Buying land for cattle

[tnwalkingred]

All,

I've been trying to figure out a way to grow my cattle operation for a while now with no luck in finding places to lease. I have 100 acres at home but its needs a lot of fencing and clearing. It's just not going to be cost effective to hire those services out and with my work schedule it's going to be a slow process doing it myself.

I've found 53 acres for sale that is only 25 minutes from my house. It's got a brand new woven wire fence around it already, a good deep pond, and a equipment/hay barn on the property. It's 90% in prime pasture so it would easily hold 30+ cows. I would rotational graze it so I could increase my numbers in time. If I bought it my payment would be less than 9000 dollars a year. I feel like the cattle would come close to producing that much in revenue alone therefore making my out of pocket costs minimal. I already have all equipment necessary for hay production paid for. Is there any reason you all can think of not to buy this farm?

Kyle

 

[jedstivers]

That's every cow paying 300 a year before baying for themselves. How many years?

 

[tnwalkingred]

30 years. I'm only 32 years old. I could pay for the land outright without the cattle making a dime if need be due to the salary at my day job. Are you not able to profit 300 a head per year? I'm making closer to 500 assuming the cows and equipment are paid for.

Kyle

 

[cross_7]

30 years. I'm only 32 years old. I could pay for the land outright without the cattle making a dime if need be due to the salary at my day job. Are you not able to profit 300 a head per year? I'm making closer to 500 assuming the cows and equipment are paid for.

Kyle

I'm sure some will disagree, but I look at land as the best investment I know of
Although with the ability to pay cash I think interest rates are cheap enough that I'd rather use someone else's money, but I would try to put enough down so the cows would make the payment.
Around here land prices have steadily risen so I look at it as a return on investment, the problem you don't see it till you sell the land or its paid off then you get to keep the money you had been giving to the bank
If I could I'd put everything I have in land

 

[tnwalkingred]

Cross,

I agree. My grandfather has bought and sold many farms over the years and never lost a dime on a single one and made large profits on a few. He always jokes that if my father had the initiative and love for farming that I do that that we'd all been made millionaires years ago!

I'm able to utilize some really great interest rates right now and would prefer to invest my own money in stocks, bonds, and savings accounts for rainy days!

Kyle

 

[jedstivers]

I just try to throw things out there to make people think. Either the op or some else reading. I actually look at land a little different in that I don't try to make it pay for itself because once its paid for it can help pay for more land. I will say lock in a fixed interest rate.

 

[Brute 23]

Pay cash for the property its a good investement. Run it seperate from the cattle and lease it back to your cattle operation. I'd go for some kind of improvements to the property over a cash lease. Non-taxable income but the asset grows in value. You will only pay taxes when... if... you cash out. Its a pretty low rate of return so maximize other investment avenues before this one.

 

[tnwalkingred]

Jed,

The I interest rate would be fixed and my goal is if I can make the cattle pay for the land to continue buying more pieces of land to do the same thing. By the time I'm ready to retire I would have a large operation and a lot of equity in farm land.

Kyle

 

[jedstivers]

I'm not going to get into what a cow can profit a year because is so different for everyone. But I know if some see this post they will say there's no way to make 300 much less 300 plus the yearly cost of the cow and overhead.

 

[Texas PaPaw]

If you can make the payments without cow income go for it and use whatever cow income you make to pay it off quicker. Think $300/cow/year for 30 years could be a stretch as you will have to replace your herd, equipment, etc several times over in that time. Almost no land in the US will pay for itself. Must have income from another source to pay for the land. Another negative is the distance from your current place. Will cost at least $25 every round trip. If your cattle get the care they need it will add up to a lot of $ just driving back and forth.

Best wishes for whatever you decide.

 

[Bigfoot]

We sometimes forget that good times, as well as bad times don't last forever. When big weaned calves get back down to $80 cwt, they want buy to many acres of land. I'm not saying don't buy, or its a bad investment. I'm just saying when you are farming, the train stops at every station. I have seen land prices fall two times in my lifetime, in my area. The bottom has fallen out of cattle several times.

 

[cross_7]

We sometimes forget that good times, as well as bad times don't last forever. When big weaned calves get back down to $80 cwt, they want buy to many acres of land. I'm not saying don't buy, or its a bad investment. I'm just saying when you are farming, the train stops at every station. I have seen land prices fall two times in my lifetime, in my area. The bottom has fallen out of cattle several times.

I've seen the bottom fall out on cattle and I have no doubt they will again
Land prices around here have always been steady other than the occasional big city money getting took from time to time.
The driving force is the recreational guys. If things get tough and people don't have disposable income for recreation and the land has to start paying for itself then there are going to be some real wrecks.

With that said at the rate we're going inflation is going to take care of debt, your savings and your retirement account too ;-)

 

[denvermartinfarms]

I think if the land is a good deal with cattle out of the picture it's a good idea. I just like for everything I buy to start out as a good deal by itself. I don't know about running 30 cows on 50 acres, can't do it here, but maybe you can there. I honestly make more than 300$ on my cows, but you won't get to opinions the same on that here.

 

[Aaron]

You've got off-farm income, lots of time to pay it off and it's turn-key. Only question I would have is, based on it's location and taking a long-term view, what kind of return can you get out of it if you eventually decide to sell it?

 

[jedstivers]

The 25 minuets away would be a deal breaker for me. I don't have 50 min. driving to give 30 cows.

 

[tnwalkingred]

All,

Thanks for the opinions. The drive time is the one factor my father has asked me to think about as well. The good news is its only about 10 minutes from my office. I've tried to find land closer to home but land here is way overpriced. For a example the land I'm looking at is 53 acres and they are asking 162k. There is 66 acres 2 minutes down the road from me and in the same county as the land I'm looking at but they are asking 650k. The only difference in the two other than the acreage is the county it joins. I'm two minutes away at my place but in a different county.

I'm fortunate that I can make the payment without the income from the cattle and feel like it's a good investment. The only issue I have right now is if the land can perk. I do not want to build a house on it but it would need to perk to have good resale value. If I make a offer it will be contingent on whether or not it passes a perk test.

I would be curious to know what everyone here thinks they make in net profit on a cow per year. People around here normally figure an average of 400 per head. And yes we all know cattle prices will drop again but I don't think they will see a significant drop off for at least 5 years.

If I do buy this property I've also been thinking about flipping all the cows every year. Buying up cheap heavy breds or 3 ways in the spring and selling them all in the fall. This would keep me from having to make trips to the farm to put out hay. This would allow me to keep growing my registered herd slowly and every year I would buy a few less commercial cows. After 5 years of retaining heifers I would enough registered cattle that I would not need to buy commercials anymore. I have 11 registered females that will be bred in 2014.

Kyle

 

[bigbull338]

if your day job can carry the land payment then i would do it no q.an when you retire the place will be payed for.running short term pairs can be risky.so you had better think it through carefully.because if you buy the bred cows or pairs to high.you can loose money when you splitt emm off an sell emm.

 

[Newberry Creek]

I would spend my money to clear and fence what I already own. 100 acres with new fence and cross fenced the way you want it is hard to beat.

 

[skyhightree1]

I would spend my money to clear and fence what I already own. 100 acres with new fence and cross fenced the way you want it is hard to beat.

I agree with NC on that.

The 25 minuets away would be a deal breaker for me. I don't have 50 min. driving to give 30 cows.

I agree with the drive being a deal breaker. I have some leased pastures 10 mins away not too bad cause I pass it on the way home from the office but 25 mins to and from no thank you.

Others may disagree with me on this but I believe in financing business stuff and not financing my toys. I also would keep all my savings I had in this economy because you never know what may happen. The savings may be needed to keep your family going or whatever. :2cents:

 

[Bigfoot]

I'm not joking, when I say I make nothing. If all that I figured was: hay, mineral, and vaccinations. I would have an annual carrying expense of $250 to $300 a year per cow. Fertilizer, seed, maintenance, depreciation, and fencing eat up the rest fairly quickly. I bought my place 25 years ago. It's been paid for now 10 years. The appreciation of my land, and the improvements to it has been the only money that I have made. I might as well have a box of rocks, because I will never sell my place. I would add to that, I am not pursueing depreciation as a means of avoiding taxes.