Metcalf Land Company, Inc.

Financing Rural Property In 2010

I am guessing you are like me in that I am tired of the gloom and doom mentality that has dominated 2009. The truth is that there are always opportunities for those who are prepared. Often poor economic conditions offer those who are prepared the very best of opportunities. So how does this relate to financing rural properties in 2010?

It is true that many lenders have basically closed their doors to new business. In other instances they have tightened credit standards to the point that the average person has no chance to qualify for financing. For my company, AgSouth Farm Credit, 2009 has been full of positive results. The reason is that we have continued to search for good, new business as much as we have in the past. Have there been changes? Absolutely. But changes have been in the normal course of business and not knee-jerk reactions and over-reactions.

So what can you expect as you consider financing the purchase of a farm, timber property or recreational timber tract with AgSouth in 2010? Pretty much the same as you would have expected in 2007 and earlier. There is one exception. At the time of this writing interest rates are significantly lower than they were in those better times. From my own experience, interest rates are lower now than at any time during my 27 year career.

Most lenders are hesitant to loan against unimproved real estate during the best of times and usually limit loans to less than 60% of appraised value. At AgSouth we are still routinely lending up to 75% of value and, depending upon the customer's qualifications, financing may be available up to 85%. Customers can still expect amortized loan terms on fixed interest rates for up to 20 years.

Additionally, consider this:

• AgSouth is a cooperative
• Being a cooperative means that we are owned and directed by the customers who borrow from us. 
• Our net earnings are refunded annually to our borrower/members and history indicates that we refund more than 25 cents of every dollar a customer pays us in interest.

The fact that we are owned by the people who borrow from us is one reason that we remain focused on lending to and assisting our customer base. It is also a reason that our programs are focused on being the best for potential borrower/members like you.

So why wasn't 2009, and why won't 2010, be a good time to purchase the land that you have always wanted? I can't think of a reason. Don't be discouraged by all of the negative talk you hear. AgSouth is ready to help you finance your real estate purchase. In terms of land prices and interest rates there may never be a better time.

Contributed by:
Daryl Griner
Regional Vice President, AgSouth Farm Credit
(864) 585-0344