Looking For Advice...

[Jeremy14]

Hello Everyone,

I have a few questions that I am sure I will get some excellent responses from. But first, a little background information:

From the heart of Cajun Country. Am 26 years old. Happily married and expecting our first child. Just moved into a new house that we built. We both have college degrees and decent jobs. Our living expenses meet our monthly incomes.

But, I have always wanted to raise my own cattle. Grew up on a tiny farm with my grandparents living next door. In fact, I used to hope that my grandpa would be running late so that I would be able to do all the farm chores by myself with no help. I was even able to purchase some of my own in high school. I guess that the sense of satisfaction that I received from working on a farm even back then is something that I have always craved.

Anyway, I have been waiting for the right time to jump back into the market. A lot across the street from me just went up for sale. 30 acres for $130,000. I feel like this is just too good of an opportunity to pass up. It is hard to find a lot this size still intact so close to home in this area. My original plans were to start looking for land within the next year, but this seems too good to be true.

I would eventually like to be able to make a living with cattle, but for now I am looking for a medium sized foothole. I don't plan on quitting my day job anytime soon.

What should I do? Does anyone have any suggestions? I am a detail freak and would love all info that any of you would like to share. Any sample budget plans would be welcome. I have read some of your opinions on financing, but got a lot of differing views. Since I don't plan on making this my living yet, do you think it would be feasible? I was thinking about 20 heads. Do you agree?

How much money do you think I would reasonably need to get started?

Like I said, links, ideas, suggestions are welcome.

Thanks in advance.
Jeremy

 

[memanpa]

$4300 an acre seems a tad high to me, fenced ? cross fenced?? water??? barn??? what kind of pasture????? elect?
any other improvments on the land? might need to look into the deed restrictions as to livestock,

 

[Jeremy14]

He actually already has about 20 heads on the land right now. Already fenced. No improvements needed.

 

[ollie']

Jeremy, in my opinion you usually have to look at land as a seperate business from cattle. There is no way the profit off cattle will service a debt on the land it takes to run them on. If you are trying to turn a profit then you almost always have to own the land or rent. If you are borrowing the money on land , cattle usually won't pay the interest on that large of a sum.You will have in the neighborhood of 9000.00 worth of interest on the realestate alone. If you borrow money on the cattle of course you will increase the amount of interest owed. On a ten year span , nation wide, the average profitper cow will be around $100.00 per head. If your realestate will support 30 mommas as you suggest then you have to put
$300.00 per calf toward interest alone. That Jeremy is a money looser. You still havn't bought fertilizer, feed or hay, vet supplies , bushogging , etc.
If you can afford it land is a good investment in most areas of the country. Just don't try to make cows pay for it at $4000. per acre.

 

[Jake]

I'd go for it, try to work the price down a tad but I'm guessing it's land fairly close to future development. You should be able to have some fun with it and resell it as an investment when the market raises enough.

 

[Susie David]

Sounds like you have already made your mind up....buy the land while you can....make yourself a comprehensive business plan detailing every idea, goal and want that you can think of and put some numbers to it....thats the starting point.
We started small, developed a niche market and went pay-as- you-go and now keep busy and don't owe the bank anything. It is amazing how fast you can grow....and a good way to find out it the wife can keep a smile on her face at two AM on a cold morning, up to her shoulder in cow adjusting a presentation.
Good luck to y'all....DMc

 

[Bama]

At 26 i would say go for it. You sound like you have good jobs that will support ya'll. Don't be looking at the land as something for running your cattle on. Look at the land as an investment. Run cattle on this investment only as a suppliment. Keep the land for a few years until the expansion of housing runs the value then unload it. Take the money you make off ot it and buy a bigger farm in the clear. This can be something you can do as a retirement interest. This will only work if the area you are in now is expanding and continues to grow through the years. Look at that property as a subdivision in the future and another place as your dream farm.

 

[Beefy]

I guess i'm in the minority but the way i feel about it is they arent making any more land. if you get the opportunity to buy something, whether you can afford it or have to borrow some money, go for it! dont be scared. its not going to go down. Bama had a really good suggestion. (that price is kind of high though)

 

[Anonymous]

Who is going to look after the kid?

You going to lose an income?

Jobs disappear sometimes.

How big is the downpayment?

Suddenly things get a bit tighter if on one pay cheque.

Deeper the debt, the better the chance of going under.

Bez'

 

[Brandonm2]

I would feel better about this if the kid was already born, here, and healthy. Me and my sister weren't really sick a day and you could have dumped us off anywhere. Our younger brother on the other hand the docs opened up 4 times in the first 3 days and broke all his ribs working on his lungs and was on a ventilator for a month. He went in and out of hospitals for years and was often life threateningly sick. I don't even want to think of how high those medical bills were then OR how expensive they would be today. There was no way my Mother could have worked his first 3 or 4 years and no day care center would take him. He was having followup surgeries at age 13. I hate to be the voice of dread; but ASSUMING that you are going to have a healthy child with a minimum of expense COULD be too optimistic. I am very bullish on real estate; but signing up for a mortgage while expecting a child is too much risk for me.

 

[denoginnizer]

Make sure you get some comparable sales, at least 3, so that you dont pay to much. 130000 would easily buy 65 acres in the more rural areas around me.
Land is the best investment in my opinion.

 

[Jeremy14]

Well, I think I am going to wait on purchasing the land. My sister has 20 acres that she is letting a distant relative work for now.

I think I would feel more at ease financing the cattle rather than both.

I'm trying to work out some details with prices for the initial year. These are just quick guestimates. Too high? Too low? Missing any expenses? Tell me what you think:

1 Bull $2,500
7 Bred Cows with calf x $1100 $7,700
Hay for November through March $10,000
Vet Bills $1,000
Trailor $8,000
Misc equipment (barnyard, chute, etc) $10,000

Total financing: $39,200


Does that seem right? Have I forgot anything? Do you think it will be self-sufficient? How long will they finance me for?

Thanks for all the replies. So far so good.

Jeremy

 

[jcissell]

130,000 is way too much for 30 acres of land. If you have tons of money and buy real estate to resale in the future I would say go ahead, but in your situation I think I would find something out of town or somewhere else for a cheaper price. The best cotton ground here goes for $2000/acre. Pasture ground is somewhere between $1200 and $2000. Of course there are those pieces that someone is selling for $10,000/acre b/c it is road frontage and he is in no hurry to sell. I am looking to buy a place that is 40 acres and they're asking $140,000 but they made it clear they will work with me on the price. I really don't want to pay more than $100,000. But this place has 3 small houses(1 or 2 bedroom), a 4000 sqft house that has alot of fire damage, a large metal farm shop, another metal shop, a 10 stall cinder block horse barn, and another woodshop/shelter for cows. There is fence on most of the property.

This property is on the edge of town and one side butts up to the ghetto, so that affects the price. The man that owned the property died in the house fire 3 or 4 years ago and the family is just getting around to getting rid of it, so everything is grown up pretty good.

I just don't think I would borrow a town of money to buy land with nothing on it that is priced that high.

 

[ChrisB]

Jeremy,

I am guessing you put in an extra zero on your hay costs. Also, I wouldn't get a trailer. You can probably find someone to haul cattle for you a couple times a year for a couple hundred dollars. A trailer will never pay for itself unless you use it regularly. You could also get by with just a headgate and not an entire chute and save quite a bit of money up front, you can always add the chute later. But depending on what your feeding and the time you have, you may need a tractor, so you could either figure less or more for misc. costs. While I'm all in favor of buying good bulls, a $2500 bull for 7 cows is a bit much in my opinion. You can buy some pretty nice bulls for just over 1/2 that.

My advice is to get by with as little as possible at first and add improvements as you see necessary.

 

[TXBobcat]

Jeremy,

I am guessing you put in an extra zero on your hay costs. Also, I wouldn't get a trailer. You can probably find someone to haul cattle for you a couple times a year for a couple hundred dollars. A trailer will never pay for itself unless you use it regularly. You could also get by with just a headgate and not an entire chute and save quite a bit of money up front, you can always add the chute later. But depending on what your feeding and the time you have, you may need a tractor, so you could either figure less or more for misc. costs. While I'm all in favor of buying good bulls, a $2500 bull for 7 cows is a bit much in my opinion. You can buy some pretty nice bulls for just over 1/2 that.

My advice is to get by with as little as possible at first and add improvements as you see necessary.

I was thinking the same thing for the hay cost - way too high. You should be able to get thru the winter on less than $1000 in hay - with 7-8 head. As far a trailer goes, I think it is a good investment, but just start out with a 14' or 16' used trailer.
Just a piece of advice, but continually borrowing equipment from neighbors will turn good neighbors into bad ones, especially if you don't clean out their trailers. I have seen this happen.

You might think about leasing a bull for 60 days or so after all the cows have calved, that way you don't have the extra expense of a bull all year.

 

[J]

Is this property near a growing area. Could it be possible that it could or would be developed in the next 10 years or so? If so and provided you could get them to come off that price some I would seriously consider it. I agree with the fact that with more debt comes more of a chance of going under but as you know they ain't making land anymore and if this is in a growing area with a good school district, water and sewer nearby, and many other variables (development cost is what I'm talking about, and that is something you have to consider into the overall picture) then you could use that land to get started on, then possibly develop it, make some money and buy a bigger place.

I never thought I'd be advocating devloping land because I would like to own as much as possible before I die and hope that no-one around me devlopes theirs but it's a thought. I work in a field that deals with these guys all the time and they make money at it. Just a thought.

 

[Brandonm2]

$10,000 is 5 times more hay than you need. I don't know why anybody with 8 cows needs a trailer, much less an $8000 one and you can pick up a used chute somewhere for $1200-2000. $1200 worth of corrall panels will give you your "barnyard" and $1000 a year in vet bills is too high for a herd of 40 cows, much less 8 head. $10 a hd will buy a cow and a calf her shots and deworming is about ~$20 a head.

 

[Jeremy14]

Thanks for the replies guys...keept them coming!

 

[ollie']

$10 a hd will buy a cow and a calf her shots and deworming is about ~$20 a head.

Glad you don't buy my meds.

 

[sidney411]

Land around me goes around $10,000 per acre, unimproved.