I have good news and bad news! The good news is I bought another farm yay 😀 The bad news is I have to find a way to raise another $25,000 by the end of July for the down payment or I lose my $17,250 deposit forever (O_O) Would anyone be interested to buy some short term, securitized Liquid Independence bonds with farmland being collateral? Lol, just kidding 😛
The property I bought earlier this month at an auction was for 150 acres of grain farmland for $172,500. I had to make a 10% (or $17,250) non refundable deposit. But I didn’t have $17K sitting around. So I used my TD bank’s line of credit at 5% interest rate to basically borrow the entire deposit amount and then transferred the money into the agent’s trust account.
Unfortunately I bought this farm before I had time to get my financing in order. All lenders these days require a minimum of 25% down payment. My 10% deposit will of course be part of the down payment, but I need to come up with the remaining 15% of the purchase price, or $25,875. I currently don’t have a lot of cash on hand. Perhaps just enough to cover the closing legal costs plus a little extra. This farm deal is scheduled for completion at the end of July. That gives me 3 months to come up with about $25,000. I can’t even save that much in an entire year, haha. But where there’s a will, there’s a way, and I have to find a way because my $17,250 depends on it ಠ_ಠ.
Unfortunately that 10% deposit really did a number on my line of credit account. I’m now using $33K of my $40K credit limit. So there’s not much room to borrow anymore. And they won’t raise my limit, I’ve asked. I could sell some stocks to raise cash or use my credit cards which has a combined limit of over $10K 🙂 Wait, a personal finance blogger is advocating the use of credit card debt? Yup 😀 I don’t believe in good debt or bad debt. Only the cost of capital matters. I would gladly pay the 19% annual interest rate on a $10K credit card balance if it means saving my deposit 🙂 It’s not clear to me yet how I’ll raise the entire $25K, but it will likely be a combination of what’s already been mentioned.
Was it a bad idea to buy a property without getting pre-approved for a loan first? Maybe. 🙂 Was it risky to wire someone $17K knowing that I would lose all of it if I can’t come up with an additional $25K? Okay, yes it is! 😀 But we only live once, and sometimes I like to add a little excitement in my life to spice things up a bit. I am so ready for this challenge \(^_^)/. I bought my first farm last year with $20,000 of my own cash and borrowed the rest to make up the total purchase price of $150,000. Average farmland prices around that area grew by nearly 20% in the last year so today that same farm that I bought is probably worth well over $170,000. I’ve just made over 100% return on that investment and became $20,000 richer. So I just couldn’t pass up another opportunity like that. I’ll keep everyone posted on how this second farm purchase turns out. 🙂
[Update Jun 2013] The seller has kindly changed the closing date of our purchase agreement to sometime in October instead of July. I’ll keep everyone posted 🙂
[Update Sept 2013] Looks like I have successfully accumulated my $25,000 and then some. 🙂 This farm deal can go ahead as planned.
[Update Sept 2014] It’s been a year since I’ve owned this farm now. Looks like it was the right decision to purchase it because the value has gone up by more than 10% so far. 🙂 This farmland is held inside my small business account so I can write off expenses for it. Who knows? Maybe one day I’ll incorporate my company too. In B.C. one can do that with onestop.gov.bc.ca. Further east Ca4it is a company that can help with incorporating in Ontario. There are many choices. I will leave my options open for now.
1000$ Here 😛 haha sad it doesn’t work like poker stacking
Glad to see some interest lol. It may not be like poker, but the odds you’ll make money is a lot better :0)
Good luck. Do you have any equity in the other one that you could tap relatively cheaply? When we needed money to buy our canal lot we used a HELOC on our duplex to fund half of the purchase. We had the rest in cash.
I still have to build up some equity before I can apply for a HELOC on it. There’s a restrictive rule in Canada that we only borrow 65% of our property, and right now my existing loan is already like 70% of the value of my first farm. But maybe by the time I make my next large investment I can tap into it 🙂
Need business partners? 😉
I’ll keep you and Brian in mind when I find a third farm（＾ｖ＾）Maybe we can work something out if you guys are still interested then.
Sounds good! I would advocate for seeking some stocks to come up with the capital. You’re just shifting investment classes, so I think You should do that before using a credit card.
totally my kind of money moves lol. the bank of mum is my favorite for easy credit.
Great idea Pauline. I haven’t thought about borrowing money from my mom yet, but I’m pretty sure whatever interest rate she would charge me is going to be lower than what I can get from other sources （^ _ ^ ）
I don’t know how you feel about this idea, but could you borrow the money from your parents and pay them back with the rental income off the property for the first few years?
I haven’t talked to them about it yet, but that’s a good suggestion. I’m not sure if they have any savings at this point though, but even if they don’t have the liquidity they could probably still help me brainstorm some ideas to put the cash together （￣ー￣） I don’t mean they have no money at all. They have a tendency to be fully invested like I am, so I just mean their money could be tied up in mutual funds and other investments that they may not want to sell at this time, but we’ll see.
Ballsy move, but I love it. Jumping on it without full funding, but I think you will make it work. I just hope you don’t lose the deposit. Why don’t you put a donate button the site and see if people will be willing to help you out?
Crowd funding sounds like a lot of fun and lots of people have had success with it. Not only can I set up a donate button but I could probably also raise some money through sites similar to Kickstarter or Indiegogo 🙂 Thanks for the idea.
Did you put only “YOUR NAME” on the offer?
You ever think about joint venture? Basically, since you found the property, another investor puts up all or most of the down payment and but you still get 50% equity.
Haven’t thought about join venture until you’ve brought it up. They say it’s hard to find venture capital in Canada, but since I don’t need that much maybe it’s not hard to find a suitable investor 😀
Hey, you got friends out here that will lend you money at 3% (ummmmmmm per month lol lol)
Good luck I’m sure it will all work out, you got time to work on it.
Haha, thanks, but another commentator below can lend me money at a cheaper rate than your offer. I feel like I’m selling debt in the open market lol.
Wow there’s already so many people with great ideas, and even offering me money to help out. I’m not worried at all now 🙂 I don’t normally comment on my own post but just wanted to say you guys rock 😀 Some kind of short term loan agreement or joint investment with a silent partner is certainly a possibility.
As someone else above has said, ballsy… but I’d consider loaning you some cash if you come up short, noyt that i think you will come up short as you are quite creative… My terms would be 7% ROI, but it needs to be paid by 30-Dec-13. So that means keep it for a day, month or until the end date, but you return to me 107% of whatever you borrow… think I’m bluffing (O-o) – you’ve got my e-mail – Cheers.
Sounds pretty straight forward Phil 😀 I like it. But I will need the interest rate to be 6% before considering the deal. Anything higher then I would rather liquidate more of my stocks because from a risk perspective I don’t think I can make more than 6% with a reasonable amount of certainty in stocks from now until year end. But this is all hypothetical at this point anyway as I’m not sure yet if I need the loan, but I’ll email you if I do 🙂
Like I said, you are creative, and I have no doubt you will attain your goal, but on the off chance you come up short, pop me an e-mail, and I’m pretty sure we can work something out. Out of curiosity, do you do your own taxes? I’m curious becasue they must be rather complicated with your diversified portfolio of assets and array of income sources. – Cheers.
I did my own this year using UFile, as it wasn’t too bad, but will probably seek a tax professional’s service next year because 2013 will be the first year I earn some rental income which could complicate matters since it will be going into my small business account 🙂 In terms of other income sources, I have two T4s (one from each job), dividends/capital gains, and some freelance income at the moment.
I like how you’re a badass PF blogger because you “don’t believe in good debt or bad debt. Only the cost of capital matters” Favorite quote of the day! 🙂
Thanks. Money is easier to understand if we take the labels away and look at situations as they really are 😀
Congrats. Sometimes you have to take risks to get ahead.
For sure. No risk, no reward. I wouldn’t be where I am today financially otherwise :0)
You can withdraw funds from your stock account without selling anything, if you are approved to use margin in your brokerage accounts. There are risks involved however, so you need to not take out too much. So if your stock portfolio is valued at $100K, you can easily take out $25K. Even if markets crashed by 50%, you are still ok. And the dividends you receive will be paying off the loan for you too 😉
That’s a great idea. I’ve used that strategy before for many things. Unfortunately I’m currently using almost all my available margin room. I purchased some gold and silver coins earlier this year and borrowed on margin to pay for those. Had I known I would be buying this farm I would have bought smaller coins 🙂
That’s tough, seems like you had to jump on it fast otherwise risk loosing the deal. I think you’ll pull through, that’s a pretty nifty deal for what you picked it up for.
It was a pretty close auction. I limited myself to $175K but luckily it didn’t go that high. But I could feel my heart beating faster every time the price went higher. I’ve won Ebay auctions before for DVDs and stuff lol, but this was my first time attending a live auction, and the stakes were pretty high.
That’s really awesome. Good job for taking the risk and see how it pays off. More power.
I have a feeling it’s going to pay off big time in the long run for me 🙂
I guess there are always loan sharks if you were really desperate? I also hear kidneys can sell for a lot!
All kidding aside… good luck raising that 25K! Do you have any family members who might want to own shares in you?
Yeah you only need one kidney to live right? lol. I can ask my parents if they would be interested to invest with me. I generally will try to solve a problem by myself but if I’m really in a pickle I wouldn’t hesitate to reach out to family, friends, or even my generious readers 😀
Splendid! I was just wondering how the second farm purchase was going! People above have mentioned the big three available in my opinion, Joint Venture/Partnership, possibly margin from an equity account, and the bank of Mom and Dad. Good luck with whatever option you end up finding!
If you were in the states I’d recommend peer-to-peer lending.
I know right? Too bad companies like Prosper doesn’t do business in Canada. I wish we had our own equivalent P2P businesses that could facilitate these lending transactions. Judging by these comments there is clearly a market for it lol. Maybe one day I’ll start a lending company myself that will match investor’s capital with borrower’s needs.
Hi there! I have been following your blog from the early days. Sometimes when I see your latest risky moves (sorry ‘leveraging’ lol), I have to read it while peeping through my hands over my eyes, just like when I used to watch ‘Dr Who’ as a scaredy cat kid. Thrilling to watch but I wouldn’t have the guts to do it myself!
Hey if you like sci-fi shows I have to recommend Battlestar Galactica if you haven’t seen it yet :0) Yeah some of the situations I put myself in can be quite daunting for others. Maybe I should create a blogging category called “Don’t try this at home” lol（＾－＾） Sometimes I just want to see how far I can push myself because struggle often leads to progress. Since you’ve been following me for awhile you’ve probably seen me mess up a few times like how I lost $2K on my swing trade with the volatility stock, haha. I think what sets me apart from most other people is I never let the fear of failure get in my way. I don’t mind making mistakes and even losing lots of money because what’s even more important than the outcomes of my decisions is what I can learn from the whole process, so that I can make better investment choices in the future 🙂 Glad my writing is entertaining. Thanks for the comment (=^_^=)
LOL – nothing like a little bit of pressure to get the fire under your ass. 😉 I have no doubts that you will figure this out. I’m looking forward to reading about it!
I’ll keep you posted. Guess my plan about flying into space will have to be postponed now 🙂
If you really believe in the no risk/no reward then I guess you could go the bank robbery route. 😉
I have been looking at trying to get some real estate exposure so I would be interested in a joint venture/partnership. I think that or liquidating the stock portfolio is probably the best way to go.
For the $1000+ per month in interest I’m paying the banks right now it’s more like they’re currently robbing me lol. Yup, I think selling some stocks is the simplest way. Good thing I’ve slowly built up a six figure portfolio over the last 4 years.
I’m sure you will be scrambling over the next month but a year or two from now you will look back on this and laugh I’m sure.
That IS the idea 😉 And 10 years from now I’ll be swimming in my pool of gold coins, lol ok probably not.
oh boy haha. quite the predicament. im surprised theres even people willing to loan you money off the web. sounds exactly like how those “i loaned money to person X and then they disappeared” stores in the globe & mail or tor star get started LOL. the funny thing is, the terms that some of these ppl are offering, i cant tell if they’re actually trying to help, or trying to rip you off
the fact you have equities though, you can always sell those, esp with markets at whats likely a short term high. paying credit card interest instead of liquidating securites seems like insanity to me… hmm
I’m also surprised how many people are offering to help. I’m touched that so many people actually care about my financial well being. I don’t even have any friends in real life that’s concerned about me lol, but that’s probably because I don’t disclose much about my personal financial situation with them a-ha-ha 😀 I realized afterwards that my statement about using credit cards is kind of unnecessary when I have plenty of stocks lol. I just have to plan ahead and think about which stocks I should sell. It will be hard to pick though. I have so many good dividend payers 😀
You cannot have everything overnight. Alex is bang on. Your best option is to sell a few of the poorer performing or arguably those dividend stocks which have had lless growth over time. Pick the weeds to water the flowers they say. You certainly have all the resources at your own fingertips to cover your endeavours from what I have seen. The real purpose of my offer is to get you past the point of possible panic, since bad decisions are usually made during moments of panic. I think you would be short changing yourself if you used any of the above mentioned suggestions, including mine, other than those that involved “rebalancing” your own portfolio to cover the costs. If you can teach yourself this now, you can learn to be truely financially independent – Cheers.
Use your 20+K in your TFSA… That is what the account is meant for… That way it keeps most of everything you have intact, and in 2014, when you are rolling in the dough once again you will be able to add the amount you took out back in…
Wow! Congratulations…and i think it is awesome that you have so many people helping!!!
Thanks. Yes I’m very surprised to find so many people willing to help. Who needs an emergency fund when you have emergency online friends right? lol
HI Liquid. I’m adding my two cents to an already rich conversations full of interesting ideas.
– Ask for love money from people in your family and/or from your friends. If 10 persons each give $2500, you could easily fund your purchase. As a commenter mentioned, you could payback these people with the rental income.
– Put a second mortgage on your other farmland.
– Incorporate a company, sell non-voting shares to people in your family and/or to your friends. Obviously, the company would be co-owner of the land.
– Propose a possible tennant a deal to help you finance the purchase. For instance, you could allow the tennant a “free use” for the value of $25000.
– Ask your lawyer to front you the money.
Keep us informed of the deal!
Incorporating sounds like an interesting idea. I know sooner or later in my life I will have to set up a company with limited personal liability. Then I can take advantage of those favorable tax treatments like sprinkling dividends lol. I wonder how long and costly the process will take to incorporate. I’ll keep everyone posted for sure 😀
The incorporation process is not long. Two or three days. And it’s not that expensive, about $1500 for a simple company.
Wow, you are ambitious! I love it! Good luck, I know you’ll be able to do it.
I learned that ambition can develop character :0) Even if things don’t turn out exactly like I want them to at least I will have learned something from my experience.
Looks like someone is spending way too much money these days!! Tsk tsk tsk, you should know better haha.
Lol I know, first that silver coin and now a farm. Back in my grandparent’s generation if you didn’t have the money then you can’t buy it. But today everyone can take on debt to buy things for instant gratification that we otherwise can’t afford. I’m no different :0) At least I’m helping to grow the economy 😉
Your a displaying YOLO to the max! Hope all goes well with farm #2!
Yup, time is precious so I’m seizing the day. YOLO for life 😀
Sorry can’t give you advice but I really like the way you’ve put yourself out there and let the “how” to take care of itself. I think we limit ourselves all to often saying “I can’t…” instead of “how can i…”. Thanks for sharing.
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