Selling Farmland

[Andy Wayne]

Hello Everyone, I have a couple of questions in regards to some real estate that I purchased 2.5 years ago. First a little background...I bought about 25 acres of farmland adjacent to some lake property that is family owned. It was purchased with seller financing at 10% down and a 5% annual interest rate. I have since paid it down to where I'm at about a 60% equity position. The land itself is about 22 acres tillable split by a line of trees / brush (about 10 acres and 12 acres pieces). It's all currently as a single parcel of land. I'm interested in selling the 12 acre part of it so that I can free up the money for another real estate adventure (I want to keep the 10 acres for a future home site). The land is located in north eastern Indiana. So for my questions...how would I got about getting the land split? I have talked to the people I purchased the land from, they are okay with me splitting the land and selling part of it as long as they are paid back in full when the sale happens. Who would I contact to get it split? Would it need to be surveyed? Or could a previous survey be used? Cost to do something like this? I'm also wondering the best way to market 12 acres of land for sale...as it's pretty small for farmland. Any feedback would be greatly appreciated!! If anymore information is needed, please let me know! -Andy

[Chris Newman]

Hi Andy,

I'm near Seattle, WA but I invest in local farmland, although it's for the transferable development rights that I can clip off and resell at a profit. It's a local-only thing. Indiana doesn't seem to have one of these TDR programs, except for forest lands. 

The people you need to talk to in order to split your farm property will be your local government Planning and Development Services, or some similar name. Same folks who approve building permits etc. or they can tell you who to see. Bring in the tax account number(s), as well as the physical address.

Before then, you might also check the long legal description for the land that was listed on your closing papers. If it says "Lot X" of Block...." then it's a single lot. If it says "Lots X, Y and Z etc. of..." then it's already split and may be able to be owned separately already. Or maybe not. Every jurisdiction has its own rules.

The first thing you'll need to learn is what the permitted lot size is for farmland. Here in Snohomish county, it's normally a minimum of 10 acres. But your land use codes may be different. 

As for the cost to split the land, you'll have to ask. It may be cheap or it may make your eyes bug out. :-)

Surveys aren't cheap and I don't get them unless it's required. Generally, existing fence lines, if they exist, come pretty close. At some point in the past, somebody knew where the lot lines are and neighbors are picky about encroachment. When you're talking acreage, a few feet either way don't usually matter much.

Have you looked into aromatic growing hops for craft beer? Indiana is in about the right Latitude (48) and there are folks growing them there now: https://www.google.com/webhp?sourceid=chrome-insta... That's the highest value legal crop that I know of for your area. For aromatic craft hops, you could be looking at $40,000/acre/year. It costs some to build the 18' trellises and plant up to 1,000 plants per acre, but both will last about 20 years before refurbishing. 

I recently posted a good manual on growing organic hops at http://www.biggerpockets.com/files/user/ChrisNewma...

If the location of your land is right, don't overlook the agritourism potential value. People love to visit farm breweries.

Just thought I'd pass this on. Not many farm flippers here on BP. 

Good Luck!

best regards,

Chris