How to Finance Your Homestead

Josh: Hey you guys, this is Josh.

Carolyn: And Carolyn.

Josh: With Homesteading Family, and welcome to this week's episode of the Pantry Chat: Food for Thought.

Carolyn: This week we are talking about how to finance your homestead.

Josh: Yeah. We've been getting a lot of questions about buying property, whether to go into debt, and just kind of how to go about it in general. So we're going to share some of our thoughts with you on that.

Carolyn: All right.

Josh: But first, we got to have a little chit chat and catch up with what's going on here at River Bend. And so what is going on with you right now?

Carolyn: Wow.

Josh: What are you up to? Are you still-

Carolyn: We've been picking green beans and canning green beans and eating green beans.

Josh: Green beans are in the garden. Oh, man.

Carolyn: We're eating a lot of green beans right now. They're amazing and wonderful.

Josh: Well, it's a fun flow of the garden too. It's just the different things that come into season and it's a lot of work, but all of a sudden you're flush in a lot of something fresh that you haven't had in a long time, right. We haven't had fresh green beans-

Carolyn: Since last year?

Josh: ... since last year. And so it's really exciting to go through those. I'm excited for the corn. We got a few weeks for the corn yet, but that's always one of my favorites in late summers is when the corn comes in.

Carolyn: Yeah, absolutely.

Josh: But yeah, green beans, pickles. Tomatoes are starting to trickle in. We're slow up here on tomatoes, but I saw you had a bowl full.

Carolyn: Yes. You guys, remember how I was doing that experiment this spring with the early short season tomatoes? It definitely worked. We're eating tomatoes this year earlier than I think we've ever had tomatoes in this location, in this cold climate growing. And those were the Glacier, the Subarctic, and the Siberian varieties. I kind of sourced all over the place to get these. So if you live in a cold climate, try these varieties next year because I already have tomatoes. It's exciting.

Josh: A lot of folks out there are like, "What are you talking about? We've had tomatoes since June."

Carolyn: I know. You guys have had tomatoes for weeks.

Josh: Yeah, it's just tough in our northern environment and even our little micro climate here, we'll have 80, 90 degree days and 40 degree nights. So even in the hoop house, the tomatoes do not like that. It stresses them and it slows down production. So it's great to be finding some varieties that will tolerate.

Carolyn: Absolutely.

Josh: Time to start seed saving those and acclimating them.

Carolyn: To our-

Josh: Land racing them to our environment.

Carolyn: Yeah.

Josh: Yeah.

Carolyn: Absolutely. Well, what about you? What are you even up to?

Josh: Oh, wow. Well, I'm on a mission today actually, when we get done here, going to pick up a fuel tank.

Carolyn: Oh.

Josh: One of our preps that I've been building this year is fuel storage. And we go through here, we go through farm diesel, regular diesel, we need regular gas, and we need a non ethanol, which is usually a higher octane gas for some of our different equipment. And we live out a ways and so if we can buy in bulk and have some storage here and have it delivered, it's actually a lot less expensive and it saves us a lot of time.

So I am going today to get... I found a really, really good deal on a thousand gallon tank. Wow.

Carolyn: That is a lot of fuel.

Josh: But I mean it's super cheap because not very many people want it. So those guys are having a hard time selling it. And so I'm getting a really good price on it. I'm going to actually have it broken up, take it to the welders, and we're going to make two tanks out of it.

Carolyn: Oh, good.

Josh: So that's today's event. But I'm excited about that because that's another layer of resiliency here on the homestead, that we can have some fuel stored here. It saves us money and it saves us time.

Carolyn: Yeah. Well, when you're buying, fuel is just like food. You buy it in bulk, you save money.

Josh: Yeah. And especially at the right time of year, certain things are seasonal and fuel's definitely one of those things that's seasonal. Now isn't the best time price wise, because it's summertime. Gas prices are usually up, but as we get into fall and winter, then we'll really fill those up, so that's a big deal. Very excited about that. That's part of the infrastructure that we're working on here at River Bend to just build up for us. What else? Compost. I'm turning my compost pile now, it's about 30 cubic yards, every other day.

Carolyn: Wow. So you're getting out there with a shovel and flipping it?

Josh: Is that why I've been walking?

Carolyn: Is that why you're back hurts?

Josh: And my back. Yeah. No, thankfully we've got a tractor for this scale and we're adding a little bit to it every day from the barn waste. We're having to have the animals a lot closer to the barn this year because of the heat and we're having to hay feed them. So it's generating actually extra waste from the wood shavings and manures, but it's adding to the compost pile, so that's really good.

Carolyn: Yeah.

Josh: And I'm working on getting it finished this year and seeing if I can accelerate that and do more of a thermal compost on this scale, make sure we're killing the weeds. I felt like we got a few weeds in our compost last year from some of the things that we composted. So I'm trying to get those heat levels up. If you can get it up to 150, in that range, 155, it will start to kill weed seeds and break down any inorganic compounds.

Carolyn: Yeah.

Josh: We shouldn't have any of that in there, but that's a good thing. So yeah, doing that and prepping for animals. I think we mentioned we're going to have Kunekunes coming.

Carolyn: Yeah, the pigs.

Josh: Pigs. These are a non rooting pig. I'm really excited, but I thought we were probably not going to have to get them here until late October, November. And it sounds like they're going to get here a bit earlier. So pressure's on to get that area of the barn set up for them.

Carolyn: Now, we've done a lot of episodes in our life where we've brought the animals in before we've completed the fencing. Don't do that. It's a bad idea. Just saying, it's a bad idea. So we're working on the fencing now.

Josh: Yeah, that was my number one answer. Hey you guys, there's a podcast going to be coming out. It's not out yet, called Homestead Stories.

Carolyn: Oh, good. A new podcast?

Josh: A new podcast, not by us. By a guy named Frank Foreman. And we'll tell you about it when it comes out. And I got to go, Carolyn was too busy, but I got to go and do that. And that was one of his questions was one of the biggest mess ups, biggest challenges you've had. And for us, one of them been getting the cart before the horse and getting into animals and projects before we were ready. And it takes up a lot of time and resources.

Carolyn: Yeah, I would imagine that we're not the only people who struggle with that.

Josh: I think that's a homesteader mentality.

Carolyn: Yeah, that's like a you might be a homesteader if.

Josh: Right. Yeah.

Carolyn: You find a great price on some animal and you buy it before you figure out the housing.

Josh: It's also a problem.

Carolyn: Have you done that? Share your story in the comments and let us know we're not the only crazy people out there, but we are learning. It's taken us a few years.

Josh: Absolutely.

Carolyn: We're learning.

Josh: You learn best from your mistakes, right?

Carolyn: Yes.

Josh: It's good if you learned from somebody else's mistakes. That's wisdom, but a lot of us are hardheaded and so we get learn from our own mistakes. Hopefully.

Carolyn: Yeah. Here we go. Hopefully.

Josh: Hopefully you'll learn from our mistakes.

Carolyn: Yes.

Josh: Again, that's wisdom.

Carolyn: Do that.

Josh: And get going a little faster than we did.

Carolyn: Okay so we have some questions of the month.

Josh: Yeah, yeah.

Carolyn: Or Week.

Josh: Okay.

Carolyn: Questions of the week.

Josh: All right. So we got a couple of them here.

Carolyn: And then we will get into the main topic. So if you're in a hurry, you can't-

Josh: You're impatient and you don't like all this chit chat stuff.

Carolyn: Some people don't like the chit chat.

Josh: Hit fast forward. It's time stamped for you.

Carolyn: There you go.

Josh: Yeah, we get it. All right. Sacred Mommyhood asks on Feeding Hungry Boys. Oh, this is a dairy class question, okay. Once we've purchased the class, will we have access to it permanently? So that's the big question.

Carolyn: She'll be moving in the middle of it.

Josh: Yes.

Carolyn: Yes. Once you purchase one of our classes, you get access to it forever. You get permanent access to it.

Josh: You can even download it, not just the PDFs. And there's going to be a ton of those in there and guides and stuff. But the videos, you can actually download them to your computer. So you own it. It's yours. This is not a membership or a subscription. This is a class and it's yours.

Carolyn: Yes, absolutely.

Josh: Good question. Okay.

Carolyn: And just so you know, we do continue to answer questions. It's not one of those classes where it's like we answer questions for the first three weeks or six months or something and stop. We continue to answer all questions in all of our classes all the time. So you always have full student support in the classes.

Josh: You've got ongoing support.

Carolyn: Right.

Josh: And we're even going to beef that up before too long. That's a major secret, but it's coming. It's coming and it's pretty exciting. Okay. Old Joe asks on the number one carrot germination hack, what is the difference between lightly tilling an established garden and a broad fork?

Carolyn: Ooh.

Josh: Interesting question. I don't know about lightly tilling. Tilling is tilling really, and tilling the ground is when you're going to turn it up and you're mixing up the layers of soil, usually down six, eight inches, maybe a little bit deeper depending on your machine. And so that's really what tilling is doing and that is something we want to reserve for one time events. We don't want to do that every year and mix up the soil ecology and disturb everything. So there's not really a light to it.

I mean, you could call it shallow. Maybe you could do a shallow till or a deeper till, but either way you're mixing up the soil and that has some issues. But actually, the bigger issue to tilling is that in that rotation, the way those blades works, it scrapes the bottom of the depth, whatever the depth is, and it starts to create a hard pan in your soil. And doing that every year starts to create a layer that makes it very hard for the roots to penetrate.

So you might get down eight inches, 12 inches if you can really get deep, but you're creating a hard layer under there that makes the plants have to work harder. It can sometimes hold water and not let the water drain. There's a variety of problems that come from that and it's not good for your soil. And so it's a great start if you need to kickstart something, what we call disturbance and permaculture in a one off event, and I'll do that on a lot of gardens.

First time we're getting in there, we'll till it and loosen everything up, but then we're done. We put that away and we're not coming back to that. And that's where the broad fork comes in. And so how the broad fork is different is it does not mix up the layers. It's got long, strong fingers or blades that go down deep, some of them up to 16 inches. And you can work that and you're layering and loosening the soil up. So it's the opposite of that tiller that creates this hard pan. And it is breaking the soil up down deep and allowing air and water to penetrate and therefore your roots and your plants to penetrate deeper down. And that makes a big difference both to the caring capacity of the soil for water and oxygen and carbon as well, along with the ability of those plants roots to really grow out and find the nutrients that they need.

Carolyn: There you go.

Josh: Yeah.

Carolyn: I like it.

Josh: Yep.

Carolyn: Good.

Josh: Okay. Martin Loan on make the crunchiest pickles ever.

Carolyn: Okay.

Josh: I read about only closing jars finger tight when I first started canning. What does that mean? Does it mean not very tight? Does it mean that some would use a wrench to tighten them, if not warned against the practice? I thought it meant not very tight, and I would regularly have one or two jars out of a batch that didn't seal. I then started tightening them as tight as they would reasonably go, I assume with your hands and without a wrench. And since then I've not had a single jar that failed to seal. Okay.

Carolyn: Got it. Well, I think you've got it right. The finger tight is meant as tight as your hand can kind of tighten it without wrenching with your whole shoulder and elbow and everything else. You don't really want to get that involved. The reason for this is that in the canning process, the steam has to actually leave the jar. So you actually have to have enough movement in that lid that the steam can push the lid up just a little bit and escape. And that's how it creates that vacuum that sucks it down.

The challenge is that, yes, people do things that would be the equivalent of a wrench. Either they get their strong husband to come in and crank that down, or they really get all their weight into it and it will completely seal to where they can the steam cannot escape. And what will happen is you'll dome your lids, which will then ruin your seal. So it'll push all the way up. Luke just came to visit.

Josh: Luke's back to visit.

Carolyn: Luke the dog likes to come join in on video sessions. So on the other hand, like you've experienced, if you don't put it on tight enough, it won't seal properly. So it's kind of that balance of reasonably tight, what your hands can do to reasonably tight is a good thing to do.

Josh: Cool.

Carolyn: If you're getting jars just not seal, but no doming, try tightening them down a little more than you've been doing. And if you get any buckling or doming on the lids, you're tightening them way too much and back off.

Josh: Good gauge.

Carolyn: Yeah.

Josh: Yeah.

Carolyn: There you go.

Josh: Cool. Right on. Well that's the questions for the day.

Carolyn: Okay.

Josh: And so getting in the topic in how to finance your homestead. And disclaimer, we're not bankers and we're not financial consultants.

Carolyn: Or advisors or anything.

Josh: But we have bought a lot of property. I have consulted with a lot of people buying property, so we do have some direct experience and a lot of observation here along with good principles.

Carolyn: And there's always a lot of opinions.

Josh: No lack of opinion. And this topic is firing out of quite a few questions over the last year actually in buying property. And we've got one here today about somebody that's got a large chunk of cash and should they buy property outright or should they take a mortgage so that they can then use some of that cash to take care of some other infrastructure on the homestead. And those are all really, really valid questions.

Carolyn: Yeah.

Josh: This is a great discussion and really that's what it is. It's a discussion because like we say in permaculture, it depends. How are you going to go about financing and setting up your homestead? It depends. It depends on your situation, but we can explore some things and see if we can shed a little light on that.

Carolyn: Yeah.

Josh: Yeah.

Carolyn: That's great. Good.

Josh: Okay. So you know what? I think if you can stay out of debt, that is the best scenario.

Carolyn: Yeah.

Josh: Right?

Carolyn: That's always best. That's going to set you up for feeling a lot more relaxed, right?

Josh: Yeah.

Carolyn: Being able to have a lot less pressure on you. But it also means that you can roll the money that you would be putting into that mortgage into other things on the homestead or just other life things.

Josh: Yeah. So debt free is the best scenario, but obviously that's challenging. So that's one extreme of a scenario and an ideal one. The other one is going deep into debt, which we don't want to do, but a lot of people don't have the cash on hand to just go do something. And so it's a barrier to entry. And so can you use a mortgage? Can you use that type of debt? Okay, no credit card debt, no burying yourself there, right? Let's stay away from that. But can you use that to help yourself get established? And that is very viable. It can be with responsibility and things done well and good decisions.

Carolyn: Right.

Josh: And there's a lot of room in between how much you put down. And this is where I think the thought comes into how do you approach getting established using the resources that you have? Most people are probably going to need a mortgage. If you're not in that situation, great. Be careful about what you do though when you step into a homestead either way, because it is a money sink.

Carolyn: Yes.

Josh: It can be and not in a bad way, but when you're getting going and depending on the property that you buy and your scenario, there's a lot to do.

Carolyn: Yeah.

Josh: It takes a lot of time. It doesn't even matter how much money you have, it takes a lot of time. It takes years to get systems up into place and it takes a lot of resources. And so you've got to try to budget that out and look at what you're doing, what kind of property you're buying, what does it need, what are the things you are going to do, not just this year, but in the next five years at least.

Carolyn: Yeah, absolutely. You get onto that property and you think it's kind of all set up and ready to go, but then, oh, you need fencing and oh, maybe you need some earthwork to smooth everything out. Maybe you need that barn or that shop or all those different things in order to actually move forward with the projects you want to do. So it's important to keep those things in mind so that you can budget for all of those and consider all those right when you're making these initial decisions.

Josh: Right. And so that's where auditing yourself and budgeting for the future and trying to be realistic about the scenario that you face. And are you buying new land or raw land is what I mean to say and are you going to build a house? What are all the costs associated with that? And then putting in gardens, clearing trees, putting in fences, buying animals. You really want to budget that out and think about that. And that's going to answer the finance question.

Carolyn: Yeah.

Josh: You may have a lot of cash, but it may make sense, as this person was asking, to leverage yourself very well, put a large down payment down, but still take a mortgage. Rates are historically low right now. And so that you can use some of that cash on hand to get other systems going. And I think there's a sweet spot in there for each person, depending on your resources of what you should do. And also knowing, being realistic about your future situation, your employment, your business, whatever you're going to do.

Carolyn: Well, your family situation too. Because I know there have been times in our life where we have thought maybe a little more optimistically about what we can accomplish than was realistic. And thinking you're going to buy raw land and then you're going to move onto that land and build yourself a little house with not spending a lot of money. And while you're doing that, you're just going to live in the trailer or the tent or something like that. If you're in the right place of life, people can make that work. A young couple seem to be able to make those things work.

Josh: Or an older couple, you don't have a lot of food needs.

Carolyn: Yeah.

Josh: You're happy living pretty simply and so you don't have a lot of monthly overhead, but you've got the cash to put in, that becomes a pretty nice scenario. You bet.

Carolyn: Right. But you introduce children into that and all of a sudden everything takes longer. And those things that seemed pretty easy to live with when you were thinking about them, when you get into months of hauling water by bucket full to go into the tent, it gets really challenging and it slows down everything and really decreases the morale. So you really need to think realistically about what you and your family can do. And that's going to inform a lot of those financial decisions. Like, no, we just need to buy a place that has a house on it, ready to go, may be the answer.

Josh: And we had to work through that buying Riverbend here. When we are in that transition, we'd been in Idaho for a few years. We had leased. We were ready to buy. We were shopping. And a lot of you guys know, I've got a construction background. We've lived in a home that I built. And it's very easy to say, "We want to build our own home. We can make it just the way we want it." And we know how to do that. That's a skill that we have. However, with the resources, with the family that we have, the size of the family that we have, the journey of doing that, of buying raw land, developing it, building a home while trying to feed our family and live the homestead lifestyle was daunting and very challenging. And the reality is that for us, our food bill, if we were paying cash for our food, is larger than a mortgage and it's larger than this mortgage.

Carolyn: Yeah.

Josh: So for us, we had to make a decision where we found that balance in the middle where we put a good down payment in, still took a mortgage, but we left ourself resources to continue to develop the property in ways that help us produce the food and the other systems that we need. And that's worked very well for us. And especially one of those big factors, like I said, is our food bill. And it's worth it to develop these other systems because it's going to be large for the next decade until kids start to go on and do other things. And it makes a lot of sense to make sure that we can be efficient in other areas.

Carolyn: So I wanted to say something for a moment here about infrastructure on the homestead because I know a lot of people right now are reaching out. They're buying a homestead and they're feeling a sense of urgency. They're seeing supply chains getting a little untrustworthy in the United States, maybe other things happening and they're feeling this sense of urgency and they want to get onto the property and they want to start growing their own food as fast as they can.

One of the best things you can do in that scenario is to save yourself enough money to be able to put in the right infrastructure on the property aside from your dwelling. That is the thing that's going to actually move you ahead most quickly and most sustainably. One thing that we see a lot of people do is kind of move out onto the land and then really bootstrap it, which can be done. But you have to remember that not setting things up the correct way is always going to end up causing you more energy and time in the long run. So if you're feeling a lot of urgency, then one of the great things to do is just make sure you save yourself enough money off to the side to do that fencing, maybe to buy a tractor. I know that's a major game changer when it comes to homestead if you can have a tractor on hand to be able to help with some work.

Josh: On the other side, be a realistic. A lot of times people will go buy a tractor and they could really get by with smaller pieces of equipment. So again, this is where this really planning and thinking through what you're going to need over the next several years, not just the first year and the infrastructure that you're talking about and really planning that out. And people get in a hurry.

We get excited. We want to go. It's like getting that cart before the horse. We want to start doing stuff and it's hard to wait for a plan. But if you can do your own planning or get a little help with planning and think through the next several years and stage out what you're going to do and budget that a little bit, that's going to help you make a good plan as far as what kind of property to buy, how much to put down, pay for all of it, or what size loan you take and where to put all these things. That planning's really helpful. And that's one of the biggest things like in my consulting that I watch, is people just want to go. They want to go start doing stuff and they don't want to wait to get a plan together and do that thought.

And it feels faster. It feels like you're accomplishing more when you just jump out there, start taking out trees, clearing for the garden, whatever it is you're doing. And yeah, okay, I'll plan as I go. Well that's actually the slow road because you're going to set yourself back somewhere a lot of times. And so if you can take a season and time and really dive in and plan, which all comes back to if you're doing that planning well, then you can budget your finance finances well and make decisions about leveraging what you have, a mortgage or not a mortgage. And you're going to set yourself up for success and you're going to find instead of getting two or three years in and hitting this large wall where for a lot of people it starts to stop and it gets hard to get forward, you're going to be able to sustain that journey and you're actually going to get running better, faster that way.

Carolyn: Yeah.

Josh: And I wanted to add... Did you have something?

Carolyn: No.

Josh: Okay. On the financing side, something for you guys to think about if you haven't bought land is understanding and talking to a mortgage broker if that's the route you're going and the lenders and finding out about buying land where you're at. There are a lot of banks that won't lend on certain sizes of property that seem very reasonable to you.

Carolyn: Okay.

Josh: We had a problem in Tennessee where we couldn't get a loan on a house on 30 acres. We didn't have that problem here. It was no problem on a house on 40 acres. But there are different requirements, different states, different institutions do things differently. So that's one of the due diligence up front in financing your property is wherever you're looking, start talking now before you get your heart set on something and make sure you understand what your options are and what they will and will not do.

There's a lot of different ways to solve the problem, but you got to know the state that you're in and where you're buying. And another one with that is sometimes go to local banks as well. If you're having a hard time with a larger institutional bank, they may not want to lend on this property in the country because they it doesn't fit their model. But a local bank who knows the area and knows the types of properties is a lot more comfortable working out a deal with you. And so find those things out in the beginning as well. That's really, really important.

Carolyn: Yeah.

Josh: Things get shut down sometimes. You're looking at 50 acres or somebody, I think they were talking about a hundred acres here, that can get challenging.

Carolyn: Yeah.

Josh: Yeah. So anyways, do you have any other thoughts?

Carolyn: No, not off the top of my head.

Josh: Yeah.

Carolyn: Yeah.

Josh: Yeah. Just do your planning and be smart up front and think it through front and find the situation that works for you. Get a lot of advice, a lot of counsel, and plan that out. Takes a little longer to get going that way, but you'll be much, much more successful in the long.

Carolyn: Yeah. Hey, you guys, check out this video that we have for you on the first five things to do once you're on your new homestead-

Josh: Yep. When you've gotten there. Okay.

Carolyn: ... to get you started.

Josh: It's been great hanging with you guys and we will see you soon.

Carolyn: Goodbye.

Josh: Bye.

Thanks for listening to this episode of The Pantry Chat: Food for Thought. If you've enjoyed this episode, please subscribe, rate, and review.

Carolyn: To view the show notes and any other resources mentioned on this episode, you can learn more at homesteadingfamily.com/podcast.

Josh: We'll see you soon.

Carolyn: Goodbye.