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Updated almost 9 years ago on .

Account Closed
  • Mc Kinney, TX
0
Votes |
1
Posts

Lending Options on Guaranteed Mortgage Payment Loan

Account Closed
  • Mc Kinney, TX
Posted

During the process of shopping for a piece of rural property to build our new home, we came across the government's CRP (Conservation Reserve Program), which basically pays you "X" number of dollars per month, per acre, not to farm or develop some or all of your land.

http://www.fsa.usda.gov/programs-and-services/cons...

Thinking the program might be useful as a small source of income on part of our new acreage, we began looking at other properties which were currently under CRP contract. (You can choose a 10 or 15-year contract when you enroll your property.)

In searching, we've come across a significant number of properties in which the CRP income is equal to or greater than what the mortgage payment would be. That got me thinking...what a great investment opportunity. Buy a piece of land...sit on it for 10 or 15 years while the CRP income makes the mortgage payment, then sell it and take out the equity, and/or simply re-up the CRP contract for another 10 or 15 years.

So my question is... how would a bank look at loaning on this type of property -- where the mortgage payment is guaranteed and there's no risk to the bank?