Am I missing something?

[hillsdown]

I would do that different Nesikep, keep the 88 and 100 (although 100 is even small) sell the little one because they actually retain their value because all these acreage people need them. You need a chore tractor with a bucket and grapple and a field tractor with a 3ph. For a field tractor you need over 100 hp if you want to break land etc.

Good luck with your venture mark, and remember it takes money to lose money in the cattle biz..

[HerefordSire]

The tractors are more valuable than they seem because of IRS section 179 concerning accelerated depreciation which could increase cash flow if you have income, including outside income. However, this section falls under the owner of the tractor.

[Angus Cowman]

you guys are missing the point he doesn't own the tractors he just has use of them

[HerefordSire]

True....but if the poster is a mechanical engineer in south Texas, of course depending on how long he has been employed, he\she is probably paying $15K in federal and state income tax from primary employment.

Edit: Oops...Texas doesn't have income tax.

[Baldie Maker]

If you plan on being a big operation in the near future and aren't worried about costs with a limited number of cattle in the first few years i would pursue A.I. extensively. The genetic improvement factor is tremedous and you can lease a bull to sweep. Also get someone to set up a facility or go over an overview of one with you so that when you do expand you can handle your cattle and do so safely. I would suggest investing in a good squeeze shute. Makes Castration and preg check a breeze compared to a regular ol' head catch. JMO tho

[Nesikep]

you are right, I forgot that the tractors aren't really his anyhow, so that doesn't really matter. I would keep the 24HP for a while though, we had a 30HP JD950 which we bought for 5000 in 1990, we put 3500 hours on it and we just sold it last week for 3500, in far worse shape than when we got it.. you can put 5000 hours on that thing and it will hardly make a difference to the price the owner of it would get.

One suggestion though.. before you go investing a large amount of money into permanent upgrades like big corrals, etc, make sure that you'll be able to use them for a long time, and not that someone gets jealous at seeing you "making money" and suddenly you have 50 cows and no land anymore, I can't scroll back enough to be able to tell, but from what I recall this isn't realyl *your* land, it's family or something?

[Brute 23]

Disclaimer:This is just my opinion, based on my expereinces, take it as that... not the bible... and I will not argue it like the bible. I am about 3-4 hours, as the bird flys, south of you.

To start, cattle will pay for cattle, but you can not charge 2000 gal of diesel to them just because that is on the ranch. Basically, the cattle won't pay for you to make food plots or any extra stuff on the property. You will have to learn to divide out what diesel you use on cattle and charge that to them for book keeping purposes.

A few thing that came to mind...
-You don't want to keep a first time heifer's calf as a replacement.
-Say you have 10 mommas. You will be lucky to maybe get 2 replacements out of them once you get rolling.
-You will lose money swapping bulls around before the cattle are paid for.

Do you have any known expences that are going to go agaist the cattle? Lease money, tractor rent, electric bills, general maintance, ect....

The way cattle prices are now you should get some great deals. I would try to get all the money you possible can for say 20 mommas. Even if you have to buy some of them a little young and turn them out on pasture for a couple months before putting a bull in. This is a great time to be buying cattle if you have grass.

Just in general, what I would do, is take your cash and buy the ten cows (how ever many you can pay cash for) and bull. Stick them on the place and make it a point to see how little you can spend on them. Keep it to the necessities... feed and vacs. No improvements to the place, no $500 hay rings, no brand new facilities, ect. Keep very detailed books of every dollars spent and earned. Just get a feel for what you are dealing with. Then set a budget and goals from that.

Hopefully, IF in a year it isn't working out you can bail the cattle and not lose money on them.

As some one said, try to make a deal with the neighbor to graze what you are not using with him knowing what your future plans are. Just year to year, and keep a tight hold. Don't let him overgraze and ruin you. May be able to make all kinds of deals by partnering up on hay, feed, borrow a bull to breed heifers, ect.. With the grasses you listed having, you probably only need one pasture (70ac), two max, for 10-20 head. We can stock 1cow to 3ac safely on improved pasture.

IF you have not read it yet, either Jogee or Caustic says learn to be a grass farmer and they are exactly right. Take care of those improved pastures.

[Howdyjabo]

You will end up doing long term improvements to the place--So right upfront get a contract signed that repays you for the % of improvements you don't get to capitalize on if you get kicked out.
Also have a clause that gives you 6 months or more to get off- so you don't have to have a fire sale and loose your investment.


Plus consider growing out some preconditioned steers while you are expanding or have extra grass-
buy your hay.
Don't mess with heifers for a few years- sell your calves and buy more 3in 1's
and for a few head AI always made sense to me.

[Bez+]

As I read all these threads I start to chuckle.

Advice coming in from all sides of the house.

Mysterious excel spreadsheet information.

Folks from all over chiming in - often conflicting and maybe with the possibility of being wrong for the location.

Probably smarter to actually go to the local ag rep, and sit down and actually come up with a plan - a real business plan - they actually do work.

Utilize the people in the area that are there to help you.

Might cost you some time, some money - but you will learn a heck of a lot at the same time.

This might even make you change your mind on the best utilization for the land.

Now .............

Sole rights to use?

What does that really mean?

Whatever you do, make sure you do not spend any money or make any committments until you know you will actually have a place once the owner is dead.

You might use it - but what about the money you spend?

What about the development?

Then .......

Uncle dies tomorrow in a car accident - then what? It does happen you know.

How many folks are going to come for the money?

How has the estate been set up so you get to keep it?

Or has it - like far too many that come here to cry about it - been left to God and the government?

Seen it happen before - lots of promises and no paper - but the final settlement sent that land to another person.

Or - even better - the distant - estranged - dick head relative shows up and wins in court.

This schitt really does happen.

Be wary and be smart.

Get your ducks in a row - no matter what anyone TELLS you - if it is not on a signed and better - a notarized piece of paper - all those promises and all that work is is not worth the sweat off your left testicle.

If it does come to you - will you have the cash available to take it over once the estate is settled - or will you have to break it up and sell?

That is where you want to start.

Got the papers and finances in order?

Do not start to build that house by planning the roof - start at the foundation and work your way up.

Then and only then would I even think about doing anything.

Without the paper you are spinning your wheels and risking a lot of time, effort and money.

Bez+

[grannysoo]

Without the paper you are spinning your wheels and risking a lot of time, effort and money.

Bez+

A risk that I would not be willing to take. No paper = No deal.

[Jim62]

The idea of using family land and equipment for free in this startup is very troubling to me. I've seen this kind of a thing done numerous times, and the outcome is almost always a train wreck. As soon as the tenant/operator gets everything improved to his satisfaction, uncle Joe decides that it's time to sell the place, or somebody dies and the new property owner decides that he wants to raise cattle, too. After all, he's got a ranch all set up and equipped for it. The tenant/operator has by now pi$$ed away many thousands on improvements, all of which turn out to be money down the proverbial rat-hole, plus he's got 100 head of cattle with no place to go.

There may be a family somewhere that will work together in harmony, but none that I know of. When land and money get involved, it's every man for himself. It's a nice plan, but I wouldn't touch it with a 10' pole.

But, that's just me (and my experience)

[Jogeephus]

Without the paper you are spinning your wheels and risking a lot of time, effort and money.

Bez+

A risk that I would not be willing to take. No paper = No deal.

I once rented a place from an absentee landowner. He wanted to sell the place but I didn't think I was in a positon to buy it just yet and I thought they were asking too much. Wanted to but... Anyhow, after two years of renting the place and working on it they dropped the rent cause they were so pleased at how it looked. A year later, a fella saw the place and bought it for the asking price cause it now had that curb appeal. I was disheartened some but I knew the deal. It was good while it lasted.

[Brandonm22]

I agree with Jim62. This whole deal sorta scares me. You have tractors somebody else paid for for some reason what was their plan for them and why are they available for you to use? You have a tenant, he is paying something to somebody. How much is that person getting and why would he not be upset if he lost that income? If you got 800 acres and can only afford 8 - 10 cows, but have a big time job, why not focus your energy on decreasing your debts, cutting your cost of living, and building a big wad of cash? Spend your free time learning more about the cattle biz and developing a business plan. Save up $80,000 as fast as you can, then you can put $40,000 into cows and have $40g in cash and other investments. Treat the cows as an investment and not just a hobby that is subsidized by your paycheck.

[marksmu]

To everyone with the get agreements from the owner I 100% agree....the land is my dad's right now. I found it at a firesale from the previous owner & his family two years ago. The previous owner was a master developer, and had bought it with big plans. He bought the tractors and most of the equipment and then was transferred out of the country. He sold the entire place turn key for nearly the cost involved in the improvements he made. There was alot of the "family" drama that caused the sale to be so affordable. He had spent a fortune buying things, and then had to leave, he only owned 100 of the 800 acres and so he got the raw end of the deal when it was sold.

Neither here nor there, but long story short, I found the property and wanted it, but could not afford it...My dad wanted an investment piece of property and had plenty of money...He bought it, with a buy/sell agreement for me finding it...I have an option on the land to buy it first if he ever decides to sell...the maximum allowed increase is 4% annually (or the minimum stated by the IRS at the time of sale)...I also pay a small lease on the land to him, to pay the property taxes....the Ag payment comes to me as the "operator" and he pays the taxes from the lease income. The lease is a 15yr lease again with an option to extend at current pricing at the conclusion of the term.

I am responsible for upkeep of everything - no tallo trees - no overgrazing, and all repairs & maintenance. I know I have a good thing and I want to be sure that I can maximize it while I can. I am however not too worried bout the family drama even though I did protect against it....my entire family dads, uncles, cousins, brothers, and even my grandmother all work together in the family engineering company...its 3rd generation at this point and even though there is drama it pans out.

I am buying the cattle with the cash I have been putting aside each year for the cattle only. I am still saving for retirement, maxing IRA's and 401K, as well as hording cash when possible. My wife is an attorney with a great job, and I am thankful to be able to live on my check and save hers b/c of plans of children in the next year or so...

So with that said, I take every bit of advice to heart...I read a book called grass fed cattle, and I am trying to utilize many of his ideas - it was a good book..it seems that many of you are doing what it says...Im going to try to start with his central theme...I am a grass farmer, who uses cows to maintain the grass.

I enjoy the work outside, and think I will enjoy the cattle as much as I spend the money on them....I want to build a herd but at the same time I want to enjoy dong it...Hopefully that works out....I am glad that there are so many opinions on it...it just shows me that everyone is doing it differently, and apparently everyone is enjoying it. If you didnt enjoy it you probably would not take the time to talk about it on here..

I am personally obsessed right now, and I hope to take that obsession and make it into a dream that at a minimum can pay for itself in the long run.

[1982vett]

Sounds like things are in good order and backing won't be pulled from under your feet. Good luck.