  Whether you are considering selling acreage in Maine or are interested in land for sale in Maine, you or your forester should walk the land to inspect the property for storm damage.

Timberland in Maine is a relatively safe passive investment.  If your land does have tree damage from winter storms, working with your forester, you may be able to schedule a salvage harvest to recoup some of the losses.

Not all damage is a bad thing, as some of the damaged trees are weaker diseased trees that once down will allow your dominant trees to grow faster.

A recent trip to our land in Surry Maine allowed us to inspect our forest to see the extent of the downed trees.  Our white pines and maple trees were basically in good condition with some limbs broken off but no serious damage.  The biggest damage was to 3-6 inch dbh fur and white birch.  See the photos in this post of our fir trees.  Land in Hancock County and land in Waldo county seemed to have the largest amount of downed trees.  Some trees snapped at the top, others in the middle and some near the butt.

12 Great Apps for Maine Land Owners & Buyers

phoneWe like technology that enhances our experience in the outdoors and ownership of our Maine land. Land owners may find a use for these and other smart phone apps. The list below are a few of our favorites. Keep in mind technology is great when it works, but as always, don't forget your compass!

  1. What tree is that?   Arbor Day tree identification guide for i-phone cost is $4.99 with mixed reviews. According to the reviews if the tree has leaves it works great. If it is fall or winter with no leaves the app is useless.
  2. Audubon Guides Box Set, Birds, Mammals, Wildflowers & Trees Cost $14.99 and received great reviews. Some of negative reviews was if no cell service is available, large app size.
  3. MyNature Animal Tracks.   Cost $6.99 with mixed reviews. Identifieds tracks and scat of 48 species.
  4. Backyard Scat & Tracks. Free. Identifies tracks and scat of 15 species. Paid version "Scat & Tracks of North America has more species.
  5. Soil Web for the iPhone
  6. Google Earth
  7. MotionX-GPS
  8. MilGPS Tactical GPS Navigation and Map. Cost is $7.99.
  9. GPS Compass for Ranger. Cost $1.99 with great reviews.
  10. Measure Your Land. Free. Received good reviews. Measures objects and distances on the ground.
  11. MyRadar Weather Radar. Free. Received good reviews. App displays animated weather radar around your current location, allowing you to see what weather is coming your way.
  12. Sunrise Sunset! By Brett Cato. Free app.

Permitting in Maine's Unorganized Territories

 

Building a cabin in the Unorganized Territories of Maine

Building a cabin in the Unorganized Territories of Maine

 

Buying a home or a piece of land can be a very enlightening experience. One of the more overlooked pieces of buying real estate is the fact that in most instances you will at some point need permits to complete renovations or build new structures.  Permitting is different depending on the location of the parcel and can be overwhelming to a new purchaser if they have no experience with the permitting process.  Permitting is mandated by Federal, State and/or local authorities.  Though the permitting process in most regions of the State of Maine is straight forward, permitting in the Unorganized Territories can be arduous if you are not familiar with the regulatory requirements.

Unorganized Territories in the State of Maine are overseen by the Land Use Planning Commission or LUPC. When you are ready to build, subdivide, mine, etc., you can go online to the LUPC website or call the representative in the jurisdiction where your parcel of land is located.  Generally, in either case you will receive a lengthy application with vague directions to complete along with a regulation manual, which are the regulations that must be followed when completing your chosen permitted activity.  Most individuals will struggle through the application process usually resulting in the submission of an incomplete application and much time wasted.  However, there are a few easy steps that can make this process less stressful.

First, find your parcel of land on the LUPC Parcel viewer located on the LUPC website. This viewer will give you the information you will need to follow the regulation manual, such as which LUPC Zone your property is located.  In most instances there will be more than one zone.

Land Use Planning Commission Parcel Viewer

Second, make sure you understand what can be done in each zone to ensure your project fits within the regulations. This can be accomplished by reviewing the sections of the regulations that apply to the zone where your property is located.

Third, acquire a copy of your deed. You will need to research the last 20 years of deed history and get copies of the deeds to submit with your LUPC application.  This can be accomplished by visiting your county registry.  Most of these files can be purchased online.

Last, you are now ready to complete your permit application. Fill out all questions.  Refer back to the regulations to ensure your project fits the zoning requirements.  The last page of the application contains a check-off sheet.  Review this sheet and check all that apply.  This will ensure you have a completed application on the first submittal.

Download LUPC Building Permit

Though it sounds easy, if you have questions don't hesitate to contact a LUPC Representative or an Environmental Consultant that can answer your questions. It is a lot less expensive to ask when in doubt than to try to complete something you don't understand or to receive the permit and have your interpretation being different than LUPC.