Buying Land

[Beef08]

I want to be able to buy a farm in the next ten years, does anyone have any advice that might make the saving of money easier or any tips of how much land to buy? or just anything to say?

 

[Green Creek]

Use the "pay yourself first" method. Take ten percent off the top of monies received and put it aside for your future farm. If you don't pay yourself, someone else is going to get it and ten percent will add up without you missing it too much.

 

[Beef08]

So I probably need to start saving more to my savings account haha..

 

[I luv herfrds]

You didn't say what your plans were for the farming. Do you plan to do farming as your sole income or do you plan to work off the farm?
What is your planned crop?
What is the average for that crop in the area you plan to farm in? Do you have your own equipment?
Do not get suckered in by the banks telling you that you need new equipment. heard of too many guys doing that and getting burned.
Are you going to farm only or also be a "split" operation that raises some livestock?
Just some things to think about.
Is it going to an established farm? Are you hoping to do a buy out?

 

[Beef08]

I plan on raising Herefords or Brangus Cattle and having another job. My grand father has plenty of equipment and I am sure I will inheriet some of it. Cattle farmers do pretty good around here if they know what they are doing... I am not big on buying new equipment. Most of my granddads and dads isn't the newest stuff, but it works just as good.

 

[dun]

Buy it now and go into hock. In 10 years even with inflated wages, land is going to be out of sight

 

[I luv herfrds]

Dun the newest piece of equipment we bought was a JD lawn tractor last spring.

Beef if you know how to keep that stuff running and fixed you shouldn't have too big of a problem.
Hubby is always fixing something and getting it going.

 

[Caustic Burno]

I want to be able to buy a farm in the next ten years, does anyone have any advice that might make the saving of money easier or any tips of how much land to buy? or just anything to say?

People are always saying land is an investment this is not nessacarily true unless you pay cold hard train riding cash. By the time you firgue the intrest you pay plus the purchase price plus taxes you have a pile in that piece of land. Look at an amorization table on 100,000 for twenty years the payments come to 186000 dollars at 7% not including taxes. That amount will only buy 50 acres at 2000 an acre, lets say you have 14000 in taxes over twenty which I would think in most area would be cheap, you now have spent double the cost of the purchase price.

 

[Beef08]

so caustic your pretty much saying dont bother?

 

[Wewild]

I know a fellow that has 3000 acres that will go for over 20k ea one.

It was bought back in the 30's for $3000.

You can't buy anything around here and expect to make a living farming.

 

[Caustic Burno]

so caustic your pretty much saying dont bother?

Didn't say that said go in with your eyes open. If you can make the note you can save the money as well.
Land doesn't always go up seen it fall like a turd after the S&L's folded and it took 15 years to get back to where was when it fell. In another 20 years my generation the boomers are going to be dying in droves we are the largest segment of the population in the US.

 

[cfpinz]

A bit off subject but here's a question for some of the more "seasoned" members: In order for the price of land to decrease significantly, what conditions need to be met and do you think that is a possibility in the near future?

cfpinz

 

[Beef08]

well I am not quite old enough yet to purchase a farm, but I sure hope to one day, and it would sure help if the price per acre went down..

 

[hurleyjd]

so caustic your pretty much saying dont bother?

Didn't say that said go in with your eyes open. If you can make the note you can save the money as well.
Land doesn't always go up seen it fall like a turd after the S&L's folded and it took 15 years to get back to where was when it fell. In another 20 years my generation the boomers are going to be dying in droves we are the largest segment of the population in the US.

I just bought land last week for $1750 per acre. The asking price was $3000. I made the offer and the offer was accepted. I look at the real estate ads all the time. There is a lot of land advertised for $3500 and up. Some has been on the market for two years. I think that if an offer is made with the scare we have in the economy then it might very well be accepted.

 

[stocky]

Beef, keep your eyes out for land that someone needs to sell in a hurry. Also look for land with few, if any improvements, so the price will be less.
Caustic, you are absolutely right about the land not always going up. Every so often it crashes and washes out the people who are in a tough financial situation. They lose everything.
Cfpinz, the things that caused our land to drop from 2,000 per acre in 1980 to 200 per acre for the next 15 years were, Horrible droughts for 3 years, 2 years of grasshoppers destroying everything, interest rates going to 23 percent, cattle prices falling from 1000 per cow to 200 per cow, feeder calves dropping from 1.10 per pound to 40 cents per pound, Round bales of hay going from 10 dollars to 60 dollars, dairy feed going from 3.50 per hundred to 17.00 per hundred, milk price going from 10 dollars to 3.25 per hundred, the outlawing of foreign ownership of Missouri farm land. All of these things and more contributed to the crash in sw missouri that destroyed most of the farmers and left hundreds of thousands of acres owned by banks for 15 years that they couldnt sell for 200 per acre. All of these with the possible exception of the foreign ownership rules could happen today. Also the other possible crash instigators today are fuel prices, fertilize prices, equipment prices, recession, depression, inflation. We live with those possibilities every day as farmers. It doesnt matter what land appraises for, it is only worth what someone will actually pay for it at that given time.

 

[Caustic Burno]

Beef, keep your eyes out for land that someone needs to sell in a hurry. Also look for land with few, if any improvements, so the price will be less.
Caustic, you are absolutely right about the land not always going up. Every so often it crashes and washes out the people who are in a tough financial situation. They lose everything.
Cfpinz, the things that caused our land to drop from 2,000 per acre in 1980 to 200 per acre for the next 15 years were, Horrible droughts for 3 years, 2 years of grasshoppers destroying everything, interest rates going to 23 percent, cattle prices falling from 1000 per cow to 200 per cow, feeder calves dropping from 1.10 per pound to 40 cents per pound, Round bales of hay going from 10 dollars to 60 dollars, dairy feed going from 3.50 per hundred to 17.00 per hundred, milk price going from 10 dollars to 3.25 per hundred, the outlawing of foreign ownership of Missouri farm land. All of these things and more contributed to the crash in sw missouri that destroyed most of the farmers and left hundreds of thousands of acres owned by banks for 15 years that they couldnt sell for 200 per acre. All of these with the possible exception of the foreign ownership rules could happen today. Also the other possible crash instigators today are fuel prices, fertilize prices, equipment prices, recession, depression, inflation. We live with those possibilities every day as farmers. It doesnt matter what land appraises for, it is only worth what someone will actually pay for it at that given time.

There is a lady that has 15 acres that butts up to mine. I have been trying to buy for years. Her and the husband bought the land in the early 80's when the S&L's were going. He died and she is still wanting what they paid for it and can't sell it as it is still overpriced for the area. Every year I offer what the going rate is and she comes back but we paid this for it, I just shake my head and walk away.

 

[john250]

A bit off subject but here's a question for some of the more "seasoned" members: In order for the price of land to decrease significantly, what conditions need to be met and do you think that is a possibility in the near future?

cfpinz

Seasoned? I like that better than "Crusty".

For every boom there is a bust.
When everyone thinks the price of land can only go up, that is when it will crash.
My experience is from the '70's, but the crash in 1919 is also instructive.
High commodity prices produce an oversupply. I know it seems corn can never go back down but trust me, it can and will.
In the 70's we started selling wheat to Russia and grains spiked up huge. Land started going wild at the same time.
In 1915-1918 the war in Europe brought high prices for grains, and land was up, up, up.
The war ended, and Europe went back to feeding itself. Prices crashed. The great depression started on the farms in 1920 or so. Lots of folks went bust.
Jimmy Carter decided to punish the Russians for invading Afghanistan, so in a classic "cut off your nose to spite your face" move he embargoed grain exports to Russia. $12 beans went to $4 in a heartbeat. Land tanked.
In the very long term, land is always up. More people and of course they aren't making more land.
In the short run, don't get caught up in a fever and buy because "it can only go up." That is why we have a mortgage crisis.
A change in ethanol policy would be enough to tank this current boom (in farmland). That may not happen, but be assured that at some point there will be "market corrections" and they will come out of a blue clear sky.
An economics professor of mine noted that land has never paid for itself. Never. People take money they make somewhere else, and they buy land. Think of the guy working two jobs and a wife working and buying 20 acres with a cottage on it.
On the high end, think Ted Turner.
Land is precious stuff, and owning is second only to raising kids as an ego booster.

 

[dun]

Unless we have a wide ranging recession, any land worht having is going to keep being bought by the recreation use community. That particular segment of the market is wt is driving the crazy prices. Most farmers aren;t going to buy land to increase their possbile corn acres, they'll be taking land that is marginal for farming and planting it.

 

[john250]

Unless we have a wide ranging recession, any land worht having is going to keep being bought by the recreation use community. That particular segment of the market is wt is driving the crazy prices. Most farmers aren;t going to buy land to increase their possbile corn acres, they'll be taking land that is marginal for farming and planting it.

You're right. Rough, nearly vertical land here is bringing as much as good cropland. Raising trophy bucks is better than 175 bu corn, if you're selling.
A recession in town may end that, for a while.

 

[MikeC]

John250 wrote: An economics professor of mine noted that land has never paid for itself.

I agree and I'll take it even further.

A friend of mine who works for the Federal Land Bank said that if someone GAVE you some farmland/ranchland (and you had no other capital or income) and that you had to make a living on it, you could not do it.

Much less PAY for the land.