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back to land and money
if yer saying its worth is what it can produce heres one for ya

i bought 5 ac attatched to my prop..45k...payment 550/mo..im not gittin into all the balloon crap either but....

tell me how to make 600 mo on 5 ac a.d ill sell every had of cows i got tomorrow...

i also lease 50 ac for 800 yr...now i can make that work pretty good..but the property locally is worth probly 150k or better...

how ya gonna make that monthly payment...w/o off the ranch income it aint happening. i dont include the land costs..i consider it a form of 401k...for my son more than myself....hopefully it will all be paid for before he is 18..

i aint the brightest guy but i do alright so someone explain to me what im doing wrong....cuz no way my cows are makin enough money to buy land....more land..more payment...more cows...still wont work..

gary
 
"I guess I'm hard headed. But I'd take the lower return on a real property . Mostly because I don't believe in or trust our gov. 401 s ira s etc depends on the government payin what they owe..."

I have to agree with this. Watch my folks loose their retirement nest egg in their 401K's when the market crashed. Bad investments maybe buy my rental properties still generate me an income. I can still turn the key. Yes their stability is dependant upon gvernment involvement but if the gov wants to take them I have recourse and I can defend them. I may get planted over that but hey you have to stand for something or you will fall for anything. Dad always told me they aren't making more land.

I do believe in putting money in the bank too. Dad was raised during the depression and he stressed that to us kids. Rainy days come and go but I think if the Gov ever tries to take my property their will be much worse things to be worrying about at that time.

More worried about them trying to take other things I own like my firearms!
 
In order to save this country we need to put GOD first! We need to start tithing, because if the church falls we all fall. There are people in our government who are pulling the strings behind the curtains. These people are wanting to destroy the church. The church is the only thing that stands between them and a total dictatorship.
 
dieselbeef":3k6igv5b said:
back to land and money
if yer saying its worth is what it can produce heres one for ya

i bought 5 ac attatched to my prop..45k...payment 550/mo..im not gittin into all the balloon crap either but....

tell me how to make 600 mo on 5 ac a.d ill sell every had of cows i got tomorrow...

i also lease 50 ac for 800 yr...now i can make that work pretty good..but the property locally is worth probly 150k or better...

how ya gonna make that monthly payment...w/o off the ranch income it aint happening. i dont include the land costs..i consider it a form of 401k...for my son more than myself....hopefully it will all be paid for before he is 18..

i aint the brightest guy but i do alright so someone explain to me what im doing wrong....cuz no way my cows are makin enough money to buy land....more land..more payment...more cows...still wont work..

gary
I think you have to look at the cost of the land versus what u can raise on the land. You have to have enough land to do something with.. the bigger the piece of land the cheeper the per acre price is.. when I bought my land I looked at it as being able to pay each acre off with 4 calves. That may mean buying land farther from town or in a area a person might not like... But just because someone wants 9 k an acre doesn't mean its worth that much... Kinda like the houses people were paying 500 k for you can buy now for 190 k...
 
so youre saying that you can get 4 calves off evry acre you own evry yr til its paid for?
do i understand that right?? that means 20 calves off 5 acre..at (insert yur payment here) thats 4 mos of payments..so then what do yu do to pay for it the rest of the yr
 
dieselbeef":1ars1jys said:
so youre saying that you can get 4 calves off evry acre you own evry yr til its paid for?
do i understand that right?? that means 20 calves off 5 acre..at (insert yur payment here) thats 4 mos of payments..so then what do yu do to pay for it the rest of the yr
No what I mean is running at full capacity I will have to sell 4 calves to pay off one acre..so if I'm running 75 head it will take me close to 10 years to pay off 200 acres at 1200 an acre
 
So what I'm saying is you have to look at what you feel is a reasonable amount of time to pay the land off and what u can make off of the land.. if either of those issues don't seem reasonable its not worth buying...
 
I just buy land for cash so that I can own land. My goal was to own the entire county but I've trimmed that back some.
 
JSCATTLE":2ay0shst said:
dun":2ay0shst said:
I just buy land for cash so that I can own land. My goal was to own the entire county but I've trimmed that back some.[/quote
Must be nice to be rich dun!! Haha
Just buy cheap land no one else wants
 
cross_7":3uxq66yz said:
i know a guy that bought a piece of property in 1972 for 49000.00
sold it in 2010 for 221000.00
at first i thought that was a great return until i began to figure what the 49000.00 would be worth had he invested it at 5% or 7% for a 40 year period.

Did he earn any revenue off the land during that period of time? If so you can't just omit that from your equation can you?
 
TennesseeTuxedo":2u2rw09h said:
cross_7":2u2rw09h said:
i know a guy that bought a piece of property in 1972 for 49000.00
sold it in 2010 for 221000.00
at first i thought that was a great return until i began to figure what the 49000.00 would be worth had he invested it at 5% or 7% for a 40 year period.

Did he earn any revenue off the land during that period of time? If so you can't just omit that from your equation can you?

Nope, and he probably lost money on up-keep also. It can go either way. You would have to know more details.
 
dieselbeef":u0goxfh4 said:
back to land and money
i bought 5 ac attatched to my prop..45k...payment 550/mo..im not gittin into all the balloon crap either but....

tell me how to make 600 mo on 5 ac a.d ill sell every had of cows i got tomorrow...

i also lease 50 ac for 800 yr...now i can make that work pretty good..but the property locally is worth probly 150k or better...

gary

I understand your math and I think I understand your motivation Gary. Cleared land where I am is going for $9500 per acre. I would like to purchase 10 acres next to mine listed at $95k with 8 of it in soybeans right now. 2 ac. are unusable. I could probably add 5-6 head by adding that additional pasture. One day I am thinking no way, I could never break even much less profit. Yet something draws me to wanting that land and having the additional pasture. Probably consumerism and the urge to own more. Thought I might offer $70k which is still crazy as far as making a profit. But if I exclude that cost it would be a nice addition to my 25 Ac. I try to justify it by saying when prices recover it might be worh $100k?? But in reality I probably wouldn't sell it then so it becomes something for my kids to have to sell you know when.
 
I am of the mindset of many here that you need to separate the land enterprise from the cattle. Not just for liability reasons, but also as investments, and for tax purposes.

To do this we create a limited partnership that owns the land. The limited partnership pays the taxes on the land and gets to depreciate the barns and bridges. The limited partnerships only liability is taxes and insurance because it paid cash for the land as both an investment and a hedge against inflation. The cattle operation pays rent to the partnership sufficient to cover the taxes and insurance and a very small profit. This reduces the tax liablity of the partnership to zero since it barely makes any money at all. There are no capital gains or any other profits to speak of unless the property is sold. The partnership is a very safe and stable savings account that you get to enjoy whenever you want. Rent is low - set at market - about $7000/yr for 768 acres. Contrary to many beliefs, land is a relatively liquid asset.

Next is the cattle operation. The cattle operation uses equipment that that is also paid for. The cattle operation pays rent to the partnership. The rent is fully deductible as an expense. The cattle were bought with cash and are depreciated. The rest of the expenses of cattle are written off as business expenses as well. Mileage on the vehicles and everything else is expensed against the cattle. A spreadsheet is kept that charges the cattle operation $45/$65/$85 hour to run a tractor for any purpose. Hours are recorded monthly and the cattle must pay the $45/hr on the equipment. That is forced savings for future purchases and needs....if equipment breaks its paid for from that fund, if we need or want something new it comes from that fund. If the cash is not there we dont get it. If it has to be repaired and the cash is not there, its paid back as soon as calves are sold. We have more than 100 head now, and I expect them to bring in enough cash to pay the rent for the land, the $45/hr for the equipment, plus all of their food, fuel, cubes, etc.....This year looks to have about $3-5,000 profit if it rains. Next year should be much higher as another 40 or so heifers come into production.

If you make sure that both operations are profitable you are making money. If you had to make payments on the land you would be in trouble, but I am of the mindset that the land is a good investment even without a steady stream of income. Its just like a crop. When you plant a crop its worth nothing. You don't get paid till harvest. For corn/rice or most other crops that is 1 year, but for pine/hardwood plantations that could be 7,15,and 30 years....For land its as long as you are willing to hold it....its a cheap year over year hedge against inflation that *usually* increase in value. Also the land is constantly being improved to make the ranch a better place. Each new fence/cross fence adds value to the property that is paid for by the cattle. All the road improvements, water wells, drainage that are done are expensed against the cattle yet become assets to the land. When I am old and cant run the cattle any longer the 40+ years of improvements to the land should have added a substantial value to the property which is recouped if you have to sell. Hopefully I get to pass down a piece of property as my family has done.

Personally I have been in the stock market for 11 years. I have 401K, I have IRA's, and I have a small personal trading account that acts like a savings account. If you take the last 11 years and cash everything out today - I have made nothing. I probably have lost, even with all of the dividends and 401K matching.

If you take the last 3 years of cattle and you take all of my expenses, including the purchase of the cattle and equipment I have bought, and you liquidate it all right now, I will have made money. I get no enjoyment or satisfaction out of the paper investments. The cattle on the other hand are great, they force me to exercise, to get me outside out of the city, away from the people who make life stressful....its a huge quality of life improvement, and it keeps me on the move. That is a value that is hard to put a pencil to, but is still valuable.

You may not be able to get rich running cattle, but if you have an off farm job, land/cattle are a fantastic hedge against inflation, and a great low interest savings account. Once the majority of the start up expenses have been paid for - you are left with years of low cost operations. Thats my .02
 
thats pretty much right on..yu can never have enough land i say..altho you can only afford so much...

even js cant make his cows pay his bills unless he has more head running in add (somewhere else?0 to the capacity of the land he is currently paying on..so he must have some free and clear that he aquired some way...
 
Marksmu, great post. I think what you described what is going to become the norm for future cattle men. Even if you have inherited or paid for land there are benefits to breaking it out like you have described. Some thing like planting grass, fencing, and other improvements seem overwhelming at times if you try to justify them for your cattle. If you factor in what those improvements do to your land value its a pretty good return on the investment. Plus if you do some thing like grass, which allows the leasee to run more head per acre, the leasor should be able to charge more per acre. You have the created additional cash flow on that side. I will add the importance of paying cash for these improvements. Interest and risk can change the whole game.

I would also add that it can be done easily by contracting out tractor work or fence building because that has the labor and equipment factored in. Although it can appear to be more expensive than doing it yourself, when trying to get off the ground its nice to not have the tractor or equipment over head.

dieselbeef":3cmbxxdp said:
thats pretty much right on..yu can never have enough land i say..altho you can only afford so much...

even js cant make his cows pay his bills unless he has more head running in add (somewhere else?0 to the capacity of the land he is currently paying on..so he must have some free and clear that he aquired some way...

Read back a couple pages.
 
dieselbeef":1p3aq51b said:
thats pretty much right on..yu can never have enough land i say..altho you can only afford so much...

even js cant make his cows pay his bills unless he has more head running in add (somewhere else?0 to the capacity of the land he is currently paying on..so he must have some free and clear that he aquired some way...
Ok let me try to explain it again....it takes 40 calves to pay my land note.. I have 45 cows on my property now ... 100 acres of Bermuda grass pasture 100 acres of 4 year old clear cut that only has the stumps left on it... I lease other land and use land for the up keep... I bale hay from some of these other properties ... I sell enough hay to cover fertalizer cost.. with the exception of this year.. I guess I'm doing something wrong because it doesn't cost me 300 a head to keep a cow.. the only expence I have is a few tubs and salt. I also lease enough land to run 300 head but choose to run half of that because of drought ... So yes the cows on my land pay for them selves and I paid for my hay equipment bailing for other people...the cows also pay the land note ...and nothing was given to me free and clear except being taught how to work hard...
 
marksmu":1isb3txr said:
I am of the mindset of many here that you need to separate the land enterprise from the cattle. Not just for liability reasons, but also as investments, and for tax purposes.

To do this we create a limited partnership that owns the land. The limited partnership pays the taxes on the land and gets to depreciate the barns and bridges. The limited partnerships only liability is taxes and insurance because it paid cash for the land as both an investment and a hedge against inflation. The cattle operation pays rent to the partnership sufficient to cover the taxes and insurance and a very small profit. This reduces the tax liablity of the partnership to zero since it barely makes any money at all. There are no capital gains or any other profits to speak of unless the property is sold. The partnership is a very safe and stable savings account that you get to enjoy whenever you want. Rent is low - set at market - about $7000/yr for 768 acres. Contrary to many beliefs, land is a relatively liquid asset.

Next is the cattle operation. The cattle operation uses equipment that that is also paid for. The cattle operation pays rent to the partnership. The rent is fully deductible as an expense. The cattle were bought with cash and are depreciated. The rest of the expenses of cattle are written off as business expenses as well. Mileage on the vehicles and everything else is expensed against the cattle. A spreadsheet is kept that charges the cattle operation $45/$65/$85 hour to run a tractor for any purpose. Hours are recorded monthly and the cattle must pay the $45/hr on the equipment. That is forced savings for future purchases and needs....if equipment breaks its paid for from that fund, if we need or want something new it comes from that fund. If the cash is not there we dont get it. If it has to be repaired and the cash is not there, its paid back as soon as calves are sold. We have more than 100 head now, and I expect them to bring in enough cash to pay the rent for the land, the $45/hr for the equipment, plus all of their food, fuel, cubes, etc.....This year looks to have about $3-5,000 profit if it rains. Next year should be much higher as another 40 or so heifers come into production.

If you make sure that both operations are profitable you are making money. If you had to make payments on the land you would be in trouble, but I am of the mindset that the land is a good investment even without a steady stream of income. Its just like a crop. When you plant a crop its worth nothing. You don't get paid till harvest. For corn/rice or most other crops that is 1 year, but for pine/hardwood plantations that could be 7,15,and 30 years....For land its as long as you are willing to hold it....its a cheap year over year hedge against inflation that *usually* increase in value. Also the land is constantly being improved to make the ranch a better place. Each new fence/cross fence adds value to the property that is paid for by the cattle. All the road improvements, water wells, drainage that are done are expensed against the cattle yet become assets to the land. When I am old and cant run the cattle any longer the 40+ years of improvements to the land should have added a substantial value to the property which is recouped if you have to sell. Hopefully I get to pass down a piece of property as my family has done.

Personally I have been in the stock market for 11 years. I have 401K, I have IRA's, and I have a small personal trading account that acts like a savings account. If you take the last 11 years and cash everything out today - I have made nothing. I probably have lost, even with all of the dividends and 401K matching.

If you take the last 3 years of cattle and you take all of my expenses, including the purchase of the cattle and equipment I have bought, and you liquidate it all right now, I will have made money. I get no enjoyment or satisfaction out of the paper investments. The cattle on the other hand are great, they force me to exercise, to get me outside out of the city, away from the people who make life stressful....its a huge quality of life improvement, and it keeps me on the move. That is a value that is hard to put a pencil to, but is still valuable.

You may not be able to get rich running cattle, but if you have an off farm job, land/cattle are a fantastic hedge against inflation, and a great low interest savings account. Once the majority of the start up expenses have been paid for - you are left with years of low cost operations. Thats my .02

If you have lost money you need a better finacial advisor. It is all about steady returns. I have always believed in being overweight in bonds and target for 5 to 6% for the long haul, you won't have the highs or the low's.
You can explain all you want you are only worth your liquid asset's. The rest is an air castle you have to find a buyer for.
No buyer no value. Millions of American's have been taught this lesson in the last couple of years.
 
JSCATTLE":387e38je said:
dieselbeef":387e38je said:
thats pretty much right on..yu can never have enough land i say..altho you can only afford so much...

even js cant make his cows pay his bills unless he has more head running in add (somewhere else?0 to the capacity of the land he is currently paying on..so he must have some free and clear that he aquired some way...
Ok let me try to explain it again....it takes 40 calves to pay my land note.. I have 45 cows on my property now ... 100 acres of Bermuda grass pasture 100 acres of 4 year old clear cut that only has the stumps left on it... I lease other land and use land for the up keep... I bale hay from some of these other properties ... I sell enough hay to cover fertalizer cost.. with the exception of this year.. I guess I'm doing something wrong because it doesn't cost me 300 a head to keep a cow.. the only expence I have is a few tubs and salt. I also lease enough land to run 300 head but choose to run half of that because of drought ... So yes the cows on my land pay for them selves and I paid for my hay equipment bailing for other people...the cows also pay the land note ...and nothing was given to me free and clear except being taught how to work hard...

You hay,mineral's fuel, taxes etc. are free. Every bale of hay you put out has a cost. I could on and on.
Just admit it your hammerheaded ;-) I can relate. As I resemble that remark.
 

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