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FINANCING FOR RURAL LANDOWNERS
IT IS VERY IMPORTANT TO KNOW THE RISKS OF LAND OWNERSHIP
Living in rural Montana can be very rewarding. It is very important to understand the risks of rural landownership. If you need to borrow money to purchase a home and acreage, you will soon discover that lenders have a different method of determining the valuation of a home that includes an acreage. Appraisals are done differently and appraisers take a hard look at easements, pollution potential, and a number of other items that are not in a loan package for an urban home.
You will also find that the number of lenders that typically loan on acreage and a home is considerably less than urban homeowners enjoy. Since the competition is down, the interest rate may be up. For those rural landowners wishing to purchase livestock, machinery and other assets may find themselves visiting with an agricultural banker. These bankers will want a balance sheet, income statement and perhaps a cash flow statement. You may also find yourself seeking an operating loan since your income per month is considerably different than having a steady paycheck. Agricultural businesses tend to have one or two big paydays with a lot of days spent using someone else's money.
Another issue that faces all agricultural producers is determining the cost of machinery. Machinery is expensive to purchase, maintain, and operate. You may be better off to employ the services of a custom operator or a neighbor to harvest hay or grain crops, and various farming operations. This may be especially true if you are holding a job in addition to part time ranching. No matter what your situation is, you need to be aware of how much is costs you to put up a ton of hay or prepare an acre of ground for planting. The spreadsheets on the right navigation bar will help you determine those numbers.
Now that you have made this purchase you may also be interested in protecting your assets This page provides you with information on those subjects.
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