Posted by 1206SWMO on November 01, 2007 at 09:37:18 from (70.41.108.232):
In Reply to: buying farmland.... posted by need your advice on October 31, 2007 at 19:46:32:
You really need to be able to come up with more than 10% down to make this work.Land quit cash flowing in the early 1970's.
The deal about no more land being made doesnt always hold true.I bought an adjoining farm in the late 1970's and had to get out from under it in the late 80's at half of what was paid for it.High interest and drought ruined things.Nearly half of my neighbors went out of business forever.
150 bushel corn ground should only rent for $150 per acre but you might get $175-200 per acre in todays market.If you paid $320,000 cash for it your return on it at $200 per acre rent is 5%.
Last Saturday here in rural MO I watched 318 acres all in grass sell at auction for $1650 per acre.Murphy hog farms bought it as it joins part of the 5-6000 acres they own in that area.No one else could afford it.$1650 is above market for this econonically depressed area.
Alot of this 318 acres could be farmed but would be better off left in grass.Pasture and hay ground rents for $40 per acre here.Thats less than a 3% retun.Crop ground rents for $65 per acre which is only a 4% return.
If you could swing 25% down and the payments on the remaining 75% can be made no matter what then go for it.
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