Rent to own land?

[Jagfarms]

Has any one had any experience renting to own land? I have heard of it done but I have not heard first hand on the details about it. How would something like this be done if it is possible?

Thanks in Advance.

Jason

[WoolyBear]

Some producers will finance the purchaser and it might be referred to as a rent to own agreement.
As with any business transaction it would be crucial to have legal agreements in place.

[cakadu]

Basically the current landowner would become the mortgage holder. One way I have seen it done is to pay rent on the property, with a certain amount of the monthly rent being put towards the purchase of the land.

The other scenario would be quite similar to getting a mortgage from a bank with a down payment, so much per month etc.

If the land remains in the current owner's name until such time as you pay off your "mortgage" and/or are able to go to a regular bank for a mortgage, then what you could do is put a Caveat on the land so that your interest is protected.

If the land gets transferred to your name, then the person you are buying it from would either put on a Caveat or do up some sort of purchase agreement.

Either way, you need to ensure that you know exactly what your legal rights and obligations are, as does the seller. That would entail legal advice at the very least and I would say help with drawing up any documents.

One option to say on legal fees is to use the same lawyer which has its pros and cons. Bottom line there is that if you use the same lawyer, in the event of a dispute both of you will have to retain separate council.

[Jagfarms]

I have been renting some land now for 10 years from a relitive. I was thinking if the bank is charging prime plus 2% I could finance it through my relitive with the help of a lawyer and we both come out ahead.

For an example

If I was to buy 6 quarters of land financed or rent to own from my relitive with a price of $85,000/quarter $510,000 for all 6. Make agreament with a lawyer to pay 4% interest over 25 years. The payments would be $32,304/year for 25 years for a total of $807,591. Every 50 months 1 quarter of land would get it's title changed over to my name. If I decide to quit farming in 100 months 8.3 years two quarter are on my name and the landlord has the other 4. I am almost paying this much for cash rent now and If I would have started this 10 years ago I would own 2.5 quarters by now. The only thing is rent is 100% tax deductable and only the interest is on payments. That's why I was wondering about the rent to own thing but that would be bad for the landlord. How would it compare to paying capital gains if he sold the 6 quarters at one shot?

They lease to own grain bins and you buy them out in the end for a small fee and get the tax benifits. Is there any way this could work with land?

Like charliep said I think the land prices are going to come down in the future in some areas. I can see that may happen here as the average age of farmers in our area would be 50-60 years old and not many young farmers around who is going to buy all the land. I have heard in some places they can not even rent the land out for enough $$ to Pay the taxes.

If I buy the land through the bank I am committed to buy it. With an arangement like this it is like renting land and every 50 months I get another quarter and I decide to get out of farming the landlord still has title to the other 4 quarters. Less risk for the tenant but have to get the landlord to agree to it.

Jason