Hello from Wisconsin

[Jeff Siemers]

Hi I'm Jeff. Looking at REITs, farmland, maybe buying land at auction.  Want to learn how to do my due diligence.

[Dustin Tucker]

Hello Jeff,

1st run and hide when you hear the word Reit's, those are flaming dumpster fire's, and are going up in smoke.

When you are buying land either at auction or at a private sale you need to understand what you can do with the land currently, and what can be done in the future.

Basic land questions:

1. Current Zoning if any

2. Can the land use be changed?

3. What is the process to change the land use?

4. Holding Costs, what are taxes, are there agriculture exemptions.

5. What is the going rate for farm and ranch leases to get an ag exemption? In texas we are seeing $10-$50/acre/year for Ag Leases.

6. Environment issues, are there any Wetlands on my property, you can look up the national wetland interactive map https://www.fws.gov/program/national-wetlands-inventory/wetl...

7. For farm rural property loans, will be harder to come by if you want to get money out of your property, a good rule is to plan on keeping a land property for at least 10 years.

If you goal is more cash flow related, you might want to look at buying single family, duplex, triplex or quadplex properties, these are the easiest properties to finance, and there are hundreds if not thousands of lenders in this space. I think that there are lot of properties where the purchase and rehab costs will be less than 70% of the after repaired value. When you can buy properties like this, you can get almost 100% of your money out of the property, convert the property into a long term rental loan, with a DSCR Loan (Debt Service Coverage Ratio) where we as the lender look at the property and if it cash flows, and that is expressed as a ratio, for instance if your Total Loan payment including Principal, Interest, Taxes and Insurance was $1000/mo, then you would need a rent of $1200/mo and you would have a 1.2 DSCR Ratio.
Here is an example of a cheap duplex https://www.zillow.com/homedetails/732-Broad-St-Menasha-WI-5...