Today I REALLY miss my Dad...

[LeatherneckPA]

...so I'm going to bounce something off of you guys. In the past I would have had a sit-down with Dad and taken advantage of his 77+ years of hard won experience and old-fashioned common sense. but he went and died on me back in February.

Many of you are familiar with my situation. Nearly 50 years old and 25 days from a Federal pension (roughly $3000 a month), my wife and I have begun to seriously search for land where we can build our little farm/homestead and live happily ever after. Cindy will continue to work for 8 more years, at which time her pension should exceed mine.

Two pieces have definitely caught our eye. The first is 8.35 acres of raw land, 15 minutes from the wife's office, and with a view of the lake where I take my daysailer, which is selling for $84,000. The second, more desirable IMHO, is 16 acres of gently sloped land, with a small pond on it and a year round stream feeding it, a small shed, and a 14' x 60' mobile home, including a well and septic system already in place, for $114,500.

My thoughts are that I would be getting twice the land, a well and septic, plus temporary housing (for while I build our timber-framed house). Well DUH!!! That part seems pretty easy doesn't it?

Now, here's the question I would be laying out for Dad, if he were here. We seriously screwed our credit up with plastic before I got wise. We are just digging out from under that and really would not be able to get any approval for a conventional mortgage. We can't sell our house until we have somewhere to move to, and we can't buy somewhere to move to while we still carry the mortgage to this house. My TSP only has about $150k in it. I was wondering if anybody thought it would be ok to take that lump sum and buy our land, move onto it, and then put our house on the market for a quick sale. We are different than most in that we aren't trying to make a mint on the sale of the house. As long as we cleared the mortgage, and maybe had a little bit left over to start the new house we'd be happy.

I'm thinking that it might not be that big of a deal since the balance is pretty small (compared to most of you) and since we will both be pensioned for life. To my way of thinking the most important part will be that we won't owe anybody for the house/land we live in/off of.

Or am I just talking myself into this because I so badly want to start our homestead?

[Deberosa]

Have you thought about making an offer that is contingent on the sale of your home? That's how I nailed down my place. I made a contingent offer. What that means is that if they do get another offer that you have what's called "first right of refusal" or in other words the right to buy the house outright at that point or they can take the other offer but you have that choice at that time.

Now the trick is quickly selling your house before someone offers on the one you want. In my case they took an offer 20K under their asking price which put the lower price out on the internet and offers came pouring in!!! At that point I lifted the contingency and crossed my fingers that my old place would sell in the time it took for the financing to get approved and I didn't push the bank -let them take the sweet time they love to take in doing appraisals and such. It worked. I didn't get top dollar for the old place but I got enough to get out and that is what counted to me. If you made a full price offer, you wouldn't get the big rush like I did.

You could have your other option as plan B but I can't say if that's a good idea or not.

They might even take a couple thousand extra to reserve the place until you sell yours within a certain time frame(no first right of refusal). Remember everything is negotiable. Do you know if this has been for sale very long? It's likely people are not interested in a single wide, people didn't like the tiny house on this place or the brambles covering much of the land - so it sat empty for a year before I came along! Get your realtor to talk to their realtor about what the seller might take as an offer in your situation and you may come up with a workable deal.

Good luck!

[msta999]

Like Debbie said. That is how we bought our second house. I would leave the TSP, if nothing else, there will be other pieces of property. If it is ment to happen, it will. Of course......there are somethings worth taking a chance.

Good luck. :-/

[SunRiverMan]

Unless you plan to work until you die, I would leave the pension alone. *There are places that will finance you, even with bad credit, you just have to find them. *Just make sure you get a fixed loan and refinance as soon as possible, usually 2-3 years.

Another option is place your personals in storage and rent a small apartment until you can buy some land. *You never said how much equity you had. *Maybe that could go a long ways on improving your credit by paying off those you owe. Do you have to retire now? *It is better to have employment while doing these things.

If the plan doesn't work there will always be more land. *Save your pension or you will be even less credit worthy than now. *SRM out!

EDIT- On second thought I wonder why I am even giving financial advice. I would go for using my TSP and having a paid off homestead. Make sure you file the homestead with the county for any protection it gives. I can't believe I said that, except having your home paid off goes a long ways. It still costs allot to live nowadays with taxes and fuel.

[Catalpa]

Sorry to hear about your Dad. I'm so blessed in that I still have my Dad and his 70+ years of advice - and yet I went against some of his ideas when I got my property. I had fantastic equity in my house, and used a new mortgage to purchase my ten acres. Now I have to finish remodeling my house and sell it before I can move to my homestead. In Michigan's tanked economy, that could be a long while.

How is the economy where you are? Could you have a reasonable expectation of selling your house quickly?

The smaller parcel with the view of the lake, will it be remote and quiet enough, and will the zoning remain stable? Around here, the lakeside/lakeview properties are constantly being split up and developed in the constant search for the almighty dollar. You may end up surrounded by high rise condos or something.

The larger parcel sounds good - especially since it has the trailer to live in while you build the house.

Are your pensions protected? Is there any chance that they could go the way of Enron and the like? In that case, I'd say do what you need to buy the property outright. Maybe you could even negotiate a lower price for a cash sale. But once you own the property, you have to consider how you will pay taxes, utilities, and food without the pension income. If your pensions are guaranteed, it may be wiser to make a contingency offer on the property you want, and put your house on the market.

If it was me, I'd look at selling the house, even if I had to rent an apartment or someting for a bit until I could close on the new property.

I know I'm not nearly as good at giving advice as my Dad, but hopefully you have some ideas to think about. Good luck to you!

[CarolAnn]

I can't get used to land being sold for more than $7,000 an acre.

In your place, I'd give serious consideration to buying the 2nd place outright.

You'd still have a bit of a cushion left, and could add back to it when your present place sells. If worst comes to worst, you wouldn't be in danger of loosing everything if it took quite a while to sell your present home.

How is the driving distance for your wife from the second place? That might be an issue if she has to work for 8 more years.

Before you buy either one, check into your local utility, and see if they have published a 10-year plan. Those show future utility lines that may cause you problems later.

How about soil? Do you have lots of shallow-rooted trees (such as red cedar) that may indicate surface bedrock?

Is the water good and accessible?

Have you checked zoning regulations, or lack of them?