A Living from the Land

by William Budington Duryee

Acquiring land for residence and for subsistence calls for the exercise of good business judgment. Not only must the site and general location be acceptable to the family, but the investment involved should be within the capacity of the owner to finance without undue strain on his resources. It should be recognized that there will be ordinary living expenses to be met in the country and perhaps some extraordinary demands resulting from emergencies. Consequently, adequate thought and preparation must be made for financing the investment and making sure, as far as that is possible, that the investment in a country home will not be lost through inability to meet possible contingencies.

It goes without saying that the capital investment should be kept as low as possible. Wherever feasible, the cash available should take care of the full investment without the necessity for additional financing. This reduces the drain upon resources through obviating the necessity of meeting interest payments on mortgages and makes possible the use of any surplus funds for improvement, for education and for giving the family the advantages which country life offers. If it is necessary to borrow funds for financing the purchase, special attention should be given to the type of mortgage which is obtained.

Mortgage Financing.—One of the most desirable types of financing is through a financially sound building and loan association whereby the interest and the amortization of the mortgage are taken care of through monthly payments. Such building and loan mortgages are available in most localities throughout the country. A series of monthly payments can be made which will take care of the interest payments and the mortgage itself so that within a period of from ten to twelve years, in most cases, the mortgage is amortized and the owner has the advantages of a home that is free of encumbrance. For example, if the mortgage amounts to $3,000, subscription to fifteen shares of a building and loan association at $1 a share per month would make it possible to clear off the mortgage in about eleven years. This would call for the payment to the association of $15 per month and interest. Through the compounding of interest, the mortgage can be lifted at less expense than any other procedure.

Another satisfactory plan is to place the mortgage with a bank or financing company or insurance company that will not call the mortgage so long as the payments are met, and at the same time start saving through a building and loan association so as to complete the payments over a series of years.

There is a far greater sense of security in having no mortgage or in setting up a definite and practical procedure for eliminating it than in always having a mortgage encumbrance with its interest payments and the possibility of having it called at an inopportune moment. A home that is free from mortgage can be carried at small cost, especially where the owner is willing to make most of the repairs and attend to the upkeep himself. The demand for outlay of cash for mortgage interest may be financially embarrassing, especially where income is not guaranteed or may be jeopardized through a drastic reduction at critical periods or as the result of emergency expenses in the family, such as are entailed by serious illness.

Taxes.—One of the factors that is frequently overlooked in the purchase of a residence in the country is the cost of meeting taxes. Since taxes must be met if the property is to be held, it is highly important that the location be one in which tax rates are not excessive. On the other hand, an exceedingly low tax rate may indicate lack of progressiveness in the community and lack of facilities which from many angles would lessen the value of the tract as a place of residence. In most localities, the tax rate is based principally upon the costs of building and maintaining highways and schools. Good facilities in both of these respects are highly desirable, and yet excessive expenditures in either direction may so advance the tax rate as to make them expensive luxuries.

In many rural communities, taxing districts are burdened with the costs of building monumental schools or a very elaborate system of roads, undertaken at some time through the flotation of bond issues. The establishment of a sinking fund for payment of interest and amortization of these bonds frequently constitutes a very heavy drain upon the residents of the district. It is, therefore, necessary to determine not only the tax rate in the locality under consideration, but also to know definitely what are the current charges for maintenance of government. Taxing methods vary so widely, even in adjoining districts, that the only method of determining the annual charges for taxes is to secure from the present owner or from the local tax assessor the definite payments that must be made.

As a means of saving trouble later, an investigation should be made of the property under consideration to make sure that taxes have been paid to the date of purchase. This is distinctly the obligation of the owner. Unpaid taxes constitute a lien on the property, and an investigation of the status of the tax payments is essential in protecting the proposed investment.

The Title and Survey.—A great deal of possible trouble can be eliminated by making sure that the title is clear. An investigation should be made along this line by an attorney or agency equipped to secure information from appropriate county offices. Very often the owner has had a recent search made and is willing to pass this on to the purchaser, thus saving expense and delay in tracing back the records over a long period of years. Such study will show whether there are encumbrances or liens of any kind on the property, and these, of course, must be cleared up before any transaction is entered into.

The potential buyer should also have a survey made by a competent engineer to definitely fix the boundaries of the property. Stakes can then be placed, indicating the corners and any irregularities in the outline of the area under consideration, showing the new owner exactly where his property extends. In many sections of the country the buyer is in a position to demand of the owner that such a survey be made at the owner’s expense. This survey is particularly important where an area of considerable size has been cut up into parcels for sale to individuals.