Leased Acreage

[Abester]

if in fact it is an agricultural property then the appraiser knows it will not meet Fannie guidelines.

What if it were the exact same ground and we just hunt on it for recreation? Does the mere fact that it is leased (for even maybe one crop - we don't know) become the driving factor? I think not. What will tip the scales one way of the other will be the contribution of the land relative to the contribution of the improvements.

 

[PropertyEconomics]

What if it were the exact same ground and we just hunt on it for recreation? Does the mere fact that it is leased (for even maybe one crop - we don't know) become the driving factor? I think not. What will tip the scales one way of the other will be the contribution of the land relative to the contribution of the improvements.

Actually Abester that isnt quite true ... if you had a similar property which was developed with extensive improvements, say for equestrian uses, ie foaling barn, veterinary barn, large hay sheds, numerous paddocks, etc. the value of the improvements would exceed (most probably) the value of the land ... a property like this, and lets say its leased for breeding and boarding of horses, would not meet Fannie guidelines even though the land to value ratios were in line with the requirements.

 

[Abester]

You got me there - I didn't make that jump in the context of the OP! I thought we were talking about a ground lease. Happy New Year to you and all!

 

[Susie Seibert]

Thank you everyone for your opinions...what a discussion!

In the Fannie Mae Handbook for Appraisers there's a scenario at the top of page 38 which discusses Buyers purchasing a 20 acre homestead with a barn, fruit stand, house where the current owners sold veggies on weekends. They say that because the appraiser determinined the site with the improvements was not uncommon for the area and that the house represented the highest and best use for the site, the loan met with FM standards because the property was primarily residential in nature and the mixed-use characteristics represented a "minor secondary activity." I guess I'll know more after speaking with the homeowner. I'm not sure how many of the 56 acres are being leased. I assumed most of them when I made the appointment. I've also emailed my client. They sometimes keep loans in-house and may decide that's what's needed to do in this instance.

Thanks again for all your input.

 

[timd354]

Happy New Year Gang! Hope it's a great one for all of us!

I just got an order to appraise a home on 56 acres. The homeowner stated that the land is being leased to a local farmer for agricultural purposes.

Does Fannie Mae take the same stand on leased farm land as it does as if the homeowner were farming it himself? I would assume so but I don't know so that's why I'm asking.

Also, is there a way to talk to a Fannie Mae appraiser directly?

Thanks!

Below is what Fannie Mae says about this issue. My reading of the Fannie Guideline is that Fannie will not lend on agircultural type properties and it does not matter whether or not it is the homeowner who is doing the actual farming or a lessee who is doing the farming. If the property is not residential in nature, then Fannie will not lend on it.

XI, 403.01: Location (06/30/02)
We will purchase or securitize mortgages that are secured by residential properties in urban, suburban, or rural areas. An “urban” location relates to a city, a “suburban” location relates to the area adjacent to a city, and a “rural” location relates to the country or anything beyond the suburban area. We do not designate certain areas as being acceptable or unacceptable. To be eligible for purchase or securitization, a mortgage must be secured by a property that is residential in nature—based on the characteristics of the subject property, zoning, and the present land use. We do not purchase or securitize mortgages on agricultural-type properties (such as farms, orchards, or ranches), on undeveloped land, or on land development-type properties.

 

[timd354]

That is not necessarily true. If I lease a single faily house, that does not mean it necessarily is an investment property.

I am just curious to know if a leased single family house is not an investor owned property, then what is it? It is certainly not an owner occupied property or a second home (assuming that the lease is a long term lease and not a short term lease such as a weekly lease, etc. of a vacation home).

 

[Louis Pompeo]

Thank you everyone for your opinions...what a discussion!

Even though I was the only one with correct observations and opinions, I speak for the entire group when I say that you are very welcome!

 

[Susie Seibert]

epilogue: lender contacted me this morning and thanked me for letting them know the acreage (not the house) was leased. they will not be making the loan. you guys are terrific!

 

[CANative]

Even though I was the only one with correct observations and opinions, I speak for the entire group when I say that you are very welcome!

You should post more often.:laugh:

 

[Abester]

I am just curious to know if a leased single family house is not an investor owned property, then what is it? It is certainly not an owner occupied property or a second home (assuming that the lease is a long term lease and not a short term lease such as a weekly lease, etc. of a vacation home).

A short term lease does not make it "investment" property regardless of who owns it. If a stay-at-home mom owns a hotel, that does not make it a daycare. This is another thread, however, since Conor has claimed this one!