Posted by dhermesc on November 01, 2007 at 06:30:41 from (24.248.193.103):
In Reply to: buying farmland.... posted by need your advice on October 31, 2007 at 19:46:32:
It will never cash flow.
You are financing 3200 per acre at 7.5% (if you're lucky) thats $240 per acre in interest alone, before you even make a principal payment. You can pretty much count on that going up a point or two (to $304 an acre) or down as much as a point (to $208 an acre) at the most.
Your annual carrying cost ranges from $16,640 to $24,320 while your income can range from $0.00 (or less) to $14,000. I'm not saying its a bad investment, but you need be in a good enough position to tote the note.
The above numbers only take into account interest expense - I'm sure the bank will expect principal to be paid occassionally and the county will also want some property taxes.
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