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Financial ideas for buying farmland in Gilroy area.


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2018 Aug 19, 11:30am   2,130 views  3 comments

by alpo   ➕follow (0)   💰tip   ignore  

So I own a ~$2M shack in silicon valley with remaining mortgage of ~$300K which I expect to pay off in next 4 to 5 years with my income of ~$220K per year. Besides that I have $50K of emergency funds and don't have any other assets. I am now thinking about buying around 10 acres of farm land just south of silicon valley say around Gilroy area (cost around $1M). In 10 years, when I get closer to retirement, I would move to the farm and rent out my big shack in silicon valley. Eventually I would leave full time work and start contracting and then retire on the farmland in middle of nature away from the crowds/traffic of silicon valley but not too far. I am ok with renting out the silicon valley shack, but not ok with selling it off.

The only way I can think of doing this is to first payoff the mortgage in next 4 to 5 years then save for a downpayment for the farm for another 4 to 5 years. I am wondering if there are any better/sooner way of doing this? Job security is an issue, so I don't want to get into a situation where I get screwed financially in case of extended job loss (say 1 year).

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1   Evan F.   2018 Aug 19, 11:46am  

At $220k/yr, your burn rate seems pretty high for only carrying a mortgage of $300k. Living in Cali is pricey, but after housing costs, it's not THAT pricey, unless you've got your kids in private school or something like that. I'm carrying payments of about $2300 on an outstanding balance of $460k on my primary house down here in the LA area (I usually add a few hundred every month on the principal), my annual take-home is comparable and I'm able to save at least $30k a year, even after my SEP contribution. At that rate, I'd need 6-7 years to save for a down payment.. so 5 years for you seems reasonable, especially without a mortgage.

Couple things to consider would be how banks treat farmland with regards to mortgages, I don't know squat about that. Maybe it's the same as an ordinary mortgage, maybe not. Also, you're basing your numbers on current land valuations.. in 5 years, it could be more. But if history is any indication, it might be less. ???
2   BayArea   2018 Aug 19, 2:54pm  

APOCALYPSEFUCKisShostikovitch says
Can you plant potatoes on the front yard of the SV shack and tie up a goat in the drive way and apply for the agricultural exemption on your taxes? Have the kids put on farmer jeans and take pot shots at cars after school while screaming 'Skeedaddle! Pesky varmints!' for added badness.


Hehehehe “tie up a goat in the driveway”
3   Automan Empire   2018 Aug 19, 3:29pm  

Keep an eye on tax sales. I picked up a nice 24 acre parcel in the Bakersfield area this way.

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