Joshuajayg
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I appreciate it. Is an inventory of wisdom similar to "kudos" people keep giving away? You know, something that is cool to have but you can't actually spend? Kinda like a Beech Duke too.
Just kidding.
Off-grid financing
- Thread starter Joshuajayg
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Just kidding.
Just anectdotal. The few people I know who got wild hair with the off-grid thing were mid-career or retirement age and either didn't need a bank or had other collateral.
Having worked in a rural area, I am well aware that there are different kinds of off-grid dwellers. We had some who were off-grid in their trailer at the end of a gravel road because the co-op took down the pole transformer due to unpaid bills.
denverpilot
Tied Down
I don't get the desire to be "off-grid" anyway. I'd rather have two. 
The current grid out here is pushing close to less than "one nine" on the high-availability scale. Last year was definitely 99.8% availability or slightly above.
Having had to build stuff to "five nines" in past job roles, the commercial electric grid in my rural area sucks at HA.
Did I mention I want it for the same price, too?
The current grid out here is pushing close to less than "one nine" on the high-availability scale. Last year was definitely 99.8% availability or slightly above.
Having had to build stuff to "five nines" in past job roles, the commercial electric grid in my rural area sucks at HA.
Did I mention I want it for the same price, too?
Most home finance companies sell the loan to Fannie Mae or Freddie Mac. So if you don't meet their specs, its impossible with them. And because of the over borrowing that was a cause of the great recession of 2008, the specs have gotten tighter. Anything less than perfect credit and they dont like appraisals unless they are LOW.
Financing is always possible if you have enough income or assets to qualify. Its all about the buyer's credit worthyness. If you make or have enough you can get a loan. Sometimes it seems that they dont lend except to those that don't need it. If things are tight, it can be very difficult to qualify. If you have millions, and only want to borrow thousands, well there you go!
Financing is always possible if you have enough income or assets to qualify. Its all about the buyer's credit worthyness. If you make or have enough you can get a loan. Sometimes it seems that they dont lend except to those that don't need it. If things are tight, it can be very difficult to qualify. If you have millions, and only want to borrow thousands, well there you go!
Joshuajayg
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After a conversation with Mr. Holland on the phone, he said owner financing isn't impossible with a large down payment. He encouraged me to still try and make other financing means work but if not, he might be able to finance part of it.
I have three people willing to help with the down payment who personally know my wife and I. Looks like a non-federally insured loan is what we might do. There is also the possibility of a 7 year unsecured loan for part of the balance as long as interest rates and terms are right.
I have three people willing to help with the down payment who personally know my wife and I. Looks like a non-federally insured loan is what we might do. There is also the possibility of a 7 year unsecured loan for part of the balance as long as interest rates and terms are right.
Joshuajayg
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True, but short term sacrifices for long term gain. I'm not going to involve four different parties. If I have to involve the seller and a financial institution, I will. I will stop at two parties either way and limit it two just one if at all possible.
Stewartb
Final Approach
You'd better find out about insurance. If you borrow money against a property the lenders will require you to insure the asset. I know you said you didn't care about insurance. Lenders will.
Ted
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iFlyNothing
Depends on who the people are. There are some people with whom I wouldn't worry about it at all. There are some people who I wouldn't borrow from at a 0% interest rate.
IS either of those parties ok with the other party having a higher ranking security interest in the property ? If you get seller financing and a bank loan, the seller may lose everything if you default on the bank loan and the bank forecloses on the property. Otoh, if the seller keeps a security interest in the property, I doubt the bank will loan you much on it.
In every mortgage I have ever taken out, the lenders were real sticklers about the source of the funds used for the downpayment. Some of that may have just been fannie-mae regulations, but the logic behind is that they don't want you to be obligated to someone who can ensure payment from you through undue influence (ex-wife keeping your kids away, Vinnie and Luca with a baseball bat).
Have you given some thought to selling your aircraft to have some cash in your hand to get a roof over your head ?
Joshuajayg
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If I am able to get a regular mortgage, I can pay the down payment out-of-pocket. If I finance the place through other means, all my other options are well within the lenders' guidelines. Good question though.
If the owner finances the place and asks for 50% down, I would be looking to either one of my wealthy friends (who doesn't care about an interest in the property) or an unsecured bank loan for the downpayment. Everyone is happy. If I finance it through a private lender (I have two options available at the moment), they get the interest in the property and my downpayment will again be either friends or an unsecured bank loan.
If I had an airplane, I would sell it to buy this place. As it is, I fly others' airplanes and fix them for a living, not my own. I have a motorcycle that isn't worth selling and some climbing gear that isn't worth selling either. Sometimes knowing people and being in good standing with them is your best asset.
Everskyward
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I wonder if the seller was insuring it. Also, how much is the structure worth compared to the land?
You must have some good friends.
Earlier you mentioned that you can get an unsecured bank loan at 14% for 7 years. That is credit card level interest. Is the bank willing to give you that loan based on a future job in Utah that you haven't started yet or based on your current employment ?
Looks like I am hallucinating then. I swear one of your initial posts said 'that's what happens if you buy the plane first'.
Joshuajayg
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Going to get an appraiser out there very soon to price the thing. The seller has not been insuring it.
Based upon future employment (30 days of pay stubs.)
I found the post you were thinking of. It was "We plan to live off-grid full time. So the only priority I may have screwed up is not buying an airplane first.
"What I meant is we don't have a first home yet and we don't have an airplane; maybe my priorities as a pilot should be to have an airplane before a house. It was in jest. No first home, no airplane. Tired of renting a basement for $1050/month. Ready to start building equity, etc.
airdale
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airdale
Re good friends, the key thing is to write a good agreement that will guide things if there are problems. When a friend wants "out." When a friend declares bankruptcy. When a friend's ex-spouse gets half his/her interest in the divorce settlement. When a friend dies and his/her minor children's inheritance ends up being managed by a trustee who wants out of the deal. ... and a jillion more. Discussing all these things is in everyone's best interest, best guided by a lawyer who can commit the agreement to paper. Discussing these things is not an adversarial process at all.
Re your earlier joke about wisdom: No, wisdom is not like "kudos" or "attaboys." Wisdom is the most important tool a person can possess. But you already know that.
Re your earlier joke about wisdom: No, wisdom is not like "kudos" or "attaboys." Wisdom is the most important tool a person can possess. But you already know that.
Joshuajayg
Line Up and Wait
One of these friends is a lawyer and I would definitely look to him to make it legally binding in case things go south. He is currently a venture capitalists and small business consultant who is experienced in loaning his personal money to friends with a fair interest rate.
Thanks for the thoughts everyone. Most things I have thought of, some I have not. All of them are valuable things to think on. Maybe I will write an article on the process once things are done if I am successful.
Joshuajayg
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Yep, spoke with two drillers in the area. There is a shallow water table in the area. There are actually several springs poking up in the immediate area (one on the property.) Well logs around the property show water at about 30 feet and 4gpm.
overdrive148
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Speaking of pilots living in apartments/rent housing wanting to build equity that dont own an airplane...
I am that. I am also (fortunately) debt free but pretty close to breaking even. The fiance wants to build a tiny house to take all over the country and travel everywhere. I don't know if it is a good investment. Seems like resale and depreciation would be difficult to handle. And building one ourselves to save cost doesn't seem feasible or smart.
I have heard of first time home buyer loans but I will admit I am not that well versed in financial stuff or building or anything along those lines. Also I am still working on my career and am pretty afraid to buy a place before I am sure where I will end up settling.
What do?
I am that. I am also (fortunately) debt free but pretty close to breaking even. The fiance wants to build a tiny house to take all over the country and travel everywhere. I don't know if it is a good investment. Seems like resale and depreciation would be difficult to handle. And building one ourselves to save cost doesn't seem feasible or smart.
I have heard of first time home buyer loans but I will admit I am not that well versed in financial stuff or building or anything along those lines. Also I am still working on my career and am pretty afraid to buy a place before I am sure where I will end up settling.
What do?
Joshuajayg
Line Up and Wait
Buy a tiny home used? I know a guy who flies an air tractor putting out fires. He's married with a bun in the oven and wants a real home now. I can get you his contact info and you can chat it up with him about tiny house life and possible purchase of his Tumbleweed.
Everskyward
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I'm trying to envision what this is and all I can come up with is a little house in a pickup bed!
Joshuajayg
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Haha! Maybe he is a dwarf?I'm trying to envision what this is and all I can come up with is a little house in a pickup bed!
If I were to go off grid I'd want to live somewhere where I was truly disconnected from society. No loan to repay, no property tax, utilities, etc. I'm not sure how many places that's even possible anymore but that would be the dream for me. Not to have to deal with any government entity or corporation outside of a store anymore.
Heat, power, and water I think I can figure out. Internet though..... that'd probably be the dealbreaker.
Heat, power, and water I think I can figure out. Internet though..... that'd probably be the dealbreaker.
Joshuajayg
Line Up and Wait
Satellite internet is available practically everywhere. I'd look at the loan payment as a seven year investment to have the totally unplugged lifestyle. If I can't have it the way I want it, might as well work toward it. Work doesn't scare me.
Then don't buy a home. Rent and save aggressively. You are going to build equity just as fast by putting the money into investments like stocks/bonds.
There are lots of efficiencies to rental life. The power bill at my apartment is $17.52 one month and $20.65 the next, and that's in North Dakota in December. If something breaks I calll the manager rather than heading to Home Depot.
Buy a house when you are situated in your career and when you have to buy a home due to kids. If you have 20% down and good credit, you have plenty of options on mortgages.
If you want to invest in real estate, buy income producing properties once you have the cash to do it. That's when others build your equity.
airdale
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airdale
Yes, but understand that equity investing (stocks) is a 5-10 year deal. Not for saving a down payment that you will need in a year or two.
@overdrive148, go here: http://efficientfrontier.com/ef/0adhoc/2books.htm and download "If You Can." 16 pages and worth a read for any younger person beginning a career. Work through his reading list, fairly easy stuff, and you will end up knowing more than many "investment professionals."
Everskyward
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I agree about not being in too much of a hurry to buy a house, especially if you don't think you're going to stay somewhere for any length of time. I didn't buy a house until I was 35 because I was a bit of a rolling stone. It worked out better for me that way, but I'm sure others will tell you different. People kept trying to get me to buy from when I was in my early 20s. Glad I didn't.
Marky_24
Pre-Flight
If it's in rural Utah, check out the loans with the USDA. yeah the USDA does home loans. But both my brother and sister got a loan with then recently, fairly good terms.
http://www.usdaranlife.com/?gclid=C...x0-waA8ISoek06kpYn05F50LtwKUjP3scUaAo298P8HAQ
http://www.usdaranlife.com/?gclid=C...x0-waA8ISoek06kpYn05F50LtwKUjP3scUaAo298P8HAQ
Joshuajayg
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They don't do off grid. Spoke with the local service center. Then called the main office ay the service center's suggestion so they know people want off-grid loans.
overdrive148
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overdrive148
Sure, why not!
More like this:
6'2"!
You and me both!
My bills are a little more but yeah, it's cheaper overall. Still though, out like 35-40k in rent over the last 4 years and no equity to show for it. Except being debt free and slightly income positive. Although the last year has been brutal financially with the whole Denver fiasco.
Will do, thank you very much! I have always wanted to understand the stuff because it is very useful going forward but never found an easy to understand source. There's a lot to it from what it feels like, but then again I'm sure people say that about flying and here we are.
So far the aviation industry (non-flying, airport stuff) hits me as one you have to move around a lot for and I'm not sure about where I'll end up once I get (another) solid career gig. Good advice I think. I don't like the idea of being tied down much at this point in my life but at the same time I want to build up some money and make it work. Right now is kind of hard but I am still trying to save up for when I need it or can spare enough to make money.
overdrive148
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overdrive148
Also I checked my credit score about an hour ago and apparently I am in collections for medical stuff in Denver while I was there...and have been for a while. I never got any mail at the place I left (I talk to the guy who lives there) and I didn't get anything forwarded to my new address (filed some paperwork with USPS for that).
I paid the $100 with the hospital and found the place that was responsible for collections on my account. I called and asked them what was up and if anything happened to the mail being sent out - they said it was returned to sender. I asked them the address they had on file - they said WE county line road. West East.
So the lady talked to her supervisor about getting the collection account removed and they said they would and that I'd see it next month. I had to give them my social for them to find me though. Kind of worried about that but they did have all of my information. Including the almost right address, how much the collection amount was, phone number, etc.
I paid the $100 with the hospital and found the place that was responsible for collections on my account. I called and asked them what was up and if anything happened to the mail being sent out - they said it was returned to sender. I asked them the address they had on file - they said WE county line road. West East.
So the lady talked to her supervisor about getting the collection account removed and they said they would and that I'd see it next month. I had to give them my social for them to find me though. Kind of worried about that but they did have all of my information. Including the almost right address, how much the collection amount was, phone number, etc.
airdale
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airdale
The people who want you to think it is complicated are generally people who hope to profit from your remaining stupid.
For example, I am involved with a nonprofit that has Morgan Stanley's "Wealth Management" unit running about a million bucks for them. The portfolio looks the the wreck of a vegetable train. Apples, tomatoes, rutabagas, ... There are like 30 little tiny stock positions of a few shares each plus about a half dozen positions in a bunch of doggy mutual funds. It is intimidating just to look at and it makes you think it takes a genius to run it. I have been benchmarking it against a simple two-mutual-fund portfolio that I set up on 1/1/2015 and have not touched since. Dividends and interest reinvested, no rebalancing. My benchmark is blowing the Morgan Stanley portfolio out of the water and the two-fund portfolio could be run by someone who reads the statements every two or three years. I call it my "couch potato" benchmark.
Oh, yeah: The "investment advisor" on the account drives a nice new Mercedes. Wealth Management is one of Morgan Stanley's best product lines, with revenue over $3.5 billion and profits of 22.5% even after paying for the Mercedes. Their goal is 25% profit. Do you think they are motivated to keep customers stupid and intimidated?
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denverpilot
Tied Down
Also I checked my credit score about an hour ago and apparently I am in collections for medical stuff in Denver while I was there...and have been for a while. I never got any mail at the place I left (I talk to the guy who lives there) and I didn't get anything forwarded to my new address (filed some paperwork with USPS for that).
I paid the $100 with the hospital and found the place that was responsible for collections on my account. I called and asked them what was up and if anything happened to the mail being sent out - they said it was returned to sender. I asked them the address they had on file - they said WE county line road. West East.
So the lady talked to her supervisor about getting the collection account removed and they said they would and that I'd see it next month. I had to give them my social for them to find me though. Kind of worried about that but they did have all of my information. Including the almost right address, how much the collection amount was, phone number, etc.
Stay on top of that.
Use the free methods to get scores and reports on the way to you from all three credit bureaus. Don't get sucked into using a service or worse, paying them for it. Find the truly free as required by law instructions and follow those. (They try to bury them and sell you crap.)
TRW, Equifax, and Experian.
Once you have your reports and know your payment cleared, start the process now of writing a simple letter to them requesting to remove the bad information using their challenge process.
Reason to give: Because the creditor had a bad address and wasn't reaching you. Say nothing else.
Make them go figure it out.
99% of the time they'll just hear "paid" and remove the entire thing, history and all because they have callcenters full of people doing this and don't have time to dig into ancient history. Paid? Yep. Had a bad address? Yep. Removed, one mouse click.
mulligan
Cleared for Takeoff
For some reason, every time I read this thread I think of Ted Kaczynski. Hopefully one day we do not have to read your manifesto
Joshuajayg
Line Up and Wait
For some reason, every time I read this thread I think of Ted Kaczynski. Hopefully one day we do not have to read your manifesto
Haha. No anarchism here. But sometimes I realize it takes way too much energy to explain to people why I want to live the way I do. Then they still don't get it.
JoseCuervo
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The fact no lender wants to lend on the property should tell you something.
The fact you need to borrow the "down payment" to have a down payment should tell you something.
Make sure you tell ALL potential lenders that you are borrowing the down payment, and will have to repay that amount, also.
The fact you need to borrow the "down payment" to have a down payment should tell you something.
Make sure you tell ALL potential lenders that you are borrowing the down payment, and will have to repay that amount, also.
Joshuajayg
Line Up and Wait
It does tell me something but not the same thing it probably tells you.
If this was a conventional loan, I would have the down-payment, no problem. But since it is treated as more of a land-loan, they are asking for a very large down payment.
I am very up front with the lenders.
The fact that someone I know personally is willing to loan me the down payment should tell YOU something. He's a venture capitalist, a laywer, and a really good friend. He's no fool. If anyone knows about my ability (or inability) to handle what I am getting myself into, he would be the one. But as it is, I'm trying to get a conventional loan on an unconventional property and that is a hard task. I still have another way to fund it but I would rather not.
denverpilot
Tied Down
Just remember...
Joshuajayg
Line Up and Wait
Nice photo, @denverpilot . That's the truth.
Here's what my friend said about this situation...
"You are in a tough spot. You have a good, but not normal, use for money. I know how super hard it is to get that money in. Whereas there are people who have a bad deals, but normal deals (like $1mm fix and flip in Boulder that has 0% chance of paying out) and they get funded like breathing."
Makes me feel better about the situation and then again... not. All his money is invested right now so he can't help. Looks like I'll likely be jumping on the rent wagon real soon.
Here's what my friend said about this situation...
"You are in a tough spot. You have a good, but not normal, use for money. I know how super hard it is to get that money in. Whereas there are people who have a bad deals, but normal deals (like $1mm fix and flip in Boulder that has 0% chance of paying out) and they get funded like breathing."
Makes me feel better about the situation and then again... not. All his money is invested right now so he can't help. Looks like I'll likely be jumping on the rent wagon real soon.
Keep in mind, owning wouldn"t have turned those 40k into equity. It would have turned 25k into interest, 8k into taxes, 2k insurance and 5k into equity. You are not building much equity in the first couple of years of ownership, most of your mortgage goes to interest and taxes. You build equity either by the price of your home going up (speculative) or by paying the mortgage in year 20 through 30. Also, I understand you are early in your career, the "tax savings' from owning are not worth much until you start to climb the tax ladder. So don't get roped in by the home-buying mafia and burden yourself with a home if it is of very little benefit at this point.
Imagine the Denver fiasco if it had involved paying the mortgage on a primary home.