Buying a farm

Gleanerk2

Member
Well I decided buying a farm is a dream for
me! If you dont have 100 grand in the bank
the banks dont seem to wanta deal with me!
I make enough at my job to cover a morgage
I want but not enough down payment anywhere
from 20 to 30 percent! Well a few hundered
thousand and that down payment is huge!
Tried saying I been farming for 5 seasons
now every year I add more ground and been
making a profit I buy wore out equipment
and fix up so the only debt I got is my
pickup! Its tough I know always has been
always will! But I just dont know how a
young person is to get started farming if
he cant buy a home base! Ok done ranting
 
Have you discussed this with the land owner? When I purchased my property I was able to pay a down payment to the owner and paid off the rest on a five year note directly to her.

Pete
 
I wanted to start farming in 1959. No one would rent me any land until I had equipment. None of the loan agencies would loan me any money to buy equipment until I had contract to rent land. I was going to buy my brothers equipment. Was working full time job as mechanic. I guess that is reasonable when you think about it.
 
(quoted from post at 16:14:26 10/01/15) Well I decided buying a farm is a dream for
me! If you dont have 100 grand in the bank
the banks dont seem to wanta deal with me!
I make enough at my job to cover a morgage
I want but not enough down payment anywhere
from 20 to 30 percent! Well a few hundered
thousand and that down payment is huge!
Tried saying I been farming for 5 seasons
now every year I add more ground and been
making a profit I buy wore out equipment
and fix up so the only debt I got is my
pickup! Its tough I know always has been
always will! But I just dont know how a
young person is to get started farming if
he cant buy a home base! Ok done ranting

I think you will see that with any non residential property. I bought a piece of commercial property a couple years ago, the only mortgages available were 30% down, 5 to 7 year balloon note, and 1 to 1.5% higher than residential mortgages. I ended up paying cash, so I avoided that trap.

As far as buying a farm, I haven't seen one sold here in many years. They usually get passed onto family.
 
You get a surprise alright go in to them and your told your farm income don't count farm expense does and the real nasty one they lie by omission the don't put your farm or payments on a credit report so your credit report does not show what your actually doing . And the best is when they forge papers to try and take your family farm to sell to a guy they like . I know next time it's tried they can pay the judge off but I got a gun .
 
(quoted from post at 00:34:50 10/02/15) FSA does offer beginning farmer loans.

That's what I did when I bought the land/machine/cows from my mom. I was too young to have a credit history. I believe you just needed to prove you were active in ag a while, and prove that you can't get a regular bank loan.
 
I feel your pain. Green stone farm credit only requires 20 percent down. If you have enough equity in other property, they will count that toward it as well.

I tried the fsa road. Pain in the a**. Funding isn't always available for the loans and it's quite a process.

Fsa also does a joint loan with green stone. Not exactly sure how that works, but might be worth asking about.
 
Banks have external advisors that are telling them to not make loans to farmers because of the declining prices for grains and livestock. Also, banks are nervous about the stock market so they would rather hold onto their cash than loan it out. If they have sufficient cash after the crash, they may be able to stay in business. 20% down used to be the norm to buy real estate years ago and lending agencies are trying to return to that practice. If a person has a large equity in the property, they are more inclined to make the payments than a person that has little or none of their own money invested.
 
I hate writing this,but the truth is , we don't need any new young farmers. Before you all jump on me, I was in the same boat once. I rented a farm with a barn and no house. later I bought the farm from the owners , and they held the note. We lived in a trailer, till I found a house to move onto the farm. That is my story. Why we don't need any new young farmers is , the old farmers are growing there farms and have sons to take them over. If they have no sons , there are always other big time farmers waiting , with money or good credit , to buy up the land and keep it producing corn wheat and soy , fora margin so slim that you could shave with it. Bigger tractors ,planters and combines ,equals less farmers. Farming is a mature industry , not the new frontier our grandfathers or great grandfathers lived.I don't like it, just the way it is. I have farmed and milked cows for 35 years, I will milk 60 cows this morning, and I am looked at as a "hobby farm" or a "life style " farmer,what a load of BS. I love farming but , there is no real money in it, so it will be hard to borrow against it. Sort of like wanting to borrow money to buy a Bass boat, because you like to fish, better have another reliable cash stream.I am frustrated for you too ! Bruce
 
A lot of truth to what you say. Wish it wasnt true, but it is. There was a time, when a young ambitious man could start with nothing work hard, make good decisions and build a big farming operation. Those days are long past. Probably 60 years past...
 
Both of my Sons have been working up to it by buying multiple smaller acreages and are diversified between livestock, pecans, hay and crops. You need a year round revenue stream outside of your day job to help pay for the land. In general terms a diversified small farm is much more apt to turn a profit year on year than a pure grain operation, running cows can help balance out your income and land use utilize your crop residues and provide an alternative market channel for your grain.
 
It is near impossible to make a start anymore. Where I live the off farm jobs just do not exist unless you are the school district superintendent or bank president to do the boot strap thing. For that matter jobs are scarce here if you just want to be a home owner. A good place to be if you are retiring from an expensive suburb and want to get some equity out but still have a sizable home. A home near church that is very sizable (over 2000 sq ft) sold for just under 95,000 dollars. A lot of for sale signs in the village and they are up for a while so I am thinking people are not getting their asking price easily if at all. Back to farming land price is totally out of line with economic return and looking to stay that way. The future is favored for those that have exotic revenue sources to buy ground. I was not feeling very good about life (farming) today before I read this thread.
 
Your best bet is one of the FSA programs for young farmers. That said, given current farmland prices you may be way ahead to continue leasing. If your mortgage payments will be much more than rent it doesn't make much sense to buy.
FSA farm loans
 
It takes a good off the farm job to afford to be a Farmer.
Unless you step into a established family operation I think your going to have to work off the farm so you can afford to play farmer at night and on the weekends.
That's what I had to do. Now that I'm retired I can work full time on the farm. But I have a monthly retirement income coming in also. I would have liked to farmed full time but I also like having money in my pocket. It is what it is.
 
Best post here. We have few farmers here, and getting fewer, the analysis that it is a mature industry is spot on. There isn't room for newcomers.
 
We may not need young farmers but young people need options if you want to keep them interested in the way we do things here in the USA. Nobody wants to borrow a ton of money for college if the field involved will under go radical change including offshoring and outsourcing five to ten years once they enter that field. Also, it is just not possible to turn every last student into a type A corporate executive. No easy answers here but what we have is becoming increasingly disfunctional and if we do not want a revolution we may have to be open to some new approaches.
 
I live just a few miles from Spook. I have purchased two farm properties in the last four years...so don't know what he is talking about there (or maybe he doesn't?). I also get a pretty fair return on my investment. I do not try to live off the farm alone, but have another business that financed the farm in it's initial stages. In addition to the land I own, I have some additional land rented from others. There are many established farmers in our area...not just a few. There are a few really large ones. One in particular. Some of these folks have rented from me in the past and from time to time I will likely rent to them in the future. It is definitely a mature industry, but ALL industries need new blood and new ideas. Whether you buy or rent, a good strong business acumen and the willingness to work very hard are enough along with some type of "off farm" income. For smaller operators it is not so much about making a living as it is about return on investment. Not enough time to explain it here but if some idiot wants to come along and tell me I am "playing farmer" then they have their heads up...

Just keep working at it and think outside the box.
 

I was thinking about you after I wrote this post. You are the only newcomer I've known that has made it, and you did it at a older age than most. I know 2 guys in the ville area that sold out in the last few years, both because they lost ground to bigger players. I think in your area, it's the Laiers that farm much of Tyrone township? In any case, the odds are against new guys coming into this, unless they have pretty substantial assets to start with.

IMHO. :D
 
I consider myself a newcomer. Started 8 yrs ago with 15 acres. Up to 80 now. Bought 30, renting the rest.

Don't like the way you worded it, but pretty much right. I make enough off what I do for it to pay for itself. I'm getting to the point I'm starting to upgrade equipment a little bit. Doing decent I think. But every dime I make I'm investing right back into it one way or another. No way I could make a living at it at this point. Just hoping that when my son is old enough, he has the option to try to make a go of it, or at least keep doing what I am. If he's not interested when he's older ,2yrs old now, at least I'll have a retirement hobby and some equipment for him to cash in when the time comes. Saying there's no room is not quite accurate. Just have to be realistic.

Also wondering if this $3 corn will eventually bring the big guys back to reality, opening up some opportunities.
 
WE have a guy here who owned a farm tire business with a dream of farming. He and his wife bought 16 acers with a barn, house and out buildings. He worked all day and farmed at night. His wife took care of the cows when there was field work to do. He quit the tire business about 15 years ago and was by then one of the bigger farmers in the area. Still most of his ground was leased. Couple of years ago they got rid of the cows and went all grain. Had a few really good years before prices tanked. He bought a lot of ground. Nice equipment too. Wonder just what his debt load is. Gotta be up there. But it can be done.

Rick
 
Yes, the dairy operation you mention is the one really big operation that I was referring to. Our daughters played basketball against each other so we have had frequent contact with them over the years. They have even taken hay from me in years when the horsey folk are in revolt and the market takes a dump...but to get back to your subject...

You and I are philosophically at opposite ends of the spectrum on this issue, which is good because if I adopted your perspective I never would have gotten up from in front of the TV. I feel that you are more likely to succeed if you do NOT require substantial assets. Obviously, if you come from a BTO family and you have access to those assets then you have the chance to succeed faster, but you may also go down in flames because you have no idea how to scratch the ground without a house sized tractor and you are likely heavily leveraged. I could write volumes on this topic and, believe me, the problems are legion, but... a smaller farmer on rented fields using older equipment has the potential to generate a strong return on investment (ROI). He will need a steady off farm income stream. He will need to be able to do most of his own maintenance and repairs. He will need to be willing to work really hard. He will need to be willing to ask questions of those who are in the know...no matter how it feels to ask.

We are lucky to have these forums to gain knowledge and have dialog like this. I appreciate the chance to express my opinions. I will concede one point. If you are planning on your small operation evolving into something more substantial, buying land and larger equipment for example, you need to really plan carefully or you will end up with a BTO's overhead that you cannot afford. I'm doing fine, but I am juggling a lot of balls. It is not for everybody.

I have to stop here or this will go on forever... :)
 

I actually tried, years ago, in a small way. I planted 10 acres of corn, on ground that I got the use of for free. But I found that my cost on 10 acres was higher than my gross...:) not a way to make money. At that time, corn was $3. I wanted to do hay, but I didn't have any ground that was suitable, and to do that, I needed a longer term access to the property, I didn't want to fertilize and lime a acreage and lose it the next year. The biggest farmers over here on the west side are the Vangilders. The real hoot is the golf course they bought, on D19 south of 96. The golf course folks spent millions constructing the course, now corn and beans fill up the fairways. There is tremendous competition here for ground, and money talks. Most older guys around here either have family or standing offers from neighbors for their ground. Asking about buying farmland about 15 years ago, a real estate broker told me that he never got called to sell a farm in the area, as other farmers or developers were there first.

At my age, and with no children, I am not going to embark on a multi generational activity. And the most successful folks seem to think in those terms.

I grew up with my dad's family growing strawberries, in addition to tool and die jobs, and my mother's family having a small dairy farm. My dads's people only had 5 acres, and the dairy got sold off to a subdivision in the early 60's. So no family ground. I currently have 10 very sandy acres, of which maybe 5 could be considered for a crop of any kind. We have chickens, and a very old goat. We had horses, but thankfully they are gone. We do a garden, and I play with my old Farmall H.

Not much TV. 8)
 

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