The Campfire Trail: September 12 - DIY Homestead - Starting With Nothing (Part 5)

September 12, 2022

Day 346 of the Adventure

Working on a Cabin

How much can you "Bring to the Table?" Can you bring money to the table when it comes to purchasing your land? No? Can you bring skills to the table? Almost all of our land/property purchases have never been cash and most have had either no or almost no down payment. How is this possible, you may ask? Mostly it has to do with being willing to work. The Homestead or Off-Grid experience is one that lends itself to a Do-It-Yourself mentality. I'm not sure how anyone could enter into those kinds of lifestyles without understanding that the skills brought with them would be the very things that would likely determine the success level achieved.

I guess the old saying that "Cash is King" when buying anything is probably true. But with real estate, it can feel nearly impossible, especially if you are trying to figure it out for the first time. To me, starting with nothing or close to it, the magic of buying real estate was found in finding property that needed a lot of work. Work that I and my wife were able to do. I'll plan to elaborate on it more in future postings, but the basics were as follows and we did this over and over dozens of times.

The goal was to find property that needed work. We would negotiate a price that left a lot of room for increasing the value based on the improvements we planned to make. In some cases, banks would let us roll the down payment into the purchase price (if the "loan to equity" spread was large enough) Then we would request a construction loan for the improvements. Even after we had done this twenty or more times, big banks would never work with us. It was always the smaller community banks that had the flexibility to do this type of lending. Once the listed improvements were complete, the banks simply rolled the purchase loan and the construction loan into a long-term standard mortgage. Yes, it still resulted in a mortgage but that was the alternative to beginning with nothing in the first place.

I suppose that it's important to be okay with making payments, but again, if the alternative is figuring out how to save enough cash to do a deal, to us, it was worth it. I can also say that we were not always successful at getting these kind of financing deals done. Our biggest purchase took eight bank denials before we found an approval. Starting with nothing is a challenge but is possible.

Carry On

Adventure Quote: Your hardest times often lead to the greatest moments of your life. Keep going. Tough situations build strong people in the end.”

― Roy T. Bennett

Base Camp Coffee of the Day: Highlander Grogg (Butterscotch/Rum flavors)

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