Land prices

[hurleyjd]

Can any one justify paying upwards of $3500 an acre to raise cows on. I for one cannot. Also the person you are leasing from cannot afford to charge less than $175 per acre this equates to a 5 percent return on their assets. Would you balk at paying $175 an acre for lease for the land. Also at what point will land get to high to buy. I have heard statements that land will always go up. If you are depending on the land to generate your source sole income. Then can you survive a drought that last for several years. The only reason that I can keep going is because of other investments and pensions.

 

[Jogeephus]

I wouldn't pay $175/acre to raise cattle and don't know anyone who rents their land that can find anyone who gets a rent based on your formula.

Has land really gone up or has it just been a good hedge on inflation?

 

[Kingfisher]

Years ago if a man came to Texas they gave him 166 acres. If he brought a milk cow they gave him 4287 acres!

 

[AllForage]

I think land for the most part has been divorced from its production value. Seems to me it is priced at what the current market can bare or the highest anyone is willing to pay obviously.

With that said 3500 an acre with a stocking rate of 4 acres to a cow is too much. Up here we can run a cow on 1.5 and make her hay on that. So stocking rate and wintering costs I thinknneed to be accounted for.

 

[Jogeephus]

The whole purpose of running cattle has always been to make use of land that is not suitable for other things. In this light, cattle are very profitable and will work for you and the land. Seems many today want to work for the cattle and for the land instead of letting it work for you. When you can no longer do this cattle are no longer profitable and you need to raise something else. Maybe okra. Or possibly solar panels.

 

[Hook]

Hard to go wrong with okra.

 

[greybeard]

Interesting subject. I have 17.4 acres in the front of my property--1300' highway frontage, that I paid $1915 an acre for during the recession in 2009. It's paid for. I don't really get much use out of it, has 3 structures on it that only one of which is in good enough shape to use for hay storage (one is an old house that has severe termite damage-the other is a 60' X 70' open side pole barn that was built at the bottom of a slight hill and stays wet during the rainy season--only thing it is good for is keeping the cows dry in really wet cold winter) but as long as it's there, I'm always wanting to do something with it, which means time, energy and $$ output. Has a small pond on it, electricity, fully fenced, year round water for stock (even in 2011 drought).It IS, like all my place, in a 100yr flood zone. I also have to keep the weeds sprayed on it and pay taxes on it. I decided a few weeks to to get rid of it because I'm older and just don't have the physical energy to keep it up and improve it any longer, and don't want to go thru the hassle of a lease. If I were 20 years younger, I would keep it--I'm not, and ain't going to keep it.
I was more than a little surprised what it appraised at and what sale price was reccomended by an independent appraiser and 3 different real estate agents. $6000 an acre ask--and would go down to $5k/acre if there were no real interest at $6k. It is on ag production with the tax appraisal district. There are lots of homesite lots available around here, but no acreage on the market unless you get up in the 100+ acre size. I'll gladly take the $$ and run if someone wants it for a little hobby farm or place to keep goats and horses on and a milk cow or 2, but there's no way to make it pay for someone to raise cattle on at that price.

 

[Rafter S]

Greybeard,

I'm just off Highway 6, between College Station and Houston. The place you described would bring $10,000 per acre here in a heartbeat.

 

[Nesikep]

In the "dream a little" thread, I looked at two ranches,.. the first was 1100 acres for 2.5 mil, 400 acres in hay, 700 in bush, so if you work it out to usable acres it's $6250 ac. It has a grazing lease for 220 cows, enough water, etc... but cows and equipment aren't included (I'm sure they'd list it if it was!).. so you're up to $3.5 mil by the time you're set up

If you went in with 2 million and financed the rest, I think you could make a go of it.

We haven't appraised our place, but I don't think it would be under $1 mil for 60 arable acres.. it would be impossible to raise cattle on this place for profit if you had any debt.. that being said, this place is capable of growing far more valuable crops... an acre of carrots would bring more money in than the whole herd, even at these cattle prices. There's the option of orchard, vinyard, greenhouses, etc.

 

[Kingfisher]

Interesting subject. I have 17.4 acres in the front of my property--1300' highway frontage, that I paid $1915 an acre for during the recession in 2009. It's paid for. I don't really get much use out of it, has 3 structures on it that only one of which is in good enough shape to use for hay storage (one is an old house that has severe termite damage-the other is a 60' X 70' open side pole barn that was built at the bottom of a slight hill and stays wet during the rainy season--only thing it is good for is keeping the cows dry in really wet cold winter) but as long as it's there, I'm always wanting to do something with it, which means time, energy and $$ output. Has a small pond on it, electricity, fully fenced, year round water for stock (even in 2011 drought).It IS, like all my place, in a 100yr flood zone. I also have to keep the weeds sprayed on it and pay taxes on it. I decided a few weeks to to get rid of it because I'm older and just don't have the physical energy to keep it up and improve it any longer, and don't want to go thru the hassle of a lease. If I were 20 years younger, I would keep it--I'm not, and ain't going to keep it.
I was more than a little surprised what it appraised at and what sale price was reccomended by an independent appraiser and 3 different real estate agents. $6000 an acre ask--and would go down to $5k/acre if there were no real interest at $6k. It is on ag production with the tax appraisal district. There are lots of homesite lots available around here, but no acreage on the market unless you get up in the 100+ acre size. I'll gladly take the $$ and run if someone wants it for a little hobby farm or place to keep goats and horses on and a milk cow or 2, but there's no way to make it pay for someone to raise cattle on at that price.

Can you build/insure in a flood plain?

 

[Bigfoot]

To answer your question, no cattle will not pay for that land. Unfortunately, land is now valued beyond its productive value.

Tobacco ground is leasing for $600 an acre here next year. That will be interesting to watch as well.

 

[greybeard]

Interesting subject. I have 17.4 acres in the front of my property--1300' highway frontage, that I paid $1915 an acre for during the recession in 2009. It's paid for. I don't really get much use out of it, has 3 structures on it that only one of which is in good enough shape to use for hay storage (one is an old house that has severe termite damage-the other is a 60' X 70' open side pole barn that was built at the bottom of a slight hill and stays wet during the rainy season--only thing it is good for is keeping the cows dry in really wet cold winter) but as long as it's there, I'm always wanting to do something with it, which means time, energy and $$ output. Has a small pond on it, electricity, fully fenced, year round water for stock (even in 2011 drought).It IS, like all my place, in a 100yr flood zone. I also have to keep the weeds sprayed on it and pay taxes on it. I decided a few weeks to to get rid of it because I'm older and just don't have the physical energy to keep it up and improve it any longer, and don't want to go thru the hassle of a lease. If I were 20 years younger, I would keep it--I'm not, and ain't going to keep it.
I was more than a little surprised what it appraised at and what sale price was reccomended by an independent appraiser and 3 different real estate agents. $6000 an acre ask--and would go down to $5k/acre if there were no real interest at $6k. It is on ag production with the tax appraisal district. There are lots of homesite lots available around here, but no acreage on the market unless you get up in the 100+ acre size. I'll gladly take the $$ and run if someone wants it for a little hobby farm or place to keep goats and horses on and a milk cow or 2, but there's no way to make it pay for someone to raise cattle on at that price.

Can you build/insure in a flood plain?

I did. What you have to do along the river I am near, is get an elevation certificate, then the surveyor tells you how high the top of your 1st floor level has to be. The reason they leave it up to the surveyor is because FEMA has never set a base flood elevation on this river. Everywhere else, (if I understand it correctly) FEMA would dictate how high the finished 1st floor has to be. Much of the new housing along Lake Livingston is in a FEMA dictated flood plain and all that is required is that you carry flood insurance, and then only as long as you have a mortgage. The lender's require it, before they'll approve the loan.
(People build along the coast all the time--my twin has a house at Bolivar Penisula about 200 yards from the gulf of mexico beach--built new in 2009, after Hurricane Ike wiped his original one off the face of the Earth. He had flood insurance on the original one and it paid off very quickly, and the check was more than enough to build a bigger and better house than he had before )

 

[Kingfisher]

Thanks for the reply. What river are you on? Onion creek flooded here last year. The City and the Feds just bought/condemned @ 100 homes here.

 

[greybeard]

East Fork San Jacinto. It's a fairly short river--headwaters begin about 40 miles north of here.
I know where Onion Creek is--or where it crosses highway 71 just East of Bergstrom airport anyway. I had had a trailer tire blowout within 100' of the bridge about 10 years ago.

 

[wacocowboy]

In my county land goes for 2000-3500 an acre bunch of city slickers and weekend ranchers moving in. I miss the days when all this land around here was used for cotton, corn or feeder calves ain't got much use for these city folks.

 

[Stocker Steve]

Hard to go wrong with okra.

How much okra production should I expect in Minnesota ?

 

[greybeard]

None--this time of year. :lol:

Here, it doesn't even start doing well until the temps get into the 90s. A hot weather plant.

 

[Stocker Steve]

There is still land that will cash flow with cattle. This does not mean you can making a living on a couple acres that fronts a major highway leading you directly to a shopping center or an office tower.

 

[Hook]

Hard to go wrong with okra.

How much okra production should I expect in Minnesota ?

With temps in Minnesota being the same as florida (per inbred redneck) you should be able to plant on March 1 :lol:

 

[OklaBrangusBreeder]

Can any one justify paying upwards of $3500 an acre to raise cows on. I for one cannot. Also the person you are leasing from cannot afford to charge less than $175 per acre this equates to a 5 percent return on their assets. Would you balk at paying $175 an acre for lease for the land. Also at what point will land get to high to buy. I have heard statements that land will always go up. If you are depending on the land to generate your source sole income. Then can you survive a drought that last for several years. The only reason that I can keep going is because of other investments and pensions.

I've come to believe the following...

* Land is an investment unto itself. Your ownership of land should not be based on "earning a return" on it as it likely will appreciate during owndership. You don't expect a stock you purchase to "pay for itself" over time. You buy a stock, it hopefully goes up, and the gain you make during ownership will reward its ownership. Same thing with land. It does not have to pay you back for the initial purchase.

* What you earn from cattle/crops should be considered the "dividend" on your investment. For me, what I can earn on the land is a better and more consistent "return" than having the cash invested in the land in other financial assets (savings account, stock, mutual funds, etc). Plus, I find the effort of farming the land to rewarding and enjoyable. So, it is a "win-win" for me.

I guess is my point if you are trying to "justify" the purchase of land by strictly what you can earn on it, you'll probably never make a land purchase ever again. However, if you look at the land more as a seperate investment from the farming operation it might calculate out more appealing.