# Which tract for my new homestead?



## RobRock (Mar 24, 2018)

I really like what I see so far. I have watched this farm for sale for some time now. I can't buy the whole farm but the tracts have now been subdivided into manageable blocks of 23 - 37 acres and each include some woodland. The 5+ acre tract and the 2 acre tract are a little too small for my needs. I can get financing for about $2500 per acre but not a whole lot more than that. I'm leaning towards the 37 acre tract and hope the cost per acre doesn't go too high.


















City water available, nice community as far as I can tell. I'm visiting the place this weekend if all goes well.


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## Cabin Fever (May 10, 2002)

Maybe this soils report will help with your decision: Soils Report for Robrock


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## Vjklander (Apr 24, 2018)

I wouldn't buy a property without natural access to water.


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## crehberg (Mar 16, 2008)

Personally, I've been screwed before by lack of road frontage. I would not go with the #1 tract if it was me.

(Here in my county in GA, you are now required to have a minimum 250 ft of continuous road frontage per home. Again, the rule went into effect and put me in a royal bind. Got it worked out for now, thank goodness!)


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## GTX63 (Dec 13, 2016)

Just an fyi which you may already know, there is a 10% buyers premium on top of whatever the final tally is on the parcels, and property taxes are due for 2019 and are the buyer's responsibility.
I'm going to throw out about 2 1/2 cents worth of thoughts-
Whoever buys parcel two is going to buy parcel three, and maybe four, and it will likely be a local farmer. Locals know all about this ground, you can be sure of that, and they will be there on sale day.
If it were raw land I would say it might fall into your budget, but if it is being used for ag and/or has a current lease, it will go for more.
I would be curious about utility service to tract one with the narrow access which doesn't appear much wider than an easement.


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## Michael W. Smith (Jun 2, 2002)

Wow!! Talk about irregular shaped properties!!

My opinion is someone is going to buy all 5 parcels to keep it together.


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## AmericanStand (Jul 29, 2014)

Pretend the lines were not on the picture. Then considering your budget and your desires where would you draw lines for the parcel you would really like to have ?

What is the notch on the left


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## TripleD (Feb 12, 2011)

I've seen sales like this before. They sell off each tract then total the amount. They add 10% to the total and some one buys it all.


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## RobRock (Mar 24, 2018)

Thanks so much to all for the observations and bringing important issues to light. Let me add....

To Cabin Fever: I'm impressed with your skillset! I plan to utilize the soil report for this property and of course the next candidate property if I'm unable to buy at this auction.

To Vjklander: Water is vital. The notch on the left side of tract 1 evidently crosses the creek, although I need to verify. One of the tracts has a large natural spring but I do not yet know which.

To GTX63: Ouch. You are right about utilities. If I purchase Tract 1 with its 40' frontage, and overhead powerlines require a 30' wide easement, this very likely mandates underground utilities along the 40' wide frontage. Much expense to be considered.

To all gracious enough to share comments: Thank you ! Like other commenters here, I have seen auctions where the individual Tract "sales" are just the warmup for the grand finale.

I have announced my budget and financing limits in this post which would appear to be a very poor strategy if competitive forces are to be considered. My notion is, the opinions and issues brought to light by the commenters replying to my post make the risk worthwhile.

I will be sure to post the sale results after I lick my wounds at the end of this month.
Thanks to all again!

P.S. I was almost expecting a comment from Alice In TX/MO, she always has good insights to share.

Robrock


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## GTX63 (Dec 13, 2016)

I wouldn't consider making your budget public a poor strategy. I buy thru auctions frequently and knowing what my competition will do may be interesting but it very rarely affects my final offer.
You can likely make a call to the auction company and ask how they plan on presenting the parcels. That may save you the drive time if their process doesn't suit you.
Just from experience, I know that many auctioneers will notify their select "buyers" ie auto/equipment dealers, store owners, realtors, etc when certain items are coming up. As they are responsible to the seller, they will do everything they can to hike the price.


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## AmericanStand (Jul 29, 2014)

Once again I’d like to ask if you were drawing the lines to divide this property how would you draw the pieces and you were interested in?


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## Cabin Fever (May 10, 2002)

It would appear that the property is currently divided into three parcels:
047-6-0-23, 047-0-0-35, and 047-0-0-36.









According to the county, the assessed land values are:
047-0-0-35 (50 acres) $15,000
047-0-0-36 (35 acres) $12,500
047-6-0-23 (41 acres) $27,500

You can research this and other information for yourself at the following web addresses:
https://qpublic.schneidercorp.com/A...&PageTypeID=1&PageID=8416&KeyValue=047-6-0-23

https://qpublic.schneidercorp.com/A...&PageTypeID=1&PageID=8416&KeyValue=047-0-0-35

https://qpublic.schneidercorp.com/A...&PageTypeID=1&PageID=8416&KeyValue=047-0-0-36


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## RobRock (Mar 24, 2018)

To AmericanStand : Now you've got me thinking..... If I could select any 30 acre parcel, I would very likely take a mix of woodland and row crop land with the maximum amount of road frontage. Cost for development of roads and utilities rise very quickly once you leave the blacktop road. If I owned the whole farm and was selling tracts, I guess the elongated tracts as they are shown now might generate the most interest. I really would like to have a natural spring though, as Vjklander pointed out. I think I will try to get down there and walk the property this weekend and maybe I'll have a better feel for what is being offered for sale.

To Cabin Fever: Once again, I'm impressed with the extension of your skills. Since "imitation is the sincerest form of flattery", I'm adding this new found knowledge you have presented in this forum to my own limited set of skills . 

Here is a real estate "zinger" regarding the County Property Valuation Administrator's assigned land values in Kentucky (loosely translated by me). If it is less than 10 acres, the PVA assigned value will likely be the total cost at the most recent transfer of deed, with periodic reviews to attempt a reflection of fair market value. 

More than 10 acres and utilized for agricultural purposes, the property might actually be valued at the County's established rate for agricultural land. Say for example, the County agricultural appraisal rate for timber land is $500/acre, row crop land at $1,500. Purchase 9 acres at $3,000/acre and you will very likely pay an annual property tax on $27k, hard to argue that that is not the fair market value if you actually paid that much.

Purchase 25 acres of timberland + 25 acres of row crop land for $3,000/acre ($150k total) and you might be eligible to be taxed at $12,500 + $37,500 for your 50 acre purchase. I think rich people may have thought up this taxation method. For a much more accurate summary, a Ky Revenue Cabinet link is provided...

https://revenue.ky.gov/Property/Pub... for Legal Opinion re Ag Value - 6-6-2016.pdf

To GTX63: I tend to agree with you regarding potential bidders such as myself. The person with the strongest attachment to the property and a flexible budget will in the end purchase the property at any given auction. I think I'll follow your suggestion and speak informally with the real estate guy.

Thanks to everyone !

RobRock


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## Wolf mom (Mar 8, 2005)

Never ever buy a land locked property. #1 (37 acres) access looks like it's a utility easement not a road access.

I'd never by from an auction like this. It's not a government bankruptcy auction - just a realtor trying to drive up prices by competitive bidding and possibly land that won't sell any other way. Find out the history. Has the property been on the market for a while maybe in different parcel sizes? There's ads around here for waterfront land on a lake - sounds a lot like the same sales tactic with a similar brochure.

Check out water depth and cost of drilling a well. Not having your own spring shouldn't be a deal breaker if you have a good well. I went 150 ft deep and got the sweetest water with a strong flow year round.

BTW: if you do buy one of these properties have, it surveyed by the seller and each bend and angle staked. It'd cost an arm and leg to survey it.


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## GTX63 (Dec 13, 2016)

RobRock said:


> To GTX63: I tend to agree with you regarding potential bidders such as myself. The person with the strongest attachment to the property and a flexible budget will in the end purchase the property at any given auction. I think I'll follow your suggestion and speak informally with the real estate guy.RobRock


I could give you stories from funny to horrible all day but two quick ones happen fairly often.
The first involved me driving 3 hours to an auction years ago. I thought I had done my homework, knew the values, knew the area, knew the guy died and the widow was ready to move in with her kids.
What I didn't know was that the auctioneer already had 2 investment/flip realtors lined up and three local farmers who had decided one of them would be the owner of that property at the end of the day. Nothing underhanded, just locals being locals.
For my time that day I went home with some old rakes, a bread maker and some hydraulic oil for my tractor.

Last summer, I was at an auction buying tractors and implements. A very rural location, 47 rolling acres with timber, pond, pasture, hog barn, pole barn and two other outbuildings. A 2 story farm house with a new kitchen and bath. The views were spectacular.
The high bidder was at 125k at the last call before the farmer next door jumped in and stole it for 133k for his son.
The thing about land auctions is that 50 acres can be worth 160 on the open market, and folks will go to an auction and refuse to budge off 110 because by gawd, because.
If you are maxed at 2500 per acre, then you shouldn't feel bad if you lose out, knowing you bid what you had.
Personally, I have found the best deals to be those that need a little perfume and lipstick.


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## Cabin Fever (May 10, 2002)

Speaking of water wells, the following link gives you the record of the water well about 1/4 mile north of the properties in question: Well #00019936 (see map below)









And, here is info on a water well about 3/4 mile to the southwest of said properties Well #60001069 (see map below)


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## AmericanStand (Jul 29, 2014)

GTX63 said:


> I could give you stories from funny to horrible all day but two quick ones happen fairly often.
> The first involved me driving 3 hours to an auction years ago. I thought I had done my homework, knew the values, knew the area, knew the guy died and the widow was ready to move in with her kids.
> What I didn't know was that the auctioneer already had 2 investment/flip realtors lined up and three local farmers who had decided one of them would be the owner of that property at the end of the day. Nothing underhanded, just locals being locals.
> For my time that day I went home with some old rakes, a bread maker and some hydraulic oil for my tractor.
> ...


I have been to more than one auction where brothers and sisters were pretending to sell just to get an idea of the actual value. 
At the last one after they came back with a no sale on all of the parcels both separately and collectively one of the serious bidders asked what it would take to buy ? a second one stood up and said yeah and a third one agreed with him when the brothers and sister would not indicate an amount a fight broke out. 
That was kind of neat because this was in the village hall which would also be technically the Village police station


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## AmericanStand (Jul 29, 2014)

I refuse to attend sales have a bidders premium. 
Since the person hiring the auctioneer has no incentive to keep that premium down I’ve noticed buyers premium’s tend to be about twice what sellers premiums are


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## RobRock (Mar 24, 2018)

To Wolf Mom: I had not thought of a drilled water well. Thanks! The more I see when reviewing costs for pumping from a developed spring, a drilled water well can likely be placed very near where I will actually need water at similar cost. Good option, I think.

To AmericanStand: Thanks for the comments. Should fisticuffs break out at the upcoming auction, while everyone else is grabbing their cell phones to capture the moment, I will shuffle off to the truck. I'm with you regarding buyer's premiums, in this case 10% of the high bid (I hesitate to call it the "winning" bid). In my case I will have little choice but to do the math and subtract the premium from my max bid.

To Cabin Fever: Once again, I am preserving the references (with links) you have provided in my "due diligence" folder. With your help, my digital toolkit is looking pretty impressive . I find the information provided to have considerable value. My wife is beginning to think that I am a smart guy. Thank you !

To all: Each and every comment really helps me to understand the options available . I may have a follow up report with observations to share after my site visit if this group of well informed individuals would care to listen.

Thanks to all once again !
RobRock


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## Mike in Ohio (Oct 29, 2002)

We bought our first 21 acre parcel at auction. We've since added 4 more parcels to our place. If that area is what you are interested in then attend auctions in the area even if the properties aren't exactly what you want. Over time you'll get a sense of what various features (hunting ground vs cropland, different types of water features, road frontage vs flag, value of improvements like a house or outbuildings, fence/cross-fenced, etc.) are and how they impact valuations. You'll also probably notice that if there are two auctions at the same time it can impact (lower) the bidding. Auctions are also a social event for locals so make the effort to speak with people. You might learn of unmentioned problems with the property, what the neighbors are like, etc. Just a few thoughts.


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## RobRock (Mar 24, 2018)

WHAT I HAVE LEARNED...

I visited the auction site and spoke with one of the realtors by phone. Each tract held certain interesting features and bottom line is, for my use the cost per usable acre will likely outweigh other factors in the decision making process. If my self imposed budget is exceeded I will not be buying property later this week.

' New to me ' terms I heard from the realtor include "developer interest" and "hard asset investor". Likely effects from "developer interest" will be inflated bids as a developer can pay more for raw land since his returns are likely to be quickly realized. I got the distinct impression that a "hard asset investor" would typically be a cash buyer seeking higher return rates over time when compared to bank deposits which are essentially zero. I guess a successful bidder could fulfill both roles at the same time. My interest is to own land to live on within my means to pay for (eventually).

A revelation and lesson learned follows.

Forum member "Cabin Fever" posted the three recorded property summaries from the local Property Valuation Administrator (thank you) . The present owner, over time, had purchased three tracts totaling 126 acres according to the deeds furnished to the PVA.
The auctioneers had the property surveyed. The three tracts totaled only 105 acres. Where is the remaining 20 acres? As it turns out, each of the three separate tracts had deed calls that overlapped the adjacent properties.

As other forum members pointed out, an archaic survey or deed description can be troublesome and downright costly. I'm glad a new survey was commissioned.

Once again, many thanks to the forum members who have shared their knowledge and experience to those of us who lack both.

RobRock


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## GTX63 (Dec 13, 2016)

Yes, a hard asset investor today would see all of the folks fleeing urban/suburban locales. He notes the number of people interested in the current hot trend of homesteading. This and the population boom marks land as a potentially high return investment over time.
I see land buyers who do nothing but seek out large parcels in order to make and sell small parcels.
There is something to be said for putting your money into dirt rather than vaults.


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## AmericanStand (Jul 29, 2014)

crehberg said:


> Personally, I've been screwed before by lack of road frontage. I would not go with the #1 tract if it was me.
> 
> (Here in my county in GA, you are now required to have a minimum 250 ft of continuous road frontage per home. Again, the rule went into effect and put me in a royal bind. Got it worked out for now, thank goodness!)


What is the idea behind it 250 foot requirement


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## Mike in Ohio (Oct 29, 2002)

RobRock said:


> WHAT I HAVE LEARNED...
> 
> ' New to me ' terms I heard from the realtor include "developer interest" and "hard asset investor". Likely effects from "developer interest" will be inflated bids as a developer can pay more for raw land since his returns are likely to be quickly realized. I got the distinct impression that a "hard asset investor" would typically be a cash buyer seeking higher return rates over time when compared to bank deposits which are essentially zero. I guess a successful bidder could fulfill both roles at the same time. My interest is to own land to live on within my means to pay for (eventually).
> RobRock


A "hard asset investor" invests in things like real estate, commodities, energy and other tangible asset as opposed to soft assets such as stocks and bonds. This does not mean that they are cash buyers. In many cases they borrow to make the purchase as a way to increase returns. It is not a a function of bank deposit rates per se. A lot of hedge funds invest in farmland because returns have been good over time (at scale). Another factor for interest in hard assets is a low correlation with the stock market. This reduces beta (volatility) in the overall portfolio.

Mike


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## crehberg (Mar 16, 2008)

AmericanStand said:


> What is the idea behind it 250 foot requirement


Basically a bunch of bureaucracy rearing it's head. The zoning commission claims it ensures clear access to each residence without the concern of easments. I think it's just a matter of them wanting to hurt the "little man".


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## AmericanStand (Jul 29, 2014)

So Can you create a road on a 50 foot wide easement run the 250 feet into the property and then donate the road to the bureaucracy?


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## crehberg (Mar 16, 2008)

AmericanStand said:


> So Can you create a road on a 50 foot wide easement run the 250 feet into the property and then donate the road to the bureaucracy?


Nope. Been there, tried that. The wording of the rule says it must directly abut an existing "public way". Basically, if your property doesn't already have a residence (existing easements are grandfathered in)or you don't have the direct road frontage you're royally screwed.

And this is in rural South Georgia! Bull honkrey!


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## AmericanStand (Jul 29, 2014)

Once you donate the public way it will be existing after that you can build the house !
I’m not sure such a law would be legal I’ve seen a few different states that tried to make it illegal to build on lots that were too small and basically courts ruled that you can say that for upcoming but not for something that’s already happened.


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## AmericanStand (Jul 29, 2014)

Now take a look at my Can you defend your self thread for thoughts on whether you can defend your rights


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## Michael W. Smith (Jun 2, 2002)

RobRock said:


> WHAT I HAVE LEARNED...
> 
> A revelation and lesson learned follows.
> 
> ...


I highly doubt the auctioneers had the property surveyed. My guess is the landowner had it done to determine exactly how many acres were there. Hard to tell when the last time was any of those parcels had an official survey done (if ever). Those old time surveyors just didn't have today's modern technology - so it was just as easy for them to be wrong on how many acres were actually in a parcel. (The surveyor could say there are 15 acres in this parcel - but having a new survey done with today's technology could indicate there are only 11 acres there. Of course, it could go the other way too and find out there are actually 17.5 acres.)

My guess is the landowner had a new survey done with markers in each corner. If you would happen to buy a parcel, chances are it would be a good idea to hire the surveyor who did the survey to come back and mark the entire property lines for you.

I hope you have good luck and get the parcel(s) you want, but my guess is you will get outbid if you even get into the bidding at all. At any rate, have fun!


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## RobRock (Mar 24, 2018)

I was outbid, frequently too !

Thanks Michael.... unfortunately, your forecast was spot on accurate. Thanks to each and evey forum member providing insight into the process. I will summarize the auction event with a loose description of the final numbers which do not include the "'buyer's premium" of 10%. 

Tract 1 bidding- Low initial interest, high bidder at $2,200 per acre. Well within my range but I did not bid on tract 1, I found Tract 3 to lay much better for my purpose.

Tract 2 bidding- Low initial interest, high bidder at $2,300 per acre. Again, within my range but I did not bid on tract 2, I was kinda set on Tract 3.

Tract 3 bidding- Again, low initial interest, high bidder at $2,500 per acre . I think I was the high bidder for quite a while.

Tract 4- Similar interest and bidding, price per acre actually higher for the smaller tracts.

Final analysis: The auctioneer went to work grouping various tract combinations after setting the values of individual tracts. Tracts 2 & 3 were combined and sold for a higher dollar ($ 170k) than the individual tracts brought at initial bid. The purchaser (wisely) did not even bid on tracts 2 & 3 separately, evidently he knew what he wanted and did not want to run the individual tract price up. 

Tract 1 sold for approximately $70,000 and tracts 4 + 5 combined sold for less than $25,000.

The seller looked pretty happy and the buyers appeared to be satisfied.

Lessons learned: a. The deepest pockets trump those of us on a budget.
b. Don't bid against yourself if you have the resources to combine tracts later in the auction.

The search continues.

Again, thanks to all.

The search continues.

RobRock


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## Michael W. Smith (Jun 2, 2002)

I'm surprised that all 5 tracts didn't go to just one person.

Any idea on what the people who bought the tracts are doing with them? Farming them or actually going to build on them?

This one wasn't meant for you. You will find your place at some point.


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## AmericanStand (Jul 29, 2014)

Now that you have a better idea of what things are worth don’t be afraid to make an offer offer on property’s that are not formally for sale.


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## RobRock (Mar 24, 2018)

to Michael and all: Thanks for the words of encouragement. The journey continues.
As far as I can tell, the purchasers either lived adjacent to the tract(s) they purchased or expressed plans to build a homestead. 

I heard one comment from several folks attending the auction..... the very narrow (essentially one lane) county road to the farmland which extended for a couple of miles adversely affected the competitive bidding and of course the price. Close to town, yes, but connected by a road that would not be "family friendly" . This squelched "developer interest" and reduced the attractiveness of the properties for upscale homes. Seemed to be satisfactory roads for a new homestead though.

Again, thanks to all !

RobRock


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## AmericanStand (Jul 29, 2014)

That’s something to keep in mind when you look for property. 
And right now is great looking for propert weather !


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## AmericanStand (Jul 29, 2014)

Do you live in the area you want to live in ? Do you visit it regularly ?
Go to church theee meet some folks , put the word out you are looking.


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