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How much money did you spend starting your homestead?  RSS feed

 
alex wiz
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The title says it all. I have 5k saved up and want to buy some land in Nebraska and build a small strawbale house. I figure it'll cost me around 40k total. How much money did you spend starting your homestead? Did you take out a loan? How much money do you need per month for your lifestyle?
 
alex wiz
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Also if you like natural building here is 1000+ photos on tumblr
https://www.tumblr.com/blog/naturalbuildingencyclopedia
 
Jay Grace
Posts: 238
Location: Nauvoo, AL
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Speaking from personal experience.
Don't take out a loan, and do go in with anyone else.
Save up and pay for it in cash and only have your name on the title.


 
alex wiz
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Thanks for replying! If you feel comfortable I'd like to see some financial numbers based on other people's purchases and lifestyles.
 
Mike Cantrell
Posts: 555
Location: Mid-Michigan
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bee books duck food preservation forest garden hunting solar trees
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In 2012, my wife and I spent our nest egg on our homestead. $42,000 for five acres, a small concrete-block barn, a detached two-car garage, and a run-down house.

I spent a ton of time and about $6,000 fixing up the house (roof, plumbing, flooring, paint, and a lot of odds and ends).

We're not working it as a homestead, in the sense of living off the land. We had a big garden this year, plus chickens, ducks, and geese. But that's it. No surplus to sell, and not even enough that we grow everything we eat.

The land doesn't provide us our income- I work a "city job" for our money. We COULD live off the land, given a year or two of notice and a willingness to cut our luxuries down to zero (luxuries like health insurance and more than one phone). Five fertile acres with a pond and the outbuildings already built, that's adequate for subsistence. But those luxuries are important enough to us to be worth it.

You asked about expenses. Our bills are about $2,100/month. Largest item is health insurance at $565. Next is groceries, $500 (five people). If the house weren't paid-for, that would be a whole lot higher.



How old are you, Alex? And are you married? Do you live in Nebraska now? What do you do for money?
I'll back up what Jay said- no mortgage, no partner. Almost everybody who's dreaming of homesteading is picturing freedom.

Starting a homestead with a mortgage is like wooing a woman with lies- it might get you what you're after, but it will ruin what you're after, too.



That's going to ruffle some feathers, I know it is. I'm not saying a mortgage is a bad idea for everyone, everywhere, every time. But it's a bad idea for you. Here's why:

1. You've got a trade but not a career. If somebody's got a steady, boring, reliable career underway, where they're pretty positive that their income is going to increase slightly for the next few decades without any gaps or up-and-down swings, fine, take a mortgage. That's not you. If it were you, you wouldn't be asking us about moving to Nebraska and building a house.
2. The mortgage isn't for making money. The people who are going to chine in here are going to say "Hang on, mortgages aren't bad, I financed $150k on my farm and it's been a good successful moneymaker ever since, and I couldn't have done it if I'd tried to scrape together $150k in cash first. I'd have never gotten there." I know that's not what you're talking about because you didn't mention any farming. You asked about minimum numbers. You said "take out a loan" instead of "finance it."

So please, please, please, let me discourage you from chaining yourself up in order to get your freedom. Or enslaving yourself to capitalism to get back to the land. It's much better to be patiently do it a little bit at a time and get it right than to hurry up and get a sad, distorted version of your dream as quick as you can.
 
R Scott
Posts: 3351
Location: Kansas Zone 6a
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If you are going to have debt--land, house, and business capital (homesteading) are the least offensive kinds. But it is still a ball and chain.

Land is expensive these days. So are things like wells and utilities. If you are going to be on the grid, find a place that already has utilities or find out EXACTLY how much they will cost to get--that number can go from a couple hundred to a hundred thousand.

You sound young and single. Save every penny you can--no beer, smokes, or fancy coffee. Live in a dive, buy a cheap RV/van/schoolbus and live in it to not pay rent now. Buy your land with cash. Keep working. Move the RV to the land only if it makes financial sense while you are still working. Pay for initial earthworks for the land and start planting trees (from seed). Keep working. Build a barn. Move the RV to the land. Continue earthworks and food production systems. Build the house. Reduce the expenses (should have been low already) and see if you can cut working down.

It is not easy if you are used to easy.
 
alex wiz
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Mike I'd give you a digital apple if I only knew how!
I wasn't planning on taking out a traditional 30 year mortgage, more like a loan that I could "hypothetically" pay off in 5 years.
Regardless, I'm sure you're point still stands. I guess you are right, it would be a giant financial burden.
Luckily, I have a seasonal job in the Ecology field. Hopefully, my next job will be even better and I'll be able to save more.

The truth is I'm slightly worried about the future of this planet. I wouldn't be very surprised if a new great depression came upon us. I'd like to have a farm if shit hits the fan.
It'd also be nice to have a home base to go to when I wasn't working in ecology (in whatever state I'd be in). I'd also like being close to a state that has legal weed.

I'm young and naive and it probably isn't easy to find a woman living in rural Nebraska. I'll listen to your advice. Thanks.
Oh how I want to break freeeeeeeeee!
 
alex wiz
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R scott, thanks for the advice. I'd greatly consider living in an RV if I had a long term job and a place to park it.
 
R Scott
Posts: 3351
Location: Kansas Zone 6a
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Other option for getting out of rent now is to do a workshare--there are lots of people that need part time help but no money (think retirees on SS) that would give you a room for 10 hours of work around the place and carrying groceries for them. But you have to be trusted inner circle for that to work, not easy thing to be in small town Nebraska.
 
Ken Peavey
steward
Posts: 2524
Location: FL
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I wrote an article explaining How I Bought This Place.

In short: $5k down, $500/month for 7 years.

Three years ago I bought this property. The price was $45k. It was previously owned by an elderly lady who's husband had passed away a couple years before. She was no longer able to take care of the place by herself. The property is 275' x 575', 3.6 acres, with pasture and some woody areas, completely fenced. It's big enough to do something with, not so big I can't handle it alone if the job was not in the way. Out back is a 16x20 livestock shelter. It's a few posts with a metal roof and plywood covering the back wall. The garage is 12x24, slab floor, metal roof, with power and in great shape. The house is an old mobile home, 1972...nearly as old as I am. Originally 12x50, an addition was built on to the north side bringing it to 20x50, plus a porch in the front. It's in good repair, everything works, new appliances, new roof, new heater/air conditioning unit (greatly desired in Florida). There is a well with outstanding water, a septic tank, and everything runs on electricity. The place has everything I need, with space to do what I want.

I make a decent living working for an industrial contractor. My bills are low. Truck has been paid off since '09. I'm able to save a few pennies here and there. I scraped together a few bucks, came up with $5000 for a downpayment and went looking for a home. Twenty years ago, following some misadventures, I went through bankrupty. I found the experience to be unsavory. In the years that followed I never took up loans or reestablished a credit rating. A miracle allowed me to finance a truck with no credit score. What helped was the fact I owned my home. In '02 I had found a home for sale with owner financing. The downpayment was 5%, $1600. The mortgage was $372/month for 15 years. Even with 12% interest it was cheaper than renting and a deal I could not pass up. During a storm, a tree fell on the house causing significant damage. The insurance claim, as it turned out, was to be in litigation for several years. I needed another home.

Financing the truck had brought me from no credit score up to 580. Pitifully poor, but it was better than blank. Banks were not interested in doing business with me as my credit history was not established other than the truck. I did not qualify for a USDA loan as 600 is the minimum requirement. There was still the option of hunting for owner financed property.

This property has a critical flaw when it comes to bank financing. The structure is an antiquated mobile home. Although it is in good repair, banks won't touch them at around 30 years old. The only way to buy it with financing is for the owner to hold the note, which is exactly what she did. The interest rate is 7%-a far cry better than my house in town. I signed in May of 2010. If I stick with the regular monthly payment I'll be paid off in late 2017.

Owner Financing has the disadvantage that the rate of interest is usually significantly higher than loans from banks. If I had the credit rating, and somehow found a bank that would finance a 1972 trailer, I'd be paying around 3-4% interest rather than 7%. Banks will set the term of the loan for longer durations, say, 30 years. The seller wants the money as soon as possible so she can move on with her life. A 30 year note with a bank at 4% for 30 years would be $190.97/month. In addition to this amount some banks set up loan payments to include property taxes and insurance, as well as mortgage finance fees. $500/month is affordable to me, and having the place paid off in 7 years is something to look forward to.

There is a distinct advantage to owner financing which can not be found with a bank. I still save my pennies. When I have enough of them I will approach the seller and offer 75% of the balance due as full payment of the mortgage. No bank would ever be able to accept such an offer. My current balance is around $18k. In a few months I'll be able to offer $12k to pay off the place. I know for a fact that the seller is in a weak financial position. Rather than waiting 3 more years with $500/month coming in, the prospect of a lump sum immediately will be tempting, and may be in her interest to accept. She may decline the offer. That will be no problem at all. I can keep making the payments. She may be willing to negotiate a different amount. I can pay the debt off early, but I'll be wanting to settle for less than the balance. If we can find common ground, this place will be paid for by January. What a great way to start the new year.
 
alex wiz
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Great story Ken, thanks for sharing!
 
alex wiz
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bumping, hoping to hear more stories.
 
Bill Hinkley
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Alex I'm in the same boat as you. I spent last winter figuring out how I could make it work with a few thousand dollars. I'm in my 20's and impatient also, but I realized I just have to continue to live cheap and save.

It's so easy to get worked up and ready to go, but the reality is actually getting out and doing it is more difficult and cost more then we imagine. Unless you are going to build under the radar, licensing and permits alone are quite expensive.

I'm not rich but for a person in there 20's in the current economy I'm doing ok. I make just under 50k a year. My monthly expensive including food are normally around $1000 a month and could be less if I got a roommate but I value my alone time. So I end up saving between 55-70% of my monthly income after taxes. I don't have cable or internet at my house but end up spending $5-10 a week on books at the thrift store or rent from the library.

I have always been impatient and wanted things to change immediately, but I am starting to view this time as part of the journey. I'm becoming even more thrifty with my money which leads to more creativity. Also its a chance to practice farming and permaculture before you bet all your money on it.

The RV thing can be great depending on where you live. I spent a year and half traveling in a camper van and you would be surprised at how many people you can meet that will let you stay at their place or know of some land you can stay on.

I always remind myself of a quote from a yogi, I can't remember who said it, but he talks about people who are stuck in society and he says "It's best to continue working in society but don't have your heart in it." I always remind myself of this quote and my goals. If I think I need a newer car or new shoes, just remember I am in a consumer culture currently, but if I don't join the consumers I can eventually get out of main stream society and relax.
 
John Wolfram
Posts: 652
Location: Lafayette, Indiana
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It's not a homestead in the truest sense of the word, but my orchard (with 600 square foot cabin) cost about $42,000 for five acres of land and the cabin. Annual spending on trees and other misc. things (rainwater storage, deer control, clover seeds, etc.) has probably been $2-3,000 per year for the last few years, and of course there is all the time I've spent working on the project. As others have suggested, saving up and cash flowing your property/homestead is a great way to go. By not having a large lump sum of money to work with, it forces you to go slow which tends to make your mistakes smaller.

Ideally, I'd like the project to become self funding before the total outlay reaches $54,000....or the price of a Corvette.


 
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