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Farmland Partners- Anybody heard of them? They are based out of NJ

An investment group that buys farmland for the people who are shareholders. They rent it out hoping to make a 4 to 6% return on the money invested.

In April of 2014 they owned 7,500 acres across the U S.

They have purchased 92,500 acres since then. To bring them up to 100,000 acres. Paying as much as 1 mil. for 80 acres.

They just completed purchases of 23,300 acres. Mostly in Colorado.

Here in my area they would struggle to make that 4% return now.

With falling rents and slowly falling land values where do you think these guys are headed?

Gary

I'm thinking this only works in states with low property taxes on farmland.

I'm thinking they're headed toward Chapter 11.

It sure wouldn't work in Franklin County KS. Cash renters are screaming for mercy. I have one cash rent piece and I am going to tell him that I will cash rent again for $20 less or he can walk with it. I've had that ground for decades but he's looking to get rich and forgot only about 10 acres of it is worth anything. I made a little on it this year but I can make up those acres other places. All of my other is shares. Those folks did well this year.

As the next few years slides back into the cycle of the 80's I'm betting that company scrambles. I hope they loose their shorts. Those are the kind of folks that have swiped land from families that have had it for generations on the promise the kids will get big money. They might, but where is the pride in the land?

It reminds me of something an older farmer told me years ago: "the greedy turn into the needy". Mike

They are probably headed for bankrupt,but if they do they may be able to declare it and still have the land free and clear. This happened around here back in the 80s. These guys now are operateing bigger than ever w/cash in their pocket.

Well the numbers sure will not work if you just look at cash rents. They also are trying to protect themselves against inflation. Farm land does tend to do that over long periods of time. Will it do that with them paying record high land prices??? I do not know. The trouble is they just might be right too. We have never seen 18-19 trillion dollar Federal debts before. When the piper demands payment our currency could be come a third world tender. There are many uncertainties in the markets and the general economy. We are heading for uncharted waters with the high public and private debt. The actual economy is not growing if you factor in total true inflation. The Federal numbers dropped energy and food out of their calculations so the federal number is useless.

I would feel safer with land right now over stocks, gold or CDs. You will have some thing if the bottom drops out. Maybe not what you started with but something.

As for those complaining about non farmers buying ground. That is a two sided coin. If your wanting to retire and the farm economy is in the dumps than you NEED outside money to put a floor under the land price. There is no God given right that you have to be a farmer to own farm ground. IF these farm prices stay low then we maybe looking for all the money form any source to help keep things afloat. As long as it is not foreign land ownership I am not against it. Farmers can buy stocks, bonds and non farming companies. So it is only right that others can invest in farmland and equipment of they want to.

As for the comments about farmers losing ground they have farmed for years. Well I feel a land owners can do what ever they want with the land they own!!! If you want total control of land then you should have to buy it period. I am against all forms of zoning and other codes that limit a private land owners use of his/her land!!!!! If you do not want a livestock finishing building across the road from you then buy the land across the road. If you move to the country then expect country smells and sounds. IF I move to a big city do I get to sue people for making for making noise at night????

That's what I'm thinking, no pride there. That is sorta what is happening around here except with the Dutch and Belgium mega dairies. Anyone inherits land or settles an estate, they want top dollar and auction it, because of the stupid high prices the foreigners pay for it, and they each have 3-4 dairies in the county I live in, so any land for sale is always near them. They just need land to dump manure and grow corn to chop. Cover it with manure in the spring, work it in, cover it, work it in, plant corn, chop corn, 2 more cycles of covering in manure in fall. They have gotten pretty good at working it in now, locals weren't too happy when they would let it lay on the snow all winter and it would melt and flow into their yards and driveways. A neighbor of my dad's thought they were going to get rich off their dad's land by auctioning it. They lived in Chicago and only came around after the parents had passed to auction the land. They had a brother that wanted it badly but could only afford to pay so much per acre (200+ acres) and it was very fair what he could afford to pay. His brother and sister in law said "nope, we can get more for that". They decided to retire and move to the country, and tear down the house his parents owned and build a new, bigger, citiot in the country styled house. The weren't aware when they auctioned the land that almost all land in that area is being bought by foreign dairies so they can get a much needed spot to dump poop numerous times a year. They auctioned it, it was bought by the foreign dairy for $2,000 less than what his brother offered for it, the manure from the tankers will almost hit their front porch, the field across the road to the west is the biggest with the most manure on it, and they can't figure out why their yard is flooding after digging through the field tile in a low spot for their foundation. LOL, that what happens when citiots move to the country and sell their family heritage with the farm. I guess they don't like the the smell...

Ross

When I was a kid growing up in west England in the early 80s, there were similar things happening, couple of local farms got bought up by one of these fund groups, they bulldozed all the bush and hedges, and had the land rented.
lasted for maybe 6 or 7 years, then it all got sold... Don't know if they made any money, but they bought at the top of the market.

No one economic pattern trends for eternity and I do not see this one doing it either. This country has not seen non farm investment on this level before and there will be factors that will disrupt it just like everything else. Everybody enjoyed running land prices up to the stratosphere but never gave any thought to the tax assessor bumping values up nor how a fixed expense such as property taxes may affect a poor business year or two. Dairy guys have been crying about tough times being back but they had no problem adding barns and cows a few years ago. Back to topic it took the perfect storm to get land up to 20K per acre in some parts of the US but even then there was a tie in to what commodities were doing at the time. Land going to 50K or 100K is crazy talk and if it happened would be long term bad. People that can pay 50 or 100 thousand dollars per acre would have to be fairly well insulated from the general economy in my opinion. No farmer could offer rent to make for any kind of return on ultra high land prices. This long term is just heading back to feudalism just as they had in Europe a thousand years ago. Where the ultra rich own the land and everybody else is a serf

The only good thing I see from investors driving up land prices is that it speeds up the process for a land crash. Then the land can be bought buy serious farmers at a discounted price. Never enter a market investment while it is on the rise. Far better to enter it when it hits bottom.

The one thing that worries me about all this is what happens to the rest of the economy. If you look though history you'll see that before every great depression the agriculture economy booms. Then after it goes bust it drags everything else down with it. The ones that happen in more recent history are not called depressions, but are called recessions. Probably to hold down some of the market panic.

Farm land was selling for $2000 an acre in the 1920s so L.Fure is correct that there is a historical president for high farm land prices to lead a depression or recession.

Also who is a "serious" farmer these days??? The BTO that has ten thousand acres??? Or the fellow that has 700 and town job for the benefits??? I look at farms of all sizes being "serious" farmers.

It seems that many think that farmers are all warm and fuzzy compared to others in business. I can tell you I have been crooked by farmers as much or more than other business men. The point being that being a farmer does not make you better or worse than anyone else. So I do not wish hardship on anyone. If they can buy the land and pay for it then it is their business. Just as it is mine to do the same or not.

In this area there is rough farm ground on one side of town, and rich prairie ground on the other side A fuel hauler once told me that when he delivered fuel to farmers on the rough ground, the farmer usually was waiting with check book in the hand before he got the hose wound up. The farmers on the better ground had to be visited a few times before they would make any payment on the fuel they ordered. Implement dealers would tell you the same thing.

There have been depression/ressions throughout this countries history. Each one tells the same story. If a young man would only pay attention to history he could make out really well, and not fall into the same traps from the past.

I was told that behind every successful farmer stood a woman with a job in town.

I can't speak for the Midwest but I remember the professors here at college talking about the Crash of 1921 and how it drove land down from at the highest 200 dollars per acre to below 100 dollars per acre everywhere in New York. A lot of land in what is known as New York's Southern Tier was cleared for wheat production just before, during, and just after WWI. A lot of it went back to woodland after 1921. I can't imagine tractors on it for how steep some of that ground is. The Crash of 1921 is talked about in Wayne Broehl's book about John Deere where Deere had miles of scrap or unprocessed metal waiting on rail cars because the factories had cut production back severely due to the downturn. It probably did not help that the Waterloo Works faced perhaps its darkest hour getting beat by Ford and IH until the model D debut in 1923.

I think this is patient, long term money. They aren't going away. This is for a diversified, long term portfolio, inflation protection. Depending on how it's structured, it might even be a tax deal.

Agree that the inflation numbers from the Fed are a joke. With that high debt, running the dollar into the ground makes it easier to pay on. Doesn't do regular people any good though. Unfortunately, the wrong people keep getting voted in by the "gimmee gimmee gimmee" crowd.

Land is probably the best place to store money. The downside is lack of liquidity. If you need that money back out when the market is down then you expose yourself to loss. Land as a pure investment is certainly a long term strategy. From the farmer's point of view you have that strategy as a backup to gains based on production. To Me it seems that with farmland investing groups and REITs there may be too many fingers in the pie to get enough daylight vs. traditional investments. Taxes factor in state to state.

In a SHTF scenario I think gold will be pretty much worthless.

I agree with a lot of what you said. I don't think there will be a crash of values but serious steady erosion. People will need to cash out land for other needs and the number of individuals that can pay as much or more will be few and most likely unwilling. I can see the ag banks telling guys after a few poor business years that the bank has gone as far as it will go and it is time to cash some ground in to pay the taxes or the money borrowed on inputs. Despite all the claims that this time it is different it always washes out the same. I listened to one fool during the end of the 1990's say that the US had eliminated economic downturns so just because somebody has a degree or a title does not make them all knowing.

At least once a month I get a letter from someone wanting to by the farm we rent out. There are several investors that do that around here and I bet they own tens of thousands of acres. I've got a cousin that has in excess of 60,000 acres over 4 states. These people don't have to worry about making payments like most of us do on a land purchase. In the event of a bad year or not renting the land it's no big deal for them. They are counting on land values continuing to go up. The Dollar is strong right now so when it inevitably goes back down the land value will go up. But as others have said, all that can be turned upside down in the event of a catastrophic economic collapse. But if that happens, it really doesn't matter what you invested in you will lose value of investment and land will always be there.

our local lender has been telling us for the last 5 or 6 years people in the banking business don't understand how the interest can be at present rates. it makes no sense to bankers. his thought the fed reserve is the only thing holding the fake economy together.
he thought the lid would blow off of this house of cards a long time ago. when it finally does hold on to your socks and shorts as it might be the only things you have left.
a friend of mine told about his dad sent a train car load of fat cattle and hogs to Chicago stockyards and didn't get enough to
pay the freight. he got a bill from the railroad
his dad owned a few farms he lost them all.

(quoted from post at 18:27:17 11/21/15) At least once a month I get a letter from someone wanting to by the farm we rent out. There are several investors that do that around here and I bet they own tens of thousands of acres. I've got a cousin that has in excess of 60,000 acres over 4 states. These people don't have to worry about making payments like most of us do on a land purchase. In the event of a bad year or not renting the land it's no big deal for them. They are counting on land values continuing to go up. The Dollar is strong right now so when it inevitably goes back down the land value will go up. But as others have said, all that can be turned upside down in the event of a catastrophic economic collapse. But if that happens, it really doesn't matter what you invested in you will lose value of investment and land will always be there.

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That line of thinking is pure speculation. Like I sais earlier, Read the history and compare it to what's going on now.

(quoted from post at 13:52:11 11/21/15)

(quoted from post at 18:27:17 11/21/15) At least once a month I get a letter from someone wanting to by the farm we rent out. There are several investors that do that around here and I bet they own tens of thousands of acres. I've got a cousin that has in excess of 60,000 acres over 4 states. These people don't have to worry about making payments like most of us do on a land purchase. In the event of a bad year or not renting the land it's no big deal for them. They are counting on land values continuing to go up. The Dollar is strong right now so when it inevitably goes back down the land value will go up. But as others have said, all that can be turned upside down in the event of a catastrophic economic collapse. But if that happens, it really doesn't matter what you invested in you will lose value of investment and land will always be there.

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That line of thinking is pure speculation. Like I sais earlier, Read the history and compare it to what's going on now.

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That's true it is speculation but that is all these type of investors do. They don't produce anything. But like I said earlier it if there is a collapse, what ever they speculate in, it won't matter. Land is the more secure bet.

The only way they could possibly make out would be to "buy low, sell high" and rent it for cash in the mean time, If they hold on to it they will never be able pay the taxes.But you can bet when the organization goes down they will loose a bunch of somebody elses money and the ones that were in charge will have made a damn good living all these years.

(quoted from post at 18:31:50 11/21/15) our local lender has been telling us for the last 5 or 6 years people in the banking business don't understand how the interest can be at present rates. it makes no sense to bankers. his thought the fed reserve is the only thing holding the fake economy together.
he thought the lid would blow off of this house of cards a long time ago. when it finally does hold on to your socks and shorts as it might be the only things you have left.
a friend of mine told about his dad sent a train car load of fat cattle and hogs to Chicago stockyards and didn't get enough to
pay the freight. he got a bill from the railroad
his dad owned a few farms he lost them all.

Click to expand...

The government and the Federal Reserve bank are in cahootz pertaining to todays low interest rates. They are only trying to help business's expand, or keep the rest of the country from going under due to high borrowing cost. But I think too many people are taking advantage of this to no good end. Sometime in the future the interest rate will have to go up, and this will slow investment in land. In turn driving the price down. Then the big land investors will slowly go broke. Back in the late seventies and early to mid eighties the interest rates were sky high. I remember credit card interest being as high as 20%, and ag notes at around 15%. I bought our place in 87 with 10.25% interest rate. Shortly after that interest rates started to fall, and I kept refinancing for lower rates. Just think what would happen if/when interest rate climb to those numbers.

The land buyers, that I'm familiar with, around here have bought at lower prices. The land values here are considerably lower than most places and the taxes are lower as well. They look at land as a better investment based on the way everything else is going. They have the money and leaving it in the bank is losing them money now. The interest rates don't keep up with inflation. Contrary to what many think, the rich folks don't enjoy sitting in rooms just counting money, they had much rather invest in something that might fail as just sit on it knowing that it is losing value every day. If that weren't the case I never would have been able to borrow money :lol:

There Buying Now But Later Selling it to CHINA ????????? = WE AMERICANS Get Screwed =It is never What You think ??? Just My Thought's

Unfortunately now when there is a crash, the land gets sold off by the bankruptsy judge to an even bigger outfit, rather than sold off pacel by parcel.

As happened with the Family Farms outfit in Illinois, and the Stamp farms in Michigan and south. Even the land they were rented the rent contracts got sold, the person owning the land couldn't choose who would fulfill the remaining part of the contacts.

So when this all crashes in, the govt has it set up so the big will get bigger.

As is typical.

If you saw a press release from the land sale you mention, the head of the buying group said they feel university spread sheets are wrong and there is plenty of room to get better returns on land than the Us are projecting.

Meaning, they figure $400 rent should work out fine.

Paul

i worked for 2 farmers in the early to mid 80s they both pretty much went broke due to high interest rates.
the 1 was a guy in late 20s who bought the neighbors farm. he used his dads equipment so all he had invested was the farm itself.
he had 2 lender willing to loan him money for the farm 1 fixed rate the other variable but a lower rate than fixed.
his dad told him interest rates haven't changed much for several years.
that went away rather quickly jimmy was president

My auctioneer buddy just sold off about a 1000 acres in Eastern Iowa, average price $12K.

There is a lot of money around, just does not seem to find me.

Taxes were mentioned on this thread, one of the advantages of living in Oklahoma, farm ground is exempt from revaluation until it is sold, then the new owners pay taxes based on the sales price. I've watched my property taxes decline every year for 30 years. The other advantage is the land is poor so you don't have to try to get rich farming. Cow-calf pays for itself but not for the land.

Yes. One of my current farms had an asking price of $2000 per acre around 1920. People thought the WWI market prices ($10.00 per cwt for potatoes, etc) would last forever. No one could borrow that much money, though. The banks were starting to tighten up. In 1930, my grandfather bought that farm for less than $100 per acre. Paid cash.

I don't think I will ever be able to afford to buy more land in my life time. I am in my mid 50's. With the 80's returning and land being driven to the stratosphere pricing it will be beyond what I would pay for it.
I also think I will be able to go to the sale for some those really big time guys. One of them has just rented one of the local farmers land for I don't know but heard it was high.
I keep hearing about these guys and then go to their auction in about 3-7 years.