Yes, my darlings, it’s true. Thirty year land loans!
Most people cringe at the thought of getting a loan on vacant land. Historically land loans have required up to 40 or 50% down, excellent credit, strong income, and have been limited to terms such as 2 or 3 years. They’ve often had unfavorable interest rates much higher than for conventional mortgages and they almost always require an exit strategy – in other words, how are you going to pay off this loan in 2 years?
For most people, the satisfaction of this requirement has been to initiate a residential construction project (house), then upon completion, refinance into a conventional 30 year mortgage. That sounds great if you are a developer, but it’s not appealing if you are a farmer and are developing a long term strategy for an agricultural business. Tea farms for instance take at least 5 years of incubation before they reach production.
I’ve Got Good News For People Who Want to Grow Food, Not Houses
Imagine if there was an entire organization whose sole purpose was to try to help you accomplish your farming goals and give you terms of up to 30 years to do so. THIRTY YEARS! What if they also told you that they wouldn’t charge points on the loan and that they offer reasonable annual interest rates? What if they told you that they also lend on farming equipment such as tractors, processing equipment for coffee farms, loans for acquiring livestock? You would be a happy farmer, right?
The dirty happy feet of yours truly protecting a baby tea plant
Introducing Farm Credit Services Hawaii
Farm Credit Services has all the above and more. I had the great pleasure of meeting Linus Tavares from FCS today in Wailuku town. Linus was born and raised on Maui in Kokomo and now lives on the Big Island. As he grew up around cattle and farming, his role as a farm loan originator is a good fit. In between bites of an Ahi sandwich and while I pigged out on a lamb and tzatziki sandwich at Aria Wailuku, he told me that next year the organization will be celebrating 50 years in Hawaii.
Here is a bullet point breakdown of a typical vacant land farm loan from FCS:
- The loan limit is currently $1,300,000 (There are other options for larger loans – inquire with Linus)
- 30% down required on loans up to $500,000
- 35% down required on loans from $500,000 to $1,000,000
- 40% down required on loans over $1,000,000
- Good credit and income required
- Program available to U.S. Citizens and Lawful Permanent Residents (“Green Card” Holders)
- Farm Business Plan required
- No Points (Borrower pays for appraisal and closing costs)
- Vacant Land Only – this loan program is not available for properties with houses already built
First Step: Find the Perfect Piece of Land
Pictured below is agricultural land whose purchase was made possible by FCS – this gorgeous 10-acre lot in Kanaio, Maui was bought by some bee keepers who are going to create an organic bee heaven. As a Realtor Broker and farmer myself, I am always delighted to help people find agricultural properties on Maui. Here’s a link to active vacant land listings on Maui.
Contact me first to discuss lending options. If the FCS Loan isn’t right for you, I have other options available.
Liam S. Ball, Realtor Broker
Pictures below are of my tea growing operation “Na Liko Tea Farm and Nursery”