Buying land for cattle

[jedstivers]

For 3,000 an acre I could have bought all sorts of land around here that would carry a cow an acre. I can't make that pencil out. It's just been in the last year that the very best farm land has gone through 3K and into 4K but now it has leveled off and hopefully will start backing up a little. It won't back up much though.

 

[u4411clb]

Sounds like a great idea to me. What you are describing is what I do as far as buying property but I make the improvements myself and get it up and running to the point where the cattle take care of the payment per year for the property and then buy another place. The important thing is to pay a good price at the beginning and the land will appreciate. As long as you make the payment from selling cattle and put anything extra they make towards purchasing the land and all you have to do is keep your bills for that place below $9000.00 a year including any tax savings then you are coming out great. Some people look at it as a gamble and it is but it is a gamble that you only have to be right 1 time and you can be set for your entire life. If you do find that place that appreciates to the point where you want to sell and it is not uncommon where I am for people to double triple in some cases 10 times there money. However I am in more of an urban setting than most people on this board but in my case Huntsville is growing leaps and bounds from BRAC and we have people moving into the area all the time and recenltly they are bidding on a Boeing contract to bring a new air liner to be built here and everytime any of this happens my property values jump across the board. So if you can cash flow it I say go for it and if worse comes to worse later then you sell it I mean we could all get hit by a bus tomorrow so what at least you tried and don't have to say what if. But if a developer comes in later and wants to turn it into subdivisions or a shopping mall you can tell your day job adios. And if not then leave it to the kids your family may have to reap the benefits even if you don't besides riding over your own place checking the cows and watching the sunset.

 

[u4411clb]

Heck you are 32 if worse comes to worse you would not be the 1st to have a failed venture at 32 and come back from it. Make sure you set it up as an LLC that way none of your personal assets are tied up in it. It is sorta like gambling but if you had to make a bet that 20 years fom now when you are 52 that the place you buy will be worth more than it is now then go for it. I am willing to bet that any place I have in 20 years when I am 55 and ready to hang up the daily grind will be worth more in 2033 than it is now.

 

[Jogeephus]

Is there any reason you all can think of not to buy this farm?

You already have 100 acres at home. $9000 year could cover a lot of the costs of hiring out the fencing and the clearing work.

Nothing wrong with buying the land but I'd try my best to get what I already have in production before jumping to something else.JMO

 

[tnwalkingred]

u4411clb,

Your situation is a lot like mine. I love right outside Murfreesboro and Franklin TN and both those cities are growing at a rapid pace similar to Huntsville. There is always going to be "what ifs" in life no matter what you're doing. I used to play golf, play poker, and ride horses a lot before I started farming as my main hobby. According to my accountant I haven't made any money in the past few years but I sure have bought and paid for a lot of nice things and my savings account keeps growing and growing. I figure I've actually "made" some money since I started farming because my former 3 hobbies had ZERO chance of ever making money and since I bought the cattle I no longer have time for them! I think the property is very well priced. My first offer will be somewhere between 100-120K. If I can buy it for that price there is little chance it won't appreciate in value fairly significant over the next 20 years. Hell either way I can afford it and it's another excuse to get out and enjoy my cattle and the country!

Jogeeephus,

I still plan on improving the 100 acres at the house. I actually just had a culvert installed last week (the cost of gravel is ridiculous by the way) for the people who are logging my cedar. I will do good to pay for the culvert on my % of the logs but they are cutting all the trees at ground level and piling the brush for me. It will take them all winter to harvest the 10 acres but when they do I will fence that part off and begin grazing it. I don't have time to take care of the livestock, get hay up, clear land, AND fence 100 acres. If I hired out the clearing and fencing it would cost me well over 50K to get 50 acres in working condition. Then I would still be fighting the stumps for a long time. I would be lucky to get it completed in 2-3 years. That's what got me thinking about buying a place. Why spend 50K to "improve" property that at the end of it still would not be tillable when I could buy a place and start seeing a return on it immediately. I can still work on clearing/fencing a few acres every year at the house in my spare time. I'll do all the work myself and my only expenses will be material and fuel. If I still have a lot of land that needs improving when I retire I'll have plenty of time to fool with it then. My goal is to run 100 cows and I'm going to have to buy a place at some point to reach that goal. I figure now's a good time as any to be in the business and try and take advantage of the high prices.

Bigbull,

Do you think it's safer to buy pairs to keep for the long haul? Any bred cows are high right now and bred heifers are thru the roof. I figured I could find some full mouth cattle worth the money and then flip them in the fall. You wouldn't have to be so picky in the cows you bought if you planned on only owning them for less than a year. I've found that there are some real deals to be made on cattle if you have cash in hand and shop around everyday.

Kyle


Kyle

 

[skyhightree1]

tnwalk I noticed you were saying you didn't have time to do everything I am not gonna bother asking about cattle paying for the land but drive time from home and your office. That is additional time of travel. If you have cattle at home and cattle on the new spot will you have to transport equip. back and forth ? will you be hauling hay? Cattle get out while you are at home you have a good haul to get to them up. If you get out there and forget something or need something at your other place that's a hour drive back and forth.

 

[bigbull338]

i would set my price say at $1500 for pairs or bred cows 6 yrs an under.an if i couldnt get them bought for that id wait till the prices went down.an yes i would keep the cows you buy culling as needed.i would not be buying an selling cows as its to risky.

 

[tnwalkingred]

tnwalk I noticed you were saying you didn't have time to do everything I am not gonna bother asking about cattle paying for the land but drive time from home and your office. That is additional time of travel. If you have cattle at home and cattle on the new spot will you have to transport equip. back and forth ? will you be hauling hay? Cattle get out while you are at home you have a good haul to get to them up. If you get out there and forget something or need something at your other place that's a hour drive back and forth.

If I decide to keep cattle there year round I will take one of the tractors there and leave it. I may bring all the cattle home for the winter since we'll be feeding hay anyways. The travel time should not affect me too much its pretty close to work. Cows can get out but this place has a brand new woven wire fence around it and I'll run two strands of electric on the inside as well. I plan on building a catch and working pen on the property and my squeeze chute is portable so I can move it easily when we need to work them.

Kyle

 

[tnwalkingred]

i would set my price say at $1500 for pairs or bred cows 6 yrs an under.an if i couldnt get them bought for that id wait till the prices went down.an yes i would keep the cows you buy culling as needed.i would not be buying an selling cows as its to risky.

Big bull,

Thanks for the advice. I would love to find some 3 ways for that price but at today's prices that's going to be hard. Would you consider buying heavy bred LH cows bred to a charloais bull for 900 dollars a piece? And if so would you keep them or try to turn a profit on the calves and then sell the cows bred back to buy some Angus cross cattle?

Kyle

 

[denvermartinfarms]

My main concern is if the place will really take care of 30 pair. If it will I think the whole deal is fine.

Here it takes 3 to 4 acres per pair so it takes about 90 or 100 acres for 30. Our land in pieces 80 to 100 acres that are in grass and have some fence start at 1200 to 1500$ an acre. So if you figure what it takes to run the same cattle our land cost is not alot different.

 

[tnwalkingred]

Denver,

I ran 20 head here last year on 20 acres. I rotated them between two pastures, sprayed, and fertilized very well. It was a little heavy for that so this year I plan to either cut back or add a third field into the rotation. I may only buy 25 head and run the same number of hair sheep as we'll with them. Our local ag extension says you can run 1 head of sheep per head of cattle and not see any affect on the carrying capacity of the place. Anyone else doing this? My main concern with the two together is water, feed, and mineral intake. Thoughts?

Kyle

 

[denvermartinfarms]

I don't know about the sheep thing, it might work. Personally I would rather have 5 more cows than the 25 sheep.

 

[midtncattle]

I had a similar dilema a while back. I decided to fence my land and it has been a blessing. I wake up and can walk out through the cows. If I want to check on a calf I walk up the road. I would think heavily about getting the place you live on in order. Then look at growth. The exspense and hassle of having them off site is tough.

 

[igrowgrass]

This land sounds ideal for mob grazing to me.

You get plenty of rain, very little snow, and not too many days below freezing.

Nothing will increase the carrying capacity of the land, the health of the land, and lower your costs for medications like mob grazing will.

When I hear about people spending all this money on fertilizer and spraying etc it makes me grab my wallet and hold on for dear life. Your animals will pee, poop, and stomp their way to a better fertilized pasture than you could ever hope to get by spraying stuff on it.

Imagine how much money your cattle could make for you if you never spent another nickel on weed killer, fertilizer, seed, etc. If you let the animals do the work they will do it. They will love doing it and be healthier and happier for their troubles.

This won't work for a lot of you guys. I wouldn't want to try mob grazing waaaay up north, but near Murfreesboro they get plenty of rain, less than 6" of snow every year, and it seems like they don't get that god awful summer heat that a lot of people deal with.

For a lot of people they get caught up in the big numbers game. They're making such a small profit per animal that they think they need 500 head to get anywhere in life. If you can reduce your feed costs to near zero and you can reduce your pasture costs (fertilizer, weed killer, and seed) to zero, and you can reduce your worming cost to zero, then you will see that you don't need nearly as many animals to make the same kind of money.

However, I would advise against buying more land when the land that you have isn't being utilized to its full potential. If you need to clear the land then do it. If you need to fence the land you should do it. If you already own land free and clear that is going to be your biggest nut to crack. I would take your money and put it where your land is.

Sometimes clearing land doesn't have to be as expensive as you think. Talk to your local timber outfits. Have them cruise the property you want cleared and work something out with them. Maybe you can get them to clear the whole piece and take the timber that is there and you break even or put a few bucks in your pocket. Now you have clear land and it didn't cost you a penny to do it. Sure, its bare clear land, but it won't be forever.

Fencing your land doesn't have to be a million dollar project either. You can run high tensile around your perimeter and do it reasonably. Then just use portable stuff for dividing your paddocks.

If you have a lot of brushy undergrowth that needs to be cleared out then maybe you would be better off running goats and pigs for a year and letting them eat it up, fertilize your ground, and put a little green in your wallet at the same time.

There are a lot of people who are going to be envious of your position. I just hate to see someone go out and buy land, far from home, where they can't keep an eye on their stock, when they could do something with the land that they live on.

I probably won't change your mind, but if you want my opinion I would be happy to go into more details via message. You can tell me the specifics about what needs clearing, etc and I can tell you what I would do. Its not the be all say all of everything, but if you have it all figured out on your own you wouldn't have asked here in the first place.

I wish you the best of luck in whatever you decide to you and hope that you enjoy your cattle and make a good buck out of them at the same time.

 

[Jogeephus]

That's what got me thinking about buying a place. Why spend 50K to "improve" property that at the end of it still would not be tillable when I could buy a place and start seeing a return on it immediately. I can still work on clearing/fencing a few acres every year at the house in my spare time. I'll do all the work myself and my only expenses will be material and fuel. If I still have a lot of land that needs improving when I retire I'll have plenty of time to fool with it then. My goal is to run 100 cows and I'm going to have to buy a place at some point to reach that goal. I figure now's a good time as any to be in the business and try and take advantage of the high prices.

Wouldn't this mean you will have to buy in at high prices to stock? And why do you need tillable land for cattle?

I think Igrowgrass has given you some great advice.

One thing you can learn either now or later is that profitable cattle ventures aren't built over night. There is a lot to be said for making use with what you got and its much easier to get more when what you got is working for you.

 

[u4411clb]

If cattle were no where in the picture would you buy the land? If the answer is yes then buy it if the answer is no and you are buying land for the sole purpose of raising cattle, 1st I would say go talk to an accountant and then a psychiatrist. If the land is a good investment on its own then buy it and the cattle is a plus. If you can find land in a good location for a good price like I said it will help your family eventually whether it be you or your kids or your grandkids. Leave the little rascals 30 or 40 acres which by the time they get it they can either put cattle on it or sell it and do your own estimate on how much they would get at that time. Probably enough to pay for all of their college educations I would guess. I have noticed allot of fancy horse places up there around Murpheesboro. Nothing like seeing a couple with a Virginia or California license plate pulled over on the side of the road checking your place out with a fancy horse trailer behind their truck. You know to raise the price $20,000 + just for that. Kidding about the last line. And I also agree on keeping a sharp pencil when raising cattle. I just believe in land as an investment. Some believe in stock market (I do think stocks should be part of your investment too) others in gold I think over time if it is the right buy land beats them both but that is my opinion. So if you are looking for an investment that you can also get enjoyment out of and the satisfaction of fixing a place up and watching it transform and get to be out doors with and hopefully make a little money and keep yourself young and active with then go for it. If buying it is all about the cattle I would honestly rethink it and move out farther from the city and get a bigger place and move there and start a cattle operation.

 

[hurleyjd]

Okay land is a good investment. When do you take the profit and how. If you have the minerals then maybe you will get rich. I have land that was bought for $100 an acre fifty years ago, might bring $2500 today. Should I cash out, if needed immediately now that might take a while. What can I do to make it generate a cash flow without doing much. I could lease it for $45 an acre now that is a good return on the $100 original investment or a poor investment return on $2500 which is 1.8% better than a CD. I figure I will sell it and try to make an investment that takes no management for the return. Both kids are in good careers and will not ever need or have the desire to own land. A cowboy preacher is buying all the land around this property and would be a good candidate to sell it to him.

 

[u4411clb]

My answer would be yes to sell it now. If you gave $100 an acre and have used it for raising cattle or farming for 50 years and had the enjoyment of using it and made any money off of using it I think a nice 25 times your investment is an ok return. I don't understand though just because your kids have good jobs that they would not like to own something. Even if they don't use it directly having the equity of $2500 x (how many acres it is) works wonders on making a good financial situation even better. But if you mean they are city slickers now and have no use in owning property I would offer to any other family members at a reasonable price if it means allot to keep in the family or yes sell it. I am sure it has brought your family joy for 50 years. Now take the $100,000+ just guessing and enjoy that for a while. At least you know now you will more than likely never need anyones help monetary wise for the rest of your life be it from your kids or any other family if you put this money along with your other davings for retirement. And if your family can't use any extra money at all there are allot of great charities.

 

[tnwalkingred]

All,

Thanks for the good advice. Let me clarify my situation a bit further. The 160 acres I live on is still technically "owned" by my grandfather. I do as I please on it and have already invested ALOT of money in it between the home renovations, fencing, and barn buildings. It's written in the will to be left to me when my grandparents pass. I tried to buy the property from them earlier this year so I could get it in my name. We hired an estate attorney and talked to them at length about what to do. In the end my grandparents decided to leave it as is for various reasons. This is exactly why I started looking at other farms. There is no doubt in my mind I will be left my grandparents farm but I'm at the age where I'm ready have my "own" place. While I do plan to keep improving the place I don't want to continue sinking ALOT of money and TIME in a place that is not in my name. I have a good stable income and can afford well more than this 53 acres. My thinking is to buy it now well worth the money and then if something happened to where I no longer could live on my grandparents farm I would have good equity in a place to build a new house on. Call it a insurance policy if you will. While there is nothing that would lead me to believe I don't get the farm you never know until the deed is in your name. I had an uncle who got Alzheimers before he passed away and you wouldn't believe the things that happened to his farm after he died.

So yes I would buy the farm even if cattle were not in the picture. I feel like it's a good investment and the return on my money would be pretty significant in 10-30 years. I have other investments and they are doing well but I wanted to diversify things a bit. I thought since I love cattle and to farm this would be a way to accomplish that goal and have fun while doing it.

I really appreciate everyone's good advice. Everyday I log on to this site I'm given new ideas to think about.

Kyle

 

[u4411clb]

Okay land is a good investment. When do you take the profit and how. If you have the minerals then maybe you will get rich. I have land that was bought for $100 an acre fifty years ago, might bring $2500 today. Should I cash out, if needed immediately now that might take a while. What can I do to make it generate a cash flow without doing much. I could lease it for $45 an acre now that is a good return on the $100 original investment or a poor investment return on $2500 which is 1.8% better than a CD. I figure I will sell it and try to make an investment that takes no management for the return. Both kids are in good careers and will not ever need or have the desire to own land. A cowboy preacher is buying all the land around this property and would be a good candidate to sell it to him.

The worst thing you can do is need money in a hurry. If you have it in a cd then of course the bank will keep a big chunk if yoiu get it early. If you have money in retirement account penalties and taxes are going to hit you. Taxes are going to take a chunk out of you with the land too I understand. And if you have your money invested in stocks what if it is a year like 2008 and they are down really low and you need to sell in a hurry you are going to be hurting and paying allot of taxes. But of course on stocks if you sold this yer you would be grinning all the way to the bank. If you get in a tight given your scenario and need money in a hurry I would hope your land would not be the 1st thing that pops in your head maybe those well to do kids that don't want anything to do with it could help you out. But if you need money in a hurry the only way it is not going to hurt is having it in a mattress or a checking or savings account.