hurleyjd":s2o4x4md said:
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.