Value of true farmland

325 acres good farmland, excellent for horses, large bank barn, 70 acres tillable, 20 acres woodland, rest in pasture, large bank barn, 1800 sqft house built 1962. priced at only $3.9 million. Thats 12,000 bucks and acre.

Now this farm is far enough out in the country that there is no developement pressure, prolly never will.

Also there is a 1075 acre farm for sale out in the country,(same as above, very rural, no developement presure), 5000 sqft colonial style house, large bank barn, about 300 acres tillable, the rest pasture and a few other sheds. i called just to amuse myself with the price, after about 30 mins of listening to the realtor go thru his sales pitch, he said "I believe its priced very fair at $12.4 million"

The problem with this, is that 10-12 thousand bucks per acre is the same as prime developement land for houses in this area more if industry wants to buy it. Basically in this county, there is no difference in the price, if its just farmland or developement land. Every farmer when they go to sell, (and i have heard this from a good many farmers in this area) "hell if they can get that much for there farm, (even though it can be developed) then i can get that for mine (even though theres cant be developed).

I tell my sons, you better be damn glad you were born on this farm, casue if you werent, you wouldnt be farming.

The secret about trophy wives:
> marry 'em young, when they think YOU know everything- they will learn the truth in time.
> marry 'em poor, and pretend like you always are
> give 'em lots of kids, and give 'em lots of horses- cleaning stalls is great for their glutes.

This is a 1968 model and I am the first owner. I got her off a little old lady in alexandria in 1990 with zero miles on her. She's good for everything, and I'm damn glad i have her and hope to keep her for a long time

I just bought 33 acres of crop-land in northern Michigan (Presque Isle Co.) and it has an agricultural exemption on it (for taxes). They have it rated for corn, barley, and oats. It is not flood-plain and I could build on it if I wanted to (and lose the ag-status). I paid $65,000 for it.

A friend of mine retired two years ago - big old tie-stall barn half falling down. Two Deere 4020s, one Deere 3020, a big ugly Deutz-Allis 4WD, assorted equipment - all old. Also, large farmhouse and 240 acres of mostly mountainside and mountaintop farm land with maybe 10% hardwoods forest. All ag - but with good development potential. He sold the whole deal for $180,000. His desire was to see it stay in farmland. Well, the new owner ran it into the ground, cut down all the trees,and now - has resold it. I heard rumours of half-a-million dollars but - at the moment - that's only local gossip.

I can't imagine some of the prices ya'll are mentioning - but I can't imagine growing 200 bushel corn with out irrigation, either...

Out here in West Texas - I've heard anywhere from $400-2000 per acre. That's mostly decent farmland with no development influence.

BUT, the big unknown here is the cost of fuel for pumping water and how long the water table will last (its going down).

Without irrigation, farming is a tough call here. For pure dryland, a person might count on a 30 bushel wheat crop 2 years out of 5...

Howard

Land price has several drivers, the biggest one today seems to be development.If you figure out what you can net per acre in dollars from farming it correctly and then figure out what an acceptable return on investment(ROI) will be for you, you can SCOPE OUT AN APPROXIMATE VALUE.

Say you want a yearly 10% ROI( not really a high value for a business but darned high for an ag investment)and you could make a net $100/acre for the land, machinery, bldgs, livestock, taxes, fertilizer,etc (not the house cuz ya" gotta live somewhere) and management, that meants that the total investment cost per acre for all these inputs spread over the farm has to be $1000/acre($100/0.10). Next you figure the per acre costs for machinery, buildings, inputs, etc, every thing except the land value, and then sum them up and subtract them from a $1000/acre and that will be an ESTIMATE of the value of the land for ag purposes. I used this methodology be cause I ranched on a small scale and had pretty good cost numbers to plug into the model to scope out the "real value" of ag land when we went out to find our ranch. We exceeded the ag land value predicted by this method ($890-$1100/acre by a factors of 1.5-1.8 but we were able to rationalize that by some other intangibles that had value to us and were hard to put a $ value on.)

I will stick my neck out and say no matter how you cut it, unless your cows have golden calves, or you have figured out how to grow 5 carat diamonds by the ton, development value for the land will far exceed the ag value for the ground.
There are those that say that this analysis method doesn"t account for this, that , etc and it doesn"t. However, the totally rigorous method would lower the land value for ag purposes even more. I offer it here as a tool to help you get a scoping cost on ag land. You buy in a free market so the real value is what any potential buyer is willng to pay. The final price will almost always be whatever the highest offer is. There are exceptions but they are rare.

I have seen the same land sell for less than $1000 2x in my life.

All depends on farmer enthusiasm for the year. When land is cheap few are selling, just rent it out. When land is high, it's too much $$$, tho much is on the market.

There is no 'perfect' time or price to buy or sell. One has to do what works for your situation.

If you feel like farming/ buying farm land, get your ducks in a row & save up a nest egg. You will be in a position to take advantage of oppertunities that come your way.

Wake up one morning & decide you want some land, don't prepare for anything ahead, and everyone else will be buying it, you don't have a chance.

Those buying & making it prepared 5, 10, 15 years ago, for that 'deal' to fall into their lap..... It's never easy.

--->Paul

--->Paul

They buy a farm, cut it up in little pieces, possibly add some utilities or access to them and all they have to do is sell one parcel; Obviously the price is elevated from what it was. The local tax office gets wind of it and your next year"s appraisal from the appraisal district (sets the tax rate for your property) is at that price.

Not fair, but that"s the way it is.

Mark

Mark