Well been waiting my whole life for one of two farms to come up for sale! And got word today one is goin to be for sale and dad and I have first chance! Dad says its all yours if you want it! He doesn't want the debt! And that amount of debt scares me! Way more than i ever had! But it's a neighboring farm to my dad's and we been farming it for 15 years! I really don't want to miss the opertunity and regret it! Gotta lot of thinking to do and work!
- Thread starter Brian806
- Start date
Deere Scotty
Member
I don't know Your situation, or how much money; but could a additional job pay it off quick, or Maybe a "Rent to Own" might work. The entire amount You pay in Rent would be Tax deductible instead of just interest on a mortgage. Would the seller maybe wait in written agreement 2, or 3 years so You could pay off bills, or make a bigger down payment? Its gut wrenching!!! But that's just part of farming. Last time I bought a $60,000 tractor in January of 1995 I don't think I slept well for 2 weeks, & When the next $11,000 annual payment came due every year either.
Bob Harvey
Well-known Member
If you are young enough and still got the energy (and can justify the $$)---Go For It ! Luck !
flying belgian
Well-known Member
That's a tough one. We farmers always have that drive to get bigger however bigger is not always better. I don't know how old you are and don't care but if you are a young man my Grandfather always said " You can't be afraid to stick your neck out but once you do you have to mean business"
Wheatfarmer
Member
DON'T buy it if you just want to get bigger. But DO buy it if it will help you make a living. Remember getting BIG can make you get much Smaller. If you are worried about debt. Do the math. Good Luck in farming.
Adirondack case guy
Well-known Member
I have never seen anyone loose money buying land, unless it was determined a wetland after ownership or captured by eniment domain for a public project. Good tillable land and even harvestable wood land will add to your net worth. Sounds as if you have a good relationship with your neighbor and your dad will be there to guide you. As said do some serious math and planning and have a well thoughtout plan to present to the banker. Low comodity prices are a land buyers friend, and it seams from your previous posts that you have been frugil in buying the equipment that you need to work additional land without a major outlay there just to get a crop in the ground and then harvest it, saying nothing of chemical control of the soil and crop. Was the land kept up or was it neglected for the past years. Soil condition could be the straw that broke the camels back if you need to restore the soils makeup to grow a profitable crop. Get in touch with a soil specialist and be sure what you are dealing with there, to develope your financial plan.
Loren, the Acg.
Loren, the Acg.
Tony in SD
Well-known Member
3 things
1) Land only comes up for sale once in your life time.
2) Land prices go up and down in the upward direction.
3) Do the math.
ps
4) good luck
1) Land only comes up for sale once in your life time.
2) Land prices go up and down in the upward direction.
3) Do the math.
ps
4) good luck
Traditional Farmer
Well-known Member
- Location
- Virginia
You must not have been around in the early 80's plenty of farmers went bankrupt with overpriced land.
I'll just reaffirm what the others said. Run the numbers and make sure it cash flows. Don't use best case projections but rather middle of the road commodity numbers and slightly above average expenses. Don't let your pride get in the way if things at some point are not working out. If you get to a point where the refinances are creating a mountain of debt then it is time to let go. Let's hope things do not get to that point.
Traditional Farmer
Well-known Member
- Location
- Virginia
If you can see your way clear on it fine but if its going to put you in financial
He!! then you will eventually hate it,plus is your wife and family(assuming you have such)
in for the long haul and willing to make sacrifices for it?
He!! then you will eventually hate it,plus is your wife and family(assuming you have such)
in for the long haul and willing to make sacrifices for it?
formerly ny bill
Well-known Member
most of the time land comes up for sale once in a lifetime.
land next door is worth more than land 10 or 50 miles away.
if you have been renting it for 15 years, you should have a good handle on what it is capable of producing. are there old fencelines etc that could be removed to increase efficiencies once you own it? can a house lot be sold off to reduce the net cost?
run some best/worst/most likely budgets and see how it looks. again, you should have better insight than anyone else on what your situation would be with/without the property.
debt can be scary, but a lot of us have dealt successfully with some major numbers over the years.
i'll repeat, land usually comes up for sale once in a working lifetime.
land next door is worth more than land 10 or 50 miles away.
if you have been renting it for 15 years, you should have a good handle on what it is capable of producing. are there old fencelines etc that could be removed to increase efficiencies once you own it? can a house lot be sold off to reduce the net cost?
run some best/worst/most likely budgets and see how it looks. again, you should have better insight than anyone else on what your situation would be with/without the property.
debt can be scary, but a lot of us have dealt successfully with some major numbers over the years.
i'll repeat, land usually comes up for sale once in a working lifetime.
60 acre hillside
Member
Every major transaction made there were a dozen old men with just enough money to pay for their coffee telling me that the tines were rough when I would go for a snack before going to my second job of working for myself. I survived the 17 % interest of 1981 - 82 and I was able to retire at 57 with a comfortable income. Buy it and do not look back!
Brian806 This farm may only come up for sale once in your lifetime. The biggest regrets I have are the farms close by that I skipped buying. They both would have turned out OK. I just did not want to go in too deep in debt. The sad part is I went way deeper in debt just a few years later on other land that was not as valuable.
The one farm had 225 acres total with 175 tillable acres in it. I was farming it. I was paying $20,000 rent each year. The owner offered it to me for $175,000 basically $1000 per tillable acre. He would have carried the loan for 5 years at a fixed rate and then new interest rate for the balance of the note. The payments would have been $27500. This was in 1986. I just did not feel I could afford the extra $7500 each year. Corn was under $20 and beans where in the $4 range. The sad part is he sold it to a friend and I kept farming it. I was paying $30,000 in rent by 1990. That proved I could have made the payments. My Brother bought the farm in 1999.He gave $4000 per acre on the total acres, just over a million dollars. So That farmed gained $800K in value in about 15 years. He could have sold it in the last year or so and doubled his investment.
So if you can see anyway to make it work then do it. IF you do not I will guarantee you will regret it. Just work your butt off getting the debt paid off ASAP. Do not just make payments. If you have an extra $500 throw it at the note. Anything over your payment goes directly to principle. My wife and I paid off our first land in 7 years doing just that. It was a 15 year note. We made the scheduled payments and then threw any extra money we made on the note as well.
The one farm had 225 acres total with 175 tillable acres in it. I was farming it. I was paying $20,000 rent each year. The owner offered it to me for $175,000 basically $1000 per tillable acre. He would have carried the loan for 5 years at a fixed rate and then new interest rate for the balance of the note. The payments would have been $27500. This was in 1986. I just did not feel I could afford the extra $7500 each year. Corn was under $20 and beans where in the $4 range. The sad part is he sold it to a friend and I kept farming it. I was paying $30,000 in rent by 1990. That proved I could have made the payments. My Brother bought the farm in 1999.He gave $4000 per acre on the total acres, just over a million dollars. So That farmed gained $800K in value in about 15 years. He could have sold it in the last year or so and doubled his investment.
So if you can see anyway to make it work then do it. IF you do not I will guarantee you will regret it. Just work your butt off getting the debt paid off ASAP. Do not just make payments. If you have an extra $500 throw it at the note. Anything over your payment goes directly to principle. My wife and I paid off our first land in 7 years doing just that. It was a 15 year note. We made the scheduled payments and then threw any extra money we made on the note as well.
formerly ny bill
Well-known Member
i think it was harder to pay off overpriced crop land in the 80s than it was overpriced dairy farms.
I was in the same boat last fall had a farm we had rented for 50 years .Talked with loan officer said after putting 40 percent down I would still loose 200 dollars an acre for 20 years till I had it paid for. So I would be 75 and never make a dime on it. Passed it by If I rented some ground and was losing 200 I would give it up
jim castleman
Member
The farmer that had to have the farm next door caused him to go broke! Pencil it out-nothing stays the same.
If I was younger I'd go for it. You and your dad should sit down with your banker and discuss ways of going for it. You'll need to come up with about 60 per cent of the appraised value in cash, do you or your dad have paid for land? That will help. A loan for the rest with yearly payments about the same as cash rent would be ideal. Good luck!
Adirondack case guy
Well-known Member
I was definatly around in the 80s. I was A Case, New Idea, Hesston,Landoll, Amco, and Knight dealer with many other shortlines, and we made the cut and became a CASE-IH dealer.
Land prices were a thousand to two thousand per/A, for tillable acerage. The thing that put a lot of our Dairy farmers out of business was intrest rates in the high teens and milk prices dipping down to below $10.oo/hwt. The farmers who failed had expanded the heard number two/three fold and put up large freestall complexes and parlors and Harvestore silos, to say nothing of buying the biggest equipment in the county at those high intrest rates. Poor production from grade dairy cows and lack of heard health brought down many of these want-to-be BTOs of the era. Today the land that they purchased for 80s prices is selling for 3 times more, so the land was and still is a good investment for a farmer who has a financial plan and is ontop of all his costs and returns.
Loren, the Acg.
Land prices were a thousand to two thousand per/A, for tillable acerage. The thing that put a lot of our Dairy farmers out of business was intrest rates in the high teens and milk prices dipping down to below $10.oo/hwt. The farmers who failed had expanded the heard number two/three fold and put up large freestall complexes and parlors and Harvestore silos, to say nothing of buying the biggest equipment in the county at those high intrest rates. Poor production from grade dairy cows and lack of heard health brought down many of these want-to-be BTOs of the era. Today the land that they purchased for 80s prices is selling for 3 times more, so the land was and still is a good investment for a farmer who has a financial plan and is ontop of all his costs and returns.
Loren, the Acg.
Brian, I agree with so much uncertainy in this country, it does make you nervous. If you have been farming it for 15 years than at least you should know you return on your crops? In my opinion agriculture is the back bone of this country, or at least it was, more important than any other industry. But then again look at how much food in the store comes from china? So it really is a crap shoot. Whatever you decide I wish you the very BEST. I wish I could buy the farm I work, but that will never happen now. Keep us posted on what you do.
Traditional Farmer
Well-known Member
- Location
- Virginia
If they couldn't pay for it and went bankrupt it wasn't a good investment.What its bringing now doesn't matter because they don't own it.
Dave H (MI)
Well-known Member
I would never turn down such an opportunity. You have 15 years of experience and know what kind of income it can generate thru some of the best and worst years. If your experience tells you it works, what else do you need to convince you?
You will have to get your chickens in a row. If other land is paid for it will help finance it. I could of bought 120 acres next to me the neighbor (dairy farmer) was losing in the early 80's. Banker call me and wanted to sell it to me. I had just built a new house and interest rates were climbing. Said no so I will never know if I could of made the payments on it.
Just rember one thing of all the things they make every day they do not make farm land you really need to do everything you can to figure how to make it happen. Yes you may have a few sleepless nights but everything will work out for the best in the end. We all have regrets on here and everyone knowes there are things he would have done different in his life. that is why most everyone is telling you to go for it.
Good luck and best wishes John
Good luck and best wishes John
Dave Sherburne, NY
Member
You have been working it for 15 years already so it must be making you money.You must already have enough equipment to work it. If it belongs to you, you can possibly make improvements that would increase the profits from the land. If someone else buys it and you still rent it, the rent will probably increase. If you can no longer rent that land and you have to go somewhere else you will probably have to start over to bring new land up to snuff and pay higher rents. Go for it.If you don't you will always regret it and be saying "I should have bought that land right next door.
Pay no heed to the land always goes up crowd. We are in a different era today: one of debt deflation, not inflation. If you buy land when interest rates are high and they go down, you can't lose but interest rate can't go down any more. So you are paying near a peak price for land today and it will likely go down. Future generations are going to be smaller and poorer than the baby boomer generation so they can't get the financing needed to push prices higher. So you will likely want to buy only if you can put a substantial amount down so that making payments will not be an issue during tough years.
MarkB_MI
Well-known Member
- Location
- Motown USA
The good news is land prices seem to have peaked, and may have dropped a bit in the past year. The bad news is commodity prices and interest rates are low. If commodity prices continue to stay low, farmland prices will decline. If interest rates go up (and they have nowhere else to go), land prices are going to drop.
You need to think long and hard about what that land might go for, and what's the absolute most you're willing to pay. Understand that it's quite unlikely you will be able to purchase the property at a price where it will generate a positive cash flow at today's commodity prices. Are there enough good reasons to buy it even if you'll lose money on it in the short term?
You need to think long and hard about what that land might go for, and what's the absolute most you're willing to pay. Understand that it's quite unlikely you will be able to purchase the property at a price where it will generate a positive cash flow at today's commodity prices. Are there enough good reasons to buy it even if you'll lose money on it in the short term?
fred goodrich
Well-known Member
If you don't buy it think of how long it may be before it comes available again and by that time you will have it figured out how to pay for it.
Traditional Farmer
Well-known Member
- Location
- Virginia
Land always going up maybe true long term because of inflation but 'land always going up' in terms of 10-15 years and under is a big lie.An older friend that died back in the 80's told me they had a farm and was offered $25,000 for it around 1918 and didn't sell,they had to sell around 1922 and said they got $5,000 and was lucky to get it.No land in my area could come close to being paid for by farming it,but can be a whole lot better investment than regular farmland because of the development potential and farm prices have Zero effect on its value.
When I bought my farm in 1957 a wise old farmer told me, "Sonny, you only get one chance in a lifetime to buy your neighbor's farm. If it becomes available, buy it." Best advice I ever got. Past 50 years bought two neighboring farms. Had to borrow every penny to buy them. Today debt free.
I bought my family farm back in 07 at 67 yrs old. had to buy brother out or lose what I had wantd all these years. He would have payed me for my half what I paid him for his half but then he would have turned around and sold for a bigger profit. I still have the farm with a loan from the bank.
This is my home.
This is my home.
I would comment that if he can maintain some discipline that he should escrow some money for a tough stretch to make sure the payments get made. If it is like around here people are bidding based on maximum cashflow from all enterprises both farm and non-farm. Example. 7000 acre farm makes 100 dollar per acre profit. 700,000 dollar profit less taxes to bid on a small tract of land. The operator of the 7000 acre operation is not worried about the small tract paying for itself but rather what the whole operation will generate to keep other bidders away.
Then there are the bidders that have exotic forms of financing that give them an edge. These bidders have access to money at one percent for 50 years but are limited to a purchase of what is considered a home farm. They calculate based on expected cash flow the maximum that they can pay for the farm in another attempt to out bid their competitors.
Then there are the bidders that have exotic forms of financing that give them an edge. These bidders have access to money at one percent for 50 years but are limited to a purchase of what is considered a home farm. They calculate based on expected cash flow the maximum that they can pay for the farm in another attempt to out bid their competitors.
Donald Lehman
Well-known Member
if there is ANY way you can see your way to make the payments and pay the taxes, BUY it! Chances are you will never have the opportunity to buy it again in your lifetime. Even if you do, the price will be a lot higher.
When the price is too high to pay for itself, it is often better to let someone else buy it.
A quarter section near the farm in ND would have been priced at $1,000 per acre a few years back - then the land price boom came along. Owner sold it for $5,000 per acre. With the normal ups and downs of crop prices, that land will never pay for itself in a lifetime.
A quarter section near the farm in ND would have been priced at $1,000 per acre a few years back - then the land price boom came along. Owner sold it for $5,000 per acre. With the normal ups and downs of crop prices, that land will never pay for itself in a lifetime.
Right now farm ground thats 100% paid for will do good to break even with 3.00 corn....How many acres is it....Do you have other farm or off farm income to help make the farm payment......How much money do you have for a down payment...How much is the land per acre and what are the yields on it....Are you already deeply in debt.....Theres lots we would need to know to give an honest opinion and I can sure understand if you dont want to tell us those things..
In 1979-1980 land in my area was selling for $800-1200 per acre....By 1986-87 it had fallen to $300-600 per acre....Lots of farmers got sold out in my area....Even the very best farmers couldnt afford to buy land then as they were barely hanging on...In 2003 a close neighbors nice 80 sold at auction for $1400 per acre...I quit at $1250...Today it would sell for $3,000 per acre.....It had been in the neighbors family since the 1930's..
In 1979-1980 land in my area was selling for $800-1200 per acre....By 1986-87 it had fallen to $300-600 per acre....Lots of farmers got sold out in my area....Even the very best farmers couldnt afford to buy land then as they were barely hanging on...In 2003 a close neighbors nice 80 sold at auction for $1400 per acre...I quit at $1250...Today it would sell for $3,000 per acre.....It had been in the neighbors family since the 1930's..
Do the Math, do not allow emotions to push you into a deal that you can not afford. If you are lucky and the Neighbor is wanting to see the farm continue to be farmed and sell it at a reasonable price, buy it. If they choose to get greedy and get every penny they can, let it go. Not worth going bankrupt and loosing everything. I am on the side of farm land prices are at or very near the top at this point. I see them dropping substantially in the next couple years due to interest rate increases and continued crop prices in the cellar. I have seen several cycles since buying the farm in 1989. I could make a huge profit if I sold now. We got lucky bought when land was cheap, and interest rates were high, it was tough, but was well worth it. Re financed when rates dropped. I am sure I will see the value drop again, but likely never to what we paid for it. Just make sure whatever you do is sensible.
Traditional Farmer
Well-known Member
- Location
- Virginia
That's not really true if land/commodity prices go in the tank he could 1)loose his down payment 2) Have to declare bankruptcy and loose everything else he has and 3)Divorce usually follows these type things like wolves follow sheep.And I have seen all 3 happen.When you put everything on the line to buy something you better be on solid ground not just buy it
because you always wanted it or it might not sell again.Nothing is so good that you can't take too much of a bite to choke on it.
because you always wanted it or it might not sell again.Nothing is so good that you can't take too much of a bite to choke on it.
Secret Squirrel
Member
If you can make it pay, go for it. With 15 years on it, you have experience. I have discovered it is not any trouble to find someone that will tell what you can't do. That being said, plan for sorry prices, high inputs when you are figuring your business plan. Multiply expenses by 2, divide profits by 2. I have never had the opportunity to buy land. The farm next to us sold before I was born (in the early 50's)for 17,000: 225 acres. Every body said they would never pay for it. It sold again in the early 1970's to settle the estate for 1350.00 per acre. Every body said they would never pay for it. The farm next to it sold 4 years ago for 4,000. My father in law was always carrying on about how these guys would fail, and in the 1980's some did, but most are still going. Hope for the best, expect the worst, and you will not be disappointed. Hope this helps, and may the Lord be with you.
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