Ranching for a living

[okiegirl2008]

Hi everyone, I am new to the board. I am here for advice.
Right now we have 17 acres. We just bought this place as we wanted something with a little land but not a huge amount. We love it here but our goal is to ranch someday. My husband works-just started his own business as a distributor and brings in good money.
Well, we want to take a loan out for around 200k when we can get a decent downpayment and enroll in the beginning farmer program. We are not going to take a loan on the cows -just land and equiptment.
We are hoping that the annual selling of calfs (sp?)will be enough to pay off the annual land payment as we understand we cannot make a profit until the land is paid off.
Am I missing anything? I know ranching is hard work. I am a farmer's daughter-been around it my whole life but not ranching. Every single person in my family is a cotton farmer. I have my Bachelors Degree but I am more interested in ranching than anything. I get so excited just thinking about someday having a ranch.
My husband was raised around cattle operations. He understands more about cattle than I do.
My other question is what is tha bank going to think if we walk in there and ask for a 200k loan with maybe 20-30k down payment? We are young(23 and 25) and are living in our second home. We bought our first home when we were 18 and 20 and just moved into this new place. Although, both of our families are in the ranching/farming business we are not helped by any of them. Everything we have is from hard work by us--and that is how we want it.
I guess what I am asking is --can you make a living ranching these days while having a side job(full time job)

 

[Workinonit Farm]

Welcome okiegirl2008.
Do a search for posts by Bez, Bez!,Bez+ and any other Bez (with something following the Bez) He has posted some fabulous advice and answers to your questions.

Off-farm jobs often are the primary source of income for many folks. Yes a living can be made ranching, but it helps if everything is already paid for.

Good luck and have fun.

Katherine

 

[Central Fl Cracker]

Let's take a typical 6 ea. cow calf operation figuring 1 per 3 ac's
Weaned calves after 8 to 10 months 5 ea. @ $650 = $3250
fertilizer cost @ $45 per ac. = $765
Hay for winter 3 rolls per cow 18 rolls @ $50 = $900
Vac's, deworming,minerals $20 = $120
Vet cost, water electricity, etc. = $ 50

Gross sales $3250
less expensives $1835
money for interest $1415 per year
No labor or land taxes included
no fence repairs no equipment

 

[EAT BEEF]

I think you will need 40,000 to 50,000 down if you were to go to farm credit and your yearly payment on 150,000 20 year note would be somewhere around 15,000.From what I understand USDA is more like 10% down,but it takes some time to get aproved and the funds have to be avalible.

If you could find a place that you could run 4-5,000 per cow unit that would be 40-50 cows.That would be pretty tight on it paying it's way and I wouldn't want to take the chance unless I had money coming from somewhere else to cover my but in the not so good years.

Land can be a great investment,but if your trying to make money with cattle I think your best chance will be renting pasture.Personally I find dealing with most okie's on land leases and such is enough to drive me nuts,but you may do better if your from here.

 

[TheBullLady]

I don't think any bank will loan you $200K with only 10% down .. especially right now. You'll need at least 20% down, and a good history of being able to pay back that type of loan. You said you were in your second home, I'm assuming you have a mortgage on that? If you've just recently purchased a new home, you may not have enought payment history for a lender to feel secure.

In my opinion, I would continue to work my "day " job and save your money for a bigger down payment. Less debt is your best bet, especially for getting into something as risky as ranching.

 

[hillrancher]

It can be done. Not overnight, you will have to establish credit as your are presently doing. As of this day your down payment will have to be more than a year ago. I will bet it will be 36 to 40 percent with a fixed of 8 percent. This is based on our local banks at present. The desire is more than half the effort. Just keep working toward your goals.

 

[okiegirl2008]

I don't think any bank will loan you $200K with only 10% down .. especially right now. You'll need at least 20% down, and a good history of being able to pay back that type of loan. You said you were in your second home, I'm assuming you have a mortgage on that? If you've just recently purchased a new home, you may not have enought payment history for a lender to feel secure.

In my opinion, I would continue to work my "day " job and save your money for a bigger down payment. Less debt is your best bet, especially for getting into something as risky as ranching.

Yes, I am hoping we can get atleast 20% down saved up. We don't have much of a mortgage on our home as we put about 75% down on it. Thanks for the help!

 

[mnmtranching]

Don't give up the dream. Get your house paid for. Put it up for sale, buy a ranch with an existing home. Use the money from the sale of your home for a down payment. Your young, take your time. And make sure you don't quit your day jobs.
Droughts have killed more farm and ranch operations then all other causes combined. You got to have means to make it past the tough years.

 

[circlet]

unless you have some form of equity to pledge (land that's owned free and clear, etc) you're going to need between 25-35% down to secure a loan. many banks/bankers aren't inclined to treat their "customers" like customers anymore and don't expect very many of them to stick with you in good and bad.

the sad fact is that if you're a "normal, middle-class type person" and you don't inherit land, chances are you won't become a rancher/farmer except on a very small scale (think hobby farmer). i think it's a terrible shame, but that's the way things have developed and the current ag climate and banking environment certainly won't do anything to change that.

but...don't give up, even though i'm doom and gloom sounding, i certainly haven't given up trying to find a way, i'm always looking for some sort of opportunity, maybe something nice will happen to help you folks out along the way. just remember that things will work out like God plans them to, not necessarily like YOU planned them.

 

[backhoeboogie]

many banks/bankers aren't inclined to treat their "customers" like customers anymore and don't expect very many of them to stick with you in good and bad.

When I started out, bought my first place, I needed a water well 300 feet deep and a few other things. I needed a $4k loan and had a hard time getting it. Went through several banks before I finally borrowed the money from family. I've never gone back to those banks. Now I am friends with many of the officers but I don't bank with them. They'd love to have me there.

I finally found a bank years ago that takes care of me if I need them. Why would I leave and go to the ones who wouldn't help me when I really needed help?

 

[Beefy]

the maximum loan you can get with a beginning farmer/rancher type loan is $200,000. if you have to put anything down its only 10% with that program. they had proposed to increase this max loan amount with the new farm bill but i dont know what ever became of that.

for land you can get a long term loan spread out over forty years with low payments and APR is still low now, last time i checked it was 5something. when i got my loan in 2004 (for cows which i've already paid off) it was 3.65% and that was to be spread out over 7 years.

the catch is you have to be turned down for a loan by a couple of banks.

 

[okiegirl2008]

the maximum loan you can get with a beginning farmer/rancher type loan is $200,000. if you have to put anything down its only 10% with that program. they had proposed to increase this max loan amount with the new farm bill but i dont know what ever became of that.

for land you can get a long term loan spread out over forty years with low payments and APR is still low now, last time i checked it was 5something. when i got my loan in 2004 (for cows which i've already paid off) it was 3.65% and that was to be spread out over 7 years.

the catch is you have to be turned down for a loan by a couple of banks.

Thanks for the help! I guess I got the wrong info. about the beginning farmer program. When I talked to them they told me all it did was lower the interest rate on the loan I get from the bank. They said they do not guarantee the loan. I seem to get different answers depending on who I talk to or which office I talk to so I am not sure who to believe!

 

[Busterz]

He's talking about FSA, Farm Service Agency aka USDA. They will have the lowest rates.
I'd check with them first. The should have loan guarantee programs too. I think they raised their limit on land loans to $350,000.

They also have a down payment loan program that may help you.

Some banks have programs for young farmers but it is usually just a reduction in interest or a reduction in the down payment or equity required.

 

[Bez+]

Hi everyone, I am new to the board. I am here for advice.
Right now we have 17 acres. We just bought this place as we wanted something with a little land but not a huge amount. We love it here but our goal is to ranch someday. My husband works-just started his own business as a distributor and brings in good money.
Well, we want to take a loan out for around 200k when we can get a decent downpayment and enroll in the beginning farmer program. We are not going to take a loan on the cows -just land and equiptment.
We are hoping that the annual selling of calfs (sp?)will be enough to pay off the annual land payment as we understand we cannot make a profit until the land is paid off.
Am I missing anything? I know ranching is hard work. I am a farmer's daughter-been around it my whole life but not ranching. Every single person in my family is a cotton farmer. I have my Bachelors Degree but I am more interested in ranching than anything. I get so excited just thinking about someday having a ranch.
My husband was raised around cattle operations. He understands more about cattle than I do.
My other question is what is tha bank going to think if we walk in there and ask for a 200k loan with maybe 20-30k down payment? We are young(23 and 25) and are living in our second home. We bought our first home when we were 18 and 20 and just moved into this new place. Although, both of our families are in the ranching/farming business we are not helped by any of them. Everything we have is from hard work by us--and that is how we want it.
I guess what I am asking is --can you make a living ranching these days while having a side job(full time job)

First - thanks for the vote of confidence from Workinonit Farm

Now then let's look at things from a bit different point of view. I am going to say some things you will like, some things you will not like and some things you have to take into consideration.

Want to ranch? So do millions of others. But ....

Young, recently married, new business and so on.

You got a lot of strikes against you no matter how you slice the cake.

If the business fails - where does the money come from?

One of you starts running around - or doing things that cause a divorce in the next ten years - now what. (Stats are with me on this)

You have no track record financially - despite the other house, you both are so young that banks just chuckle.

What happens when kids come along? And I hope they do - lots of happy and healthy ones - that cause you all sorts of parental grief! Pay back for what you did to your folks!!!

Medical emergencies and health issues, etc - all kill the future unless carefully planned out well in advance - all it takes is one drunk driver with no insurance or job and you are screwed.

More than one business has failed through absolutely no fault of the owner

Suggestions from me.

1. Find out how much that loan you want would cost you on a monthly basis - and start paying it to yourself - now!!!! - and that is on top of your saving for the down payment. Going to be tough - but you will get hit with some whopper bills that you are not expecting when you are in the ranch / farm game - so you might as well get used to that early.

Run that business hard - drive it till it breaks out in a sweat and makes you tons of money. Whip it for at least 10 years - then take all that savings and the money you paid to yourself and go buy what you can cash.

Drive the cheapest rat trap car and truck you can - fancy is expensive and it takes away from your dream. Cannot do it? Then you are not ready to make the effort.

Get out of debt. Save.

Prices of land may be high today but watch closely - there will be some good deals to be had in the future.

Stay out of debt!! It has killed more operations than it has helped - of that I can assure you.

You want to ranch?

If you do what I suggested for 10 years - and follow the plan closely, the money you have created will make your payments for you.

And you will only be 33 years old. Lord if only I could go back to that age knowing what I know now.

If you successfully manage what I suggested, you will not only make a living - you will make a fine living - provided the good Lord smiles at you and the luck around the next corner continues to come your way.

So I try to pass it on - you will do as you see fit - and I would suppose that is only proper.

Regards

Bez+

 

[Boldcat]

It's a tough life . But I wouldn't want to live anywhere else .
A lot of situations are out of your control like weather , markets , disease , diesel , fertilizer inputs . etc .
My oldest boy is packing up and heading for college and my youngest (16) is having a long think about whether to stay or go.
We haven't had a vacation in 3 years and I have to work off the ranch every winter to have enough cash to keep going , However ,that being said I just made my last land payment last month and that will make things easier .
If I had to do it all over again though I'd probably still be a rancher.

 

[1982vett]

It's a tough life . But I wouldn't want to live anywhere else .
A lot of situations are out of your control like weather , markets , disease , diesel , fertilizer inputs . etc .
My oldest boy is packing up and heading for college and my youngest (16) is having a long think about whether to stay or go.
We haven't had a vacation in 3 years and I have to work off the ranch every winter to have enough cash to keep going , However ,that being said I just made my last land payment last month and that will make things easier .
If I had to do it all over again though I'd probably still be a rancher.

Congrats on the last land payments, I'm sure the boys heading off to college will find a way to use what used to be a land payment. :help: :nod:

 

[Wewild]

It all comes down to cash flow. I dont know where you live. Land prices around here are pretty high and it is all rented up. How much money do you need to get by each month? How much with the note? Dreams can come true. It ain't highly likely without planning about the money.

I wish you the best in what ever you do.

 

[EAT BEEF]

No risk no reward. I have tried to put everything I have into living the life I want to live.I worry alot about everything,but for me that might be the best part.If I'm not worried about things I'm bored out of my mind.In the moment I think how could it get anyworse,but when I look back on those times I aways smile and think man we were livin.

 

[Boldcat]

It's a tough life . But I wouldn't want to live anywhere else .
A lot of situations are out of your control like weather , markets , disease , diesel , fertilizer inputs . etc .
My oldest boy is packing up and heading for college and my youngest (16) is having a long think about whether to stay or go.
We haven't had a vacation in 3 years and I have to work off the ranch every winter to have enough cash to keep going , However ,that being said I just made my last land payment last month and that will make things easier .
If I had to do it all over again though I'd probably still be a rancher.

Congrats on the last land payments, I'm sure the boys heading off to college will find a way to use what used to be a land payment. :help: :nod:

Hey Vett , Just before I made my last payment the transmission went on my pickup , so the boys don't need to worry about me throwing money at them.
I make them earn everything so they appreciate what they have :cboy: