Buying Hunting Land Questions?

My mother-in-law is considering selling the “family land” (long story, but she’s leased it out to hunters for over a decade, until recently when it was destroyed by straight-line winds)

It’s an 80 acre parcel that used to be awesome. Now it’s a shadow of it’s former self, but the majority of it has been cleaned up by a logger. It resembles a heavy select cut now.

She wants to sell it under a land contract. I know next to nothing about them.

Are land contracts a good option?

What should I look out for?

What questions should I be asking?

It’s your mother in law. Tell her to gift it to her daughter for cheap and call it good

Bearcat89 wrote:

It’s your mother in law. Tell her to gift it to her daughter for cheap and call it good

My wife has lots of sisters…..That wouldn’t work out too well

The price is already cheap, not free, but a hell of a deal. None of her sisters are in a position to buy it, so hopefully it doesn’t start any family feuds if we do.

I’m with BC, any of them single? We could split it.

B-man wrote:

My mother-in-law is considering selling the “family land” (long story, but she’s leased it out to hunters for over a decade, until recently when it was destroyed by straight-line winds)
It’s an 80 acre parcel that used to be awesome. Now it’s a shadow of it’s former self, but the majority of it has been cleaned up by a logger. It resembles a heavy select cut now.

She wants to sell it under a land contract. I know next to nothing about them.

What is her reason for wanting to go the land contract route? With interest rates this low and the property market red hot, why would she want to take on this additional risk and hassle vs just selling it outright, getting a big check, and being done?

Is she trying to use a land contract to make it possible to “steer” the sale to a relative or family friend with bad credit or other issues that make it impossible for them to get a conventional loan? If so, this situation has “huge clustermuck” written all over it if the deal goes sour.

Also have to ask, why sell NOW if the property is a shadow of its former self? Why not invest in having a habitat improvement company remake the property next season and increase the value? Depending on the exact situation and location of the property, there may be a lot of money sitting on the table. Adding some high value features like food plots, a water hole, and just generally cleaning up can bring a huge ROI. Nothing makes buyers want to sign like visiting a property and seeing plots full of deer and ready to hunt features like trails.

Also, not to be negative, but I talk to a lot of recreational property realtors and hear this often. When selling old hunting camps that have fallen into disuse, having old shacks, old trailers, busses, and other junk on the property can be a big drag on value. Getting rid of this stuff represents a hassle that a lot of buyers don’t want to mess with. Start the cleanup process and get the family involved as this can be a lengthy and labor-intensive process.

Grouse, she wants to sell it through a land contract because of tax purposes and where she is at in life (a few years from retirement and from collecting SS). Like I said, I’m not familiar with the in’s and out’s, but going this route benefits her somehow (capital gains? minimizing gross income?)

In a few years we’ll probably take out a traditional loan and pay her off the balance we owe her (it sounds like that’s what she wants to do after retirement)

She is definitely leaving a ton of money on the table and could easily sell the property for twice or more than what we are getting it for (we have nothing in writing yet, and I hope she doesn’t change her mind)

When the storm hit in 2019, the land was an unrecognizable bomb. Literally impenetrable and virtually void of game. Since she had it logged it’s a thousand times better and will come back naturally on its own. I’d plan to hire a local dozer guy and have him plow some roads and clear stumps for food plots.

Thankfully the property is virtually garbage free, except an old dock from the lake lot she already sold across the street. It’s roughly 50% woods, 45% swamp, and 5% water. The deer are coming back in now and I jumped several walking the property the other day.

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B-man you need to do what you need to do, if the sisters are in no position ot buy then go for it.

B-man wrote:

Grouse, she wants to sell it through a land contract because of tax purposes and where she is at in life (a few years from retirement and from collecting SS). Like I said, I’m not familiar with the in’s and out’s, but going this route benefits her somehow (capital gains? minimizing gross income?)
In a few years we’ll probably take out a traditional loan and pay her off the balance we owe her (it sounds like that’s what she wants to do after retirement)

She is definitely leaving a ton of money on the table and could easily sell the property for twice or more than what we are getting it for (we have nothing in writing yet, and I hope she doesn’t change her mind)

Bman, I didn’t catch that you were potentially buying the land.

If that’s the case and you can get it on a contract, why not? No downside from the buyer’s end and if it makes it a better deal fron the MIL’s end, great.

However you do it, get the deal DONE ASAP. I have seen so many of these “almost” deals fall through with lots of hard feelings because of one thing: Other family members get involved and sink the deal.

If it were me, I’d get my own lawyer, agree a price and terms with the MIL, have the layer put together the contract, and get it closed. The longer things linger, the more chance there is that someone in the family or elsewhere will get involved and start “advising” the MIL and that will only go one way.

what grouse said times 2! get it in writing and signed! go for it!they dont make any more land!

As Larry the Cable Guy would say
“GIT ER DONE” B

Mrs. Bucky has been antsy about a new build, so we recently purchased 40 acres that joins up to ~200 acres of family land where our buildings are at. It’s about 10 acres of woodland and 30 acres of cropland. We heard word that it was going to be sold to help finance the neighbor’s early retirement. Following the advice of “moving fast” we jumped the BS and went right to the neighbor’s door. We shot out a price that was quite low and they said “we will think about it.” After 2 weeks of them “thinking about it” I called and said we will give you ag rental at half our going rate on the family farm for 3 years if it’s closed this month with first dibs to rent after at full cost. After a quick call to the lawyer and one face-to-face meeting, it’s done.

One thing to mention is that if for any reason you need the land surveyed, best of luck. Our purchase was originally subject to survey but that was dropped from the contract after we heard how long the wait was to even get someone out to look at it (multiple months).

Get the process rolling. The land market is right up there with the housing market. For those who think it has really slowed down, it hasn’t. Both are maybe one stride back from where the market was a month ago…but things are still moving in the blink of an eye at top dollar.

Two things generally come from land contracts.
1 she doesn’t recognize the capital gains on a lump sum
2 buyer builds equity in the purchase. In most cases land contracts are short term until the buyer can take out a traditional loan and pay the balance off

Randy Wieland wrote:

Two things generally come from land contracts.
1 she doesn’t recognize the capital gains on a lump sum
2 buyer builds equity in the purchase. In most cases land contracts are short term until the buyer can take out a traditional loan and pay the balance off

I agree. With regard to item 1, avoiding capital gains, she’ll pay capital gains at 15% one time. Depending on jurisdiction, she may pay income tax on the monthly contract payments. If her tax rate is low, not a big deal. If her marginal rate is 28% it is a much bigger deal. Regardless, get thee to an attorney and make sure it is done right.

Brad Dimond wrote:

<div class=”d4p-bbt-quote-title”>Randy Wieland wrote:</div>
Two things generally come from land contracts.
1 she doesn’t recognize the capital gains on a lump sum
2 buyer builds equity in the purchase. In most cases land contracts are short term until the buyer can take out a traditional loan and pay the balance off

I agree. With regard to item 1, avoiding capital gains, she’ll pay capital gains at 15% one time. Depending on jurisdiction, she may pay income tax on the monthly contract payments. If her tax rate is low, not a big deal. If her marginal rate is 28% it is a much bigger deal. Regardless, get thee to an attorney and make sure it is done right.

Be sure she deducts every dollar spent on improvements toward potential capital gains (the logging you mentioned, any gravel, culverts, and any other input costs). If she’s really cutting you a deal for the purchase price below market value, she may be able to shrink the capital gains to a negligible amount.

Brad Dimond wrote:

With regard to item 1, avoiding capital gains, she’ll pay capital gains at 15% one time. Depending on jurisdiction, she may pay income tax on the monthly contract payments. If her tax rate is low, not a big deal. If her marginal rate is 28% it is a much bigger deal.

So just a question to anyone out there who might know.

Since the sale of must hunting land would be subject to the long term capital gains tax (15% for most of us mortals), is there really any tax advantage to NOT going the straight-up-sale route (versus a land contract) with the sale of land?

Yes, you have to pay the tax in one lump, but the government’s going to get their share one way or the other. You still pay the taxes, you just pay them all at once.

How would going with a land contract (which will be taxed at your normal income tax rate) be any less?

Just wondering if the tax advantage that is often given as a reason to go with a contract is really there for most sellers?

Well thanks for the advice so far guys.

I asked my old neighbor in Wisconsin (who is a realtor) who to use to write the contract up and he gave me a referral to a local Land/Title/Abstract company.

TheFamousGrouse wrote:

<div class=”d4p-bbt-quote-title”>Brad Dimond wrote:</div>
With regard to item 1, avoiding capital gains, she’ll pay capital gains at 15% one time. Depending on jurisdiction, she may pay income tax on the monthly contract payments. If her tax rate is low, not a big deal. If her marginal rate is 28% it is a much bigger deal.

So just a question to anyone out there who might know.

Since the sale of must hunting land would be subject to the long term capital gains tax (15% for most of us mortals), is there really any tax advantage to NOT going the straight-up-sale route (versus a land contract) with the sale of land?

Yes, you have to pay the tax in one lump, but the government’s going to get their share one way or the other. You still pay the taxes, you just pay them all at once.

How would going with a land contract (which will be taxed at your normal income tax rate) be any less?

Just wondering if the tax advantage that is often given as a reason to go with a contract is really there for most sellers?

Most of the time it is difficult to get a bank loan on bare land. A contract for deed is often the only way to finance a bare land purchase unless you have other collateral to back up the loan.

you better buy it!!! first I like for it to stay in your family, I like the idea of knowing who my neighbors are! I would hate to see it bought by some developer and lotted off and sold as back lots” and if you ever decide to move back to God’s country you’ll have hunting right out your back door.
from what little I know of land contracts they tend to benefit the buyer, that house built on fox creek by my brothers old home was bought on a land contract, when the owner that held the contract passed, it was written so that guy got the land free and clear.

B-man wrote:

Well thanks for the advice so far guys.

I asked my old neighbor in Wisconsin (who is a realtor) who to use to write the contract up and he gave me a referral to a local Land/Title/Abstract company.

Get an attorney in the vicinity of the land, it’s money well spent and it won’t be a huge outlay.

Beast wrote:

you better buy it!!! first I like for it to stay in your family, I like the idea of knowing who my neighbors are! I would hate to see it bought by some developer and lotted off and sold as back lots” and if you ever decide to move back to God’s country you’ll have hunting right out your back door.
from what little I know of land contracts they tend to benefit the buyer, that house built on fox creek by my brothers old home was bought on a land contract, when the owner that held the contract passed, it was written so that guy got the land free and clear.

Thanks Jim, I really hope we can close the deal with her. It would strictly be kept a family hunting property with absolutely zero intentions to ever sell it or break it up.

As you remember I used to hunt the property back before she leased it and well before the disaster. It was pretty cool seeing 25+ deer on opening rifle, but when she decided to lease it, I couldn’t justify thousands of dollars just to kill some deer (when I had other private property I could hunt on owned by others)

If we get it I promise I’ll be a good neighbor sir

Brad Dimond wrote:

<div class=”d4p-bbt-quote-title”>B-man wrote:</div>
Well thanks for the advice so far guys.

I asked my old neighbor in Wisconsin (who is a realtor) who to use to write the contract up and he gave me a referral to a local Land/Title/Abstract company.

Get an attorney in the vicinity of the land, it’s money well spent and it won’t be a huge outlay.

Yep, the company we’re looking into is nearby and local to the property.

I wish you and your family nothing but the best, we’ll keep our fingers crossed for you, I think it will be 2-4 years before the hunting will be back to what it was pre-tornado, The cover is really starting to come back, should be good winter feed for some time to come, you got good water flow, I can’t see it not being excellent for years to come.

Our place also got demolished by straight line winds back in 2011 or so. Lost maybe 30% or more of the trees. Was almost all mature hardwood. It is coming back but there is still a lot of annoying(unless you’re grouse hunting) young popple/aspen stands that are thick and less than 15’ tall. But I know that won’t last forever.

That’s the beauty of it. The woods will always go through natural cycles so it won’t stay the same forever, for better or worse. I’d say go for it. Might just be awesome in the future, especially for your boys!

Be sure you have a buy/sell agreement. We just sold a 35 year old 300 acre camp. Great friends, never a problem, but we all knew the rules.