Financing bred heifers? Or bad idea

[Ky cowboy]

I recently come across 80 acres close by fenced water barn working pens everything I need and want. Owner wants to lease it for $1200, price is right for my area I believe, places to lease are few and far between here. But I currently don't have the cattle to stock it. Found 14 bred heifers a guy wants to sell ($1450) this price also seems very reasonable all I've seen is pics of them haven't seen in person yet. Is it always a bad idea to finance cattle I know the markets down now and it seems like the right time to get in a little deeper I already have income coming in from another set of cattle and feed isn't an issue we bale plenty of hay. Just nervous about taking a loan to buy cattle. I've always tried to pay for this kinda of thing cash but never bought this many at one.

Thanks

 

[talltimber]

You're gonna get some input here I bet.

Personally, I am not scared of borrowing money on them, maybe i should be. I just borrowed for some heifers lately. I wanted them (insert instant gratification comments here), I need them (bringing per hd cost down), they will be a genetic improvement to my existing group, and that kind of heifer is hard to find for sale in this area and won't be any cheaper if I could find them. If you like them, you need them, and the cost suits you, let'er rip. I am not looking back on mine. If they all die and I end up with a cow note to pay out of pocket then so be it. I can't work any harder at it than I am. I'm leaving it all on the table. Goal, or broke and wore out.

 

[JMJ Farms]

This may not be the common consensus on the board, but that's only $20k. $20k is not gonna make or break you (I don't imagine). Rates are good. As long as you use borrowed money in the way it's supposed to be used, I view it as a good "tool". Rent seems very cheap. Only you can make the call.

 

[Ky cowboy]

Yes the rent is cheap. Not many people in this area want to mess with cattle, there's a lot of fenced off corn fields around here. The $20k will not break me I'm just trying to make them pay for themselves.

 

[JMJ Farms]

And I may be wrong but this is the way I look at it..... I see people spend $20k on toys (razors, boats, jeeps, jet skis, etc) and $5k on vacations, and whatever else. It's their money. They can spend it as they see fit. I'd rather buy land, cows, houses, equipment or anything else that SHOULD either appreciate or generate income or both. Doesn't make me right but that's how I look at it. I'd rather have a years lease and 14 bred heifers than new toys. Just a thought.

 

[Ky cowboy]

It blows my mind how people spend more money on toys than I spend on a truck. And they finance it all, to each there own I guess but not me. I can't even bring myself to buy a used four wheeler. Figured god give me legs to walk with and it's a lot cheaper

 

[RiverHills]

The price sounds good and that's big if you have to barrow. How long would the lease be for?

 

[True Grit Farms]

Financing heifers to put on rented ground? Doesn't seem like a good idea to me, but I hate to depend on others.

 

[Cross-7]

Might not work there but here I'd let it sit and grow grass till September/October then buy buy bred cows when prices drop off

 

[sim.-ang.king]

I prefer not to loan money on breeding stock, since their salvage value is worth less than half the purchase price.

 

[Rafter S]

I personally think it's a bad idea to finance anything. If I can't pay for it I don't buy it.

 

[Drzr]

I personally think it's a bad idea to finance anything. If I can't pay for it I don't buy it.

Must be nice!

 

[JMJ Farms]

I personally think it's a bad idea to finance anything. If I can't pay for it I don't buy it.

Must be nice!

Yep. I don't fault anyone for paying as they go. I admire it actually. But that's a hard row to hoe when you start with nothing. I've used borrowing to build equity. I have two guidelines. 1) I always put cash into the purchase and keep the payments high. 2) I don't borrow on things that don't a)generate income or b)appreciate in value. Only exception is my truck. (But I could argue strongly that it produces income)

But as I said earlier to each their own. As far as I'm concerned people can do whatever they want with their money.

 

[bball]

Rent seems like a good price. Seems like a decent price for the heifers too (presuming quality/breeding,etc) Only concern I see is making dam sure you have that ground rented for the life of the cattle note (as a minimum ) and at that price too. Crunch the numbers and make sure it pencils out.

 

[angus9259]

Financing heifers to put on rented ground? Doesn't seem like a good idea to me.

I believe you should pay some heed to this double whammy. How about rent the ground - so you have it - and put something manageable on it. A couple cows? Goats? Is there a dairy in the area looking to sublease it from you for this season? I pay someone $20 per head per month to pasture my open heifers on ground he leases from someone else.

I also agree with the comment that "it's only $20,000" if you can be ok with that yourself. If you are ok with the risk of taking that loss, I guess it's different. That said, most folk that are ok with taking that risk haven't borrowed to do it I would imagine.

 

[Brute 23]

I would rent the land to secure it even if I could only afford to pay cash for 2 cows the first year.

Losing money you have is not as bad as losing money you don't IMO.

 

[Rafter S]

I personally think it's a bad idea to finance anything. If I can't pay for it I don't buy it.

Must be nice!

Not sure what you mean by that. I'm far from being rich, and don't have a large income. I just do without a lot of things that other people seem to think they have to have. I'm driving a 10-year old pickup that has almost 190,000 miles on it, and I'm hoping to get that many more. My wife drives a Nissan Rogue with about half that many. Bought them both used. I almost never buy new clothes. You'd be surprised at the high quality shirts you can get on eBay or at Goodwill for considerably less than $10.00 (often 1/2 that much).

I sleep real good at night because I have almost no financial risk. If the cattle market crashes I don't have to worry about how I'm going to pay the bank.

 

[Brute 23]

I personally think it's a bad idea to finance anything. If I can't pay for it I don't buy it.

Must be nice!

Being in Debt is a choice... no one feels sorry for you.

 

[sim.-ang.king]

I personally think it's a bad idea to finance anything. If I can't pay for it I don't buy it.

Must be nice!

It is pretty nice not owe anyone anything. In fact it use to be the common, but in this day and age of "cheap money", it's hip to be in debt.

 

[wbvs58]

I think that is a manageable amount, a bit more risk with heifers, costs seem OK. I would pay all the expenses as I went out of my own pocket and then use the income from the sale of calves to reduce the debt.

Ken