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One more thing about a higher-interest loan:

Financing the new property at 9.5% with 60% down will give us a payment we can afford ($600-$700 / mo with taxes and insurance), allow us to improve our credit and finances, which would then enable us to refinance a year later at a lower rate.

There is a cosmic shift occuring in American agriculture, and it should have happened decades ago. Micro-farms and community-supported agriculture (CSA) are popping up everywhere, due to skyrocketing demand for organic, locally-grown food. The demand is a result of subsidies for corporate mega-farms and produce grown overseas under God-knows-what kind of conditions, both of which have contributed to the demise of the independent farmer. People are re-learning the art of growing efficiently on smaller parcels with nature, not against it.

I believe these are the types of farms that generate the most interest for "agri-tourism". My wife and I sell plants at a local CSA in Tampa. Visitors are always blown away to see a 6-acre organic farm in a city of over 1 million people. The demand for their produce vastly outweighs the supply, and people show up week after week just to spend time in such an amazing oasis.

We're currently planning on getting a property with just under 2/3rds of an acre so we can expand our nursery business (we grow native plants and potted herbs) and get into growing organic herbs for local restaurants. The demand of restaurants for harvested, fresh herbs is huge and the local precious few local growers can't even begin to supply enough product for everyone.

Anyway, eco-tourism, agri-tourism, micro-farming, CSA's, and organic growing are exploding right now and, in my opinion, they all go hand-in-hand.

I'm currently looking for advice about selling our home and buying this new property in the following thread:

http://forums.biggerpockets.com/viewtopic.php?t=3579

I would appreciate anyone and everyone's advice!

Thanks,

Josh

Thank you for your advice. Here's some more info:

We bought our current home when I was working as a programmer and earning ~$52k / year of verifiable income. I've since left that profession because I wasn't allowed any spare time and it was killing my marriage and home-life. My opinions on American life and working 9 to 5 (or in programmers' cases, 9-9) are probably radical in a place like this. Basically, I feel that working for some else with the "promise" of being taken care of is essentially a lie. I have no faith in the wealthy of this nation to treat me fairly for the work I provide. I'm purely independent now, working as a landscaper and selling plants (starting a nursery business). This is really hard with a 55x120 ' city lot with a 1400 sf house on it. So, we want to take the equity in our home and put a lot of it into a cheaper property, giving us a smaller mortgage. The plan is to live with much less debt, not more.

With more land, we'll be able to make more off of our plants and expand our business to give us the income we need, meanwhile lowering our monthly expenses.

Selling our home will not be a problem. The area market has seen a slowing-down since last year, but things are still selling and our figure of $265 is lower than what we would have sold for last fall. We might even go as low as $250, which is a bargain for this area, to get a quick sale.

All Cash: I appreciate your advice. It is, without a doubt, great advice. However, we're weird people in a weird situation with weird goals. If we were to sell our house first, where would we live afterwards with our pets? Tens of thousands of dollars would be poured down the drain into a rental, I would have to go back to working 60+ hours a week and thus toss away any hope of gaining independence. During that time, the property we really want would probably be sold and we'd be back to searching for a suitable property. Until we find a new place, a lot of the money from the sale of our house would be pissed away on rent and other expenses, requiring us to borrow more for the property we find, bringing us right back to the situation we are currently in. Obviously, refinancing first and all that would have it's own expenses, but at least we'd end up with the property we want. In the end, we'll only do it if it fits our bottom line.

I brought up the idea of refinancing our current home just as a temporary solution to buy the property we want, with the intention of selling our current home ASAP after closing on the new property.

In a nutshell: We need a smaller house with more land and a smaller mortgage payment than we've got now. We'll be buying it with about 60% down.

I know some of you will see my comments about working for corporate America as an afront to your own ideology. Although you may feel my opinions are counter-productive, I ask you not to debate about the virtues of capitalism. Let's start that discussion in another forum. :wink:

Wesley: Thanks for your input. We'll be leaving most of the furniture in our current house so we don't have to move it, and so the place looks furnished when people see it.

Thanks again for your advice, guys! Keep it coming!

Josh

Hi everyone. I'm not much of an investor, but my current home has appreciated a lot in 5 years so I suppose I qualify. :) I have a couple questions for you guys, but first let me explain my situation...

My wife and I would like to sell our home worth about $265k and we found another house that we really like for a very firm $150k. We're not able to afford our current house payments and would like a larger lot & smaller home. We owe $108k on our home now (FHA 30 mortgage 7.25%) and would like to put $85k or more down on the new property. This would give us a much smaller mortgage bill and make our finances much more workable. We both have pretty bad credit from our current house's foreclosure. It has been reinstated, so it's no longer in foreclosure, but we want to sell it and get into something we can afford. Our income is only about $30k / year and not much of that is documented.

So, here's the main issue: We'd really like to buy the new property and move there before selling our current home. It will be much easier for us and allow us to maximize the selling price by finishing up some cleaning and repairs. The seller is unwilling to do any creative financing to accomplish this and doesn't want to commit to a long contract to allow us to sell our home before closing. We've got $150k+ in equity and it just seems like there should be a way to pull enough of it out to put $85k down on the new house (mortgaging the remaining $65k) before we sell the current one.

I'm guessing this is kind of how it would have to go...
1) refinance home for $210k, leaving ~$95k cash
2) $85k down on new home, finance $65k (9.5%? :crazed:)
3) sell 1st home and pay off the $210k

That would mean about $275k financed until we sold our first home, far beyond what we could make payments on. I guess the big question is: Would any lender give us a loan for the initial refinance, knowing our credit is pretty bad (foreclosure in last 6 months) and our income rather low? Are there any lenders who do such loans for a short-term, knowing we'd sell our house shortly after refinancing (hope that makes sense)? Is an equity loan a possibility?

If closing on the new house before selling our home is not feasible, we'll just offer a 45-day contract and see if we can sell our home by then (assuming she accepts the contract).

I know this is probably a long-winded post and I probably didn't explain everything 100% correctly, but any ideas you might have is greatly appreciated.

Thanks!!

Josh