It sounds like a good opportunity, but I have a couple questions:
1) Why wait 3-5 years to build? Is it so you can save up enough for a down payment on building the new home?
2) How much will it cost to build a home on the new lot? Will you be reusing the foundation, or digging/pouring a new one?
3) Where would the money for the lot come from? Small loans like that are harder to come by.
A couple other thoughts:
1) If you're working from dinner time to midnight on farming, and only pocketing $5k/year, that's not a job, that's a very slightly profitable hobby.
2) No, you shouldn't do anything until your wife has a full-time job, especially since your total income will only be $4500/mo. (what's your estimated total commission for a year?)
3) If you bought the property for $25k, you'd have $142k of debt on a $54k/year income. That's not a horrible debt-to-income ratio, but it's not good, especially considering the fact that your student loans will have a higher interest rate.
4) Your needs/desires/values may change over the next 3-5 years, and there's a very good chance that what you want now is not what you'll want 3-5 years from now.
5) Again, what's holding you back from just selling your current place, buying the new lot, and renting for a few months while your new home is built? This to me sounds like the best course of action if you're actually interested in that land.
Zolo, thanks for the response, I'll address your questions.
1) Why wait? Well, I'm waiting for my wife to take her boards, and pass, which will result in a 75% pay raise. I don't want to rush into this, and make finances tight, where I could sit on the property until we have paid down our mortgage and SL's a bit more, and saved up for a sizeable DP.
2) I've been in contact with a builder and will be touring some houses in the coming weeks, and furthering our discussions into pricing, floor plans, sq ft, etc.
3) Money for the lot will come from the bank that I work at (we are a "bank agency"). They understand that market, and have sold several acreages such as this in the 100 years we've been around. As long as I can show that we are planning on building, or that if we don't build, we'd be able to sell the lot back off for little to no loss after we clean it up (we don't plan on ever selling it, if we buy it, but that option has to be there incase something happens to come up).
On your thoughts..
1) This farming that we do, I'm paid $17 an hour, work maybe 3-4 weeks in the spring, 3-4 weeks in the fall. As my FIL ages, one of his sons and I, will as of now, be taking over the operation, and keeping our full time jobs. We run about 2k acres right now.
2) She has a full time job, just is getting paid as a "tech" instead of an "assistant", which she will get the day she passes her boards. Estimated commission is tough, to be honest. I just use my salary for my numbers when budgeting, and we will be throwing all commission money and farming money towards either my SL's, or savings for a DP on the new place.
3) 54k net income, yes. Gross would be in that 70-75k range, excluding commissions and other income - I'll pull down 38k, before taxes, without commissions, and my wife will be making about 37k. Pretty weak incomes, but are in a LCOL area for sure. Our currently acreage was bought for 82.5k, 20% downpayment, and a 15 year loan. Our payments are $650 a month. A lot less than you'd see in a city or HCOL area.
4) I get your point on this, but I'm 99% positive that our desires won't change. The agency I work for has been around for 98 years, all three others in our office are 50+ years old. I'm very secure in my job. My wife got the job that she moved home in hopes to get (moved home as she got into PTA school) - she had interned there throughout college, and it's a county hospital, so, job security is perfect, and she is very well liked. Not to mention that my inlaws are 3rd or 4th generation farmers, and even if we dropped the rented ground and just farmed the owned and sharecropped stuff, we'd be over 1k acres.
5) Holding back is waiting for her to get her wage increase, meeting and figuring out floorplans and pricing on what it'd take to put a new house up, and with the local towns having under 600 people - rentals aren't exactly the easiest thing to find! I say 3-5 years as a baseline - I'd love to be there in a year, to be honest. But, I don't want to push things too tight, and if waiting a year will allow us to save 5-10k to put towards the house, as well as find a buyer that might be willing to purchase our current place, knowing that we'd only move when our new place is finished, is still a possibility. The realtor that we'd use has sold our acreage that we are currently in the last 3 times it's been sold. She knows the market, and will be of great help to us.
Just spit balling numbers here..
Let's shoot low, say we sell the house for 115k.
Mortgage of 49k, student loans of 45k. 94k in debt - pay it all off with the profits in the house sale, leaves us with 21k to put towards the new house - knowing that we'd already have purchased the vacant lot. That is PLENTY available funds, you're right.
Let's assume that we take a small home equity loan for our downpayment on the 30k acreage - so 6k, we'd have 100k in debt before we sell the house, leaving 15k available. That is still enough to make stuff work, because we won't have any other debt that we are making payments on (no car loan, student loans would be paid off, no credit card debt, etc.). Not to mention the bank I work for would probably loan me w/ 0% down, knowing that we have no debt, and higher than median income for our area. Obviously, that isn't the route that we want to go, but it's a possibility.
Maybe I'll check w/ the realtor on the average time it takes for stuff to sell in our area - which is closer to a couple big towns than the place we are looking to buy, assuming there might be more demand in our current area for houses to sell.