So you intend to board?
what does the Deed say are the property boundaries? Is there a separate deed for the second address? (Two of my neighbors have land that is broken into separate particles, each particle with their own deed…but are tax jointly)
My property in the middle of the city of acreage has Four addresses all are correct (and two zip codes, both are correct) …but the deed is a single document that encompasses the entire land mass
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I know it’s a long thread and probably confusing but when the whole thing started we were just considering it. We looked at a number of properties with just enough stalls for our personal horses and a couple of friends (potentially).
We had spoken about that with the LO prior to making the offer on this particular place, which had more boarders than we were originally wanting, but then we decided that was actually just fine after seeing the place, and that we would lose some as we adjusted pricing etc, probably making it just like we had originally wanted anyway. By the time we actually started the first conditional approval it was well known to everyone that we were purchasing a property that had both a boarding facility and a residence on it. In the contract there were items that would flag it as a boarding facility including the tractor and arena drag. We have not been shy about this in any way shape or form, including getting insurance coverage FOR a boarding facility specifically.
The RE knew, the LO knew, almost everyone on the planet knew (ok, that’s an exaggeration). When I got the information that they wanted an LOX stating that we would not be boarding on Wednesday, I was a bit confused. Originally I thought that they just wanted confirmation that neither of us would be quitting our outside stable jobs, which we would not be doing Then on Thursday, before the bombshell on Friday, I got the message that we needed a stronger LOX stating that we in no way would be boarding. At the time I thought, well, ok, we can go back to being a non-boarding facility and just adjust our plans, which I did say to the LO.
At no time through that entire process did anyone say up front “we can’t do a loan if it’s a boarding facility”. The RE agent did mention early on that “she and the LO were talking about how to keep it out of commercial status” and when I asked the LO about it he said that the only disadvantage was that it was harder to qualify for and more expensive, but he said nothing about the fact that they DIDN’T actually do commercial loans. Should I have known that? I don’t know, the RE agent who listed the property listed it as a boarding facility and the “boarders want to stay” but listed it as eligible as a conventional loan. Since the listing agent is affiliated with an agent who is known in the area to sell boarding facilities, I guess I figured someone along the way would have mentioned something more than “oh commercial is more expensive”. Now that I’ve had this detailed education into real estate financing I realize why there’s a problem, but prior to this there wasn’t any indication made to me that it would be.
If I have to split the properties into two purchases or buy as a hobby farm per the farm credit guy, then I will keep the boarders. Most of the horses are elderly, it can be a nice business as they leave (with attrition). If the only way I have a place for my horses and I to stay is to boot them all out and be 100% residential, I will do so. I didn’t really even consider that until it started to become a big ol’ mess.
The reason this particular property is attractive is not it’s business ability (although that’s a nice perk) but it’s close to my hubby’s work (hard to get in this area), and I could care for my critters myself, it has a nice ring for me to be able to train (my own horses) as a serious rider, and I can see how with upgrades it will be ideal for me. My actual goal from the get-go was to finally really see how far I can push my competition career now that my kids are grown and gone.
I don’t know about the actual deed. You two are the first ones to mention that - it may be deeded separately. I believe Title said that it could be two properties, but would have to confirm that with the RE Agent.
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Hmm hmm.
This all sounds more and more like a lost cause with the current mortgage lender.
There is currently a business with “tenants” operating on the property, an insurance policy with verbiage to cover continued business operations with “tenants” was provided to the lender and multiple appraisers confirm the property does not meet regs for a residential appraisal.
Those items all add up to this transaction does not fall inside Fannie Mae’s guidelines for conforming conventional primary residence mortgages.
I don’t see anything in your list of products offered by your current broker that looks like it is suitable for your transaction.
I would focus energy on sourcing a suitable loan product. Are there any local credit unions that you are eligible for membership with? Is the Hobby Farm guy associated with Farm Credit?
Once again, at this point I am focusing on the hobby farm guy, but that does’t mean I’m not going to pursue all available avenues. I literally provided him all of the documentation on Saturday and am waiting for any sort of indication that it’s going to be possible or impossible. He is not affiliated with farm credit. I called them this morning (they were closed over the weekend) but they are unable to help since the farm is located in an area that is considered 100% developed. He did give me two other banks to try, which I am following up on.
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Perhaps this is playing into the property’s inability to be appraised as a residence. Though the existence of the business on site may be the larger factor.
It’s unfortunate that the Hobby Farm loan provider was unable to assist. Good luck in your continued search.
Hobby Farm guy is still a potential. Farm Credit is not.
How would the area being 100% developed make it not a residence? It’s developed AS residential. It’s literally sitting in the middle of a subdivision. Maybe I’m just tired haha
I mis understood which lender stated they weren’t able to move forward.
If it’s developed as in strip malls all around that could be an issue. But if it’s developed as in neighborhoods all around probably not. You may have clarified up thread on that item. I can’t recall.
As I added in my edit for clarity, the existence of a business currently operating on the property is the more likely culprit. But there are other factors that could be playing as well. It’s the appraiser’s role to take all those factors into consideration.
Hopefully a path forward will present itself shortly!
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This might be a dumb question… since the seller is going to have this problem with whoever buys it would they go for a land contract? With your current place being sold I’m guessing you should be able to put some down then pay the seller directly.
Had a friend on a similar situation except he was the seller and that was how he sold his place.
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There are no dumb questions at this point 
It might be an option but we haven’t floated that yet. If I exhaust all of the present options that might be what we present to them. I know they want to sell the property and I keep saying to our real estate agent that this is going to be a challenge for literally anyone who wants to buy the property so this would look attractive for the sellers as well as a short term rental while we get it sorted out.
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Oh thank heavens…
I’ve found a lender who will do this type of loan and our pre-approval is complete. They keep it in house I believe. It’s more down than we were initially ready for in cash, but we have some reserves we can pull from. Now I’m just waiting for extensions and paperwork so that we can go through underwriting…again…and have a place to sleep this week!
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So happy it looks like you might get this property purchased. Continued hopes that it is all easy from here on out and you get closed quickly.
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Best of luck!! Hope it goes smoothly from here on out.
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Whoop whoop!
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Thank you! This does buy us more time, and a place to sleep. I may need to sleep for a few hours this evening to catch up…this was rough!
Just in case, the idea of a land contract was brilliant - and I’m surprised I didn’t think of it as I’ve bought and sold several pieces of property that way. Good news and good luck!
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I agree!! A very good idea (and I’m sorry I didn’t acknowledge that earlier!!!)
Oh what a crazy week it has been. Original lender loan officer thought it was still possible that the two property approach would work (we thought the deal was dead). He got his boss involved and she seemed to claim the opposite, and asked us for a bunch of documents that indicate that LO was not particularly forthcoming with particulars about our finances that we had disclosed openly to him, making it look like we were fraudulently trying to get the loan. Thankfully I had email proof that I explained the situation to him. I understand that he was trying to be helpful to us in obtaining the loan, but misrepresenting the situation is not ok.
Hobby farm guy is still on track, so hopefully this will all be resolved soon!
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When I built my house on my property I split off 5 acres from the 32 acre parcel for the house mortgage. I left the barn on the other parcel ( first things first - I built my barn first and was living in a trailer when I got ready to build my house). However I had paid off the property and barn before starting the house so that is different from financing two parcels.
We did a survey and marked off the 5 acres that went with the house and I got a conventional mortgage on the house. I even refinanced once as a conventional mortgage but I had a hard time getting comps to refinance. They kept trying to compare my house to a converted doublewide. Even though I had made a large cash downpayment they wanted to charge me PMI which they subsequently refunded. Buying my property surely had its share of “surprises” but all ended well. Hopefully yours will too.
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