Rookie needs advice with big decision

[Chief254]

New to the forums and completely new to Cattle farming. I'll try and provide as much info as possible.

30 years old w/ wife (accountant) and 3 yr old daughter.
6 yr Air Force veteran.
Non farming related full time job.
Made $88k and $91k last 2 years.
My only debt is a house payment. No student loans, credit cards or auto loans.

My goal is to start a small cattle operation with hopes of it being profitable within 5-7 years. I have found 38 acres for sale on a farm that neighbors a good friend of mine. Asking price on the 38 acres will be $80k. The property is currently half pasture and half timber. My average quote for Timber harvest is around $21k. This $21k can be used in two ways. I can immediately pay it to the $80k loan. Or the second option is to use a portion to purchase the first 4 cow calf pairs. The remaining $13k can then be set in an account to make the monthly payment for the next 3-4 years. Est monthly payment is $360.

I can access close to $15k cash to make the initial cattle and equipment investment. My goal is to start with 5 cow calf pairs.

What do you guys think? Is there any way for me to be profitable within 5 years? What advice do you have for me? Is there another route that you believe to be better suited for my circumstances?

Thank you in advance.

 

[Son of Butch]

Run away, talk it over with your wife, but small cattle operation will not generate income you are accustom to even
if you were an experienced cattleman let alone completely new to cattle. Put it on the back burner for 25 years and
revisit the idea/dream after your daughter and future children are married. Your 1st duty is to your family and small
cattle operation may fit your desired lifestyle when you are closer to nearing retirement. The risk/reward is too great
for the amount of time you'll need to put in and your current time is still too valuable for your circumstances. Unless
you are really, really desperate for a hobby that may lose money I'd suggest forgetting about it for now.

 

[Black and Good]

:nod: x2 Not tring to discourage your dream. But by the time you start buying hay, feed, feedbunks, hayrings something to feed them with etc. etc. Your going to just be throwing money at money. B&G

 

[talltimber]

I would never tell anyone not to buy ground when they find some worth the money. I agree that with your daughter growing up, there will be times when time is very hard to come by, and maintenance on ground can be very time consuming. Is the ground close to you, or a significant distance?

 

[angus9259]

Unless you are really, really desperate for a hobby that may lose money I'd suggest forgetting about it for now.

X2

I did what you (poster) are suggesting but the ground (50 acres) is part of our retirement and it's holding cattle till we get there. That said, I bought in while our kids were young and I still worked full time because it's a money loser. Basically everything suffered. Cattle didn't get done right, kids didn't get the attention they needed, could have done better at the job I had. As they say, experience is a brutal teacher - she gives you the exam first then teaches you the lesson.

 

[backhoeboogie]

If you buy a car, you're sure to lose money. A boat is almost an absolute loss as well.

Land has always made me money. You may have to hold it 2, 5, or even 10 years, but you will have gains if you improve it.

Cows give you an ag exemption in Texas. They can help you keep an ag exemption if you already have one.

You speak of timber. Why was this land not already cultivated/converted to pasture?

Does someone in your family own a tractor? How close is this land to your home? How much time are you willing to devote?

There are many unknowns. I don't even know what region you are in.

No one, no matter how good they are on cattle, can give you adequate advice with any parameters you identified.

38 acres will not support many cows. You need facilities such as working pens. You need equipment. Just a run of the mill stock trailer is going to cut in to profits on a place that small.

I'd rather see someone put money in land than in a boat, truck, etc. Atleast with land you'll get some sort of return. You likely will never see a return on cattle with a place that size.

I don't necessarily agree with all the other posts, totally. But these folks are steering you in the right direction, based on the parameters you have given.

 

[Dave]

To start with I wish I won't have listened to the naysayers when I was your age. Land is almost always a good investment. They aren't making any more of it. Two questions you need to ask yourself. How close is the land to where you live. If it is real close it is probably a no brainer. Farther away the more questionable it becomes. Define profitable. Five or six cows aren't going to make the land payment for you. In my opinion there are a lot of lessons taught to kids raised around livestock and farms that are invaluable. Can you make the land payment on your own now? How much will that tax the family budget? How much interest are you going to have to pay? Then the question becomes should you log now or is the timber growing at a rate that adds value more than the interest? If I were to log the timber off all that money would go against the land payment.

 

[farmerjan]

I have to agree that there is little or no way you will make a "living" off it. But there are a couple of other questions....and comments....No they aren't making any more land. If this is near/next to a good friend of yours, do they farm? Would they be helping to take care of the animals or are they close to you? Where are you located and what is the average cow per acreacres per cow in that area? Texas dryland is alot different from here in Va.... Is this the place you want to retire to and build a house, or at least in the area you want to settle in?
Farming is a great way to raise kids, but the outside job and the kids and the farm are all EACH their own full-time job....
Is it in use as part of a farm? Are there necessary things like fences, water, any holding/catch pens barns anything else in place? You can get by with hiring someone to haul the calves to market once a year rather than invest in a trailer and truck to pull it right off...portable catch pen panels for only handling a few animals...but you will need more permanent facilities to handle cattle down the road.

Not knowing where you are is a big thing...but let me give you a few numbers from here in Va. We have a cow/calf operation, 75% rented land. Run 1 cow/cf pair per 1-3 acres and we rotational graze most every place we can. We feed hay in the winter where we cannot stockpile for late grazing, and when there isn't too much snow on the ground.
Figure it costs roughly $350-400 per year to keep one cow/cf pair, here. Right now a 450-500 lb steer calf is worth 1.25 to 1.40 lb; heifers are worth 1.00-1.25 lb same size. So roughly on average say you are getting $500. for the calf. That's 100 over the cost of keeping the cow. NOT COUNTING cost of repairing fences ( if there are some on the place) time and effort to feed in the winter, working them through the chute to band/castrate the calf, needing a bull to breed them back so cost of rent or purchase of a decent bull, minimum of once a year worming and vaccinations; then what if one gets sick, needs a vet trip @ $100 or so, medicine, time for shots or pinkeye treatments.....or one dies, or like we had a disaster last year and lost 12 cows to one of 3 possible things and then lost 4 of those calves because they were at a bad age to be without their mommas and got sick...over 1200 in vet bills ... what if one has trouble calving and you lose her, or the calf, or both.

I am not trying to discourage you...but everyone else has been there done that too. We have to love what we do, be a little crazy, mostly BOTH; my son and I both work off the farm too. A couple of years ago feeder prices had gone WAY UP. $2.00-3.00 a lb for heifers and steers respectively. We made money, and you could weather some problems. Last year prices fell way back off and there has been a very slight uptick right now and the buyers are saying they don't look for it to last. Prices are a little better southwest of here and some in the mid-west, that said, like a couple of guys said, they don't have as much trucking costs as we do here in the east to get our cattle to grazing or to feed out operations.

We just bought 75+/- acres, to be able to expand/spread out a bit and have the house rented to help make the payments. It's an investment that we feel we will sell in the future, but the price was good for this area. If we didn't have off farm jobs we couldn't pay for it, he already has a house and mortgage. I rent, and neither has car payments, but we do have equipment payments for several things we bought from our friend that was dying of cancer when we took over his farm...and pay a very high rent for the farm to the widow. Cattle are all paid for now.

If you could get it logged off put some of that money into getting the land into grass/hay, and pay down on the mortgage, and get it rented or make it pay for itself for a little bit before you get into the cattle unless you are sure you are going to be right there to take care of stuff. And don't plan on making much/any money any time soon even if nothing goes wrong.

 

[djinwa]

Sometimes it isn't all about the profit potential. Some people only make moves that make money.

Speaking of which, you do realize that marriage and children are unprofitable, right?

At your income, plus I assume your wife makes more, I don't see how you couldn't afford to buy the land, unless you have a horrendous house payment.

As for time commitment, I was recently thinking I'd move to town when place became too much work. At which point my wife mentioned that our neighbors don't do anything with their land. Hadn't thought of that option.

You can put in as much or as little time as you want. I just have a few cows and put about a half hour a day into them. You need something to look forward to besides your job. And kids need something to do besides texting. You can work with them - best time with kids is spent actually doing something.

I would agree that its best to have the land close, or to actually live on it.

Edit to add: With only a few cows, could halter break them and tie them up to work on them. I just have a shed and a few pens.

 

[SIMMGAL]

Run away, talk it over with your wife, but small cattle operation will not generate income you are accustom to even
if you were an experienced cattleman let alone completely new to cattle. Put it on the back burner for 25 years and
revisit the idea/dream after your daughter and future children are married. Your 1st duty is to your family and small
cattle operation may fit your desired lifestyle when you are closer to nearing retirement. The risk/reward is too great
for the amount of time you'll need to put in and your current time is still too valuable for your circumstances. Unless
you are really, really desperate for a hobby that may lose money I'd suggest forgetting about it for now.

And if you're really, really, REALLY desperate for a money hole hobby, look at some horses! :lol2:

But seriously, takes a lot of time and money to get started and do it right! But hey, there's no harm in trying, right?

 

[frank boucher]

Thanks for your service. I see it as a lifestyle choice now.Financially you're in good shape,tells me you got common sense and know how to stretch a dollar.You'll be fine whatever you decide.Buy the land,keep the job in town,work on it when you can,you'll build equity,if something happens down the road and you need to sell,good chance you'll profit.Or you can pass and put the down payment and $360 a month in a quality equity income fund for 20 years and have cash to buy a farm with.I don't know which will make the most,but i think either will be fine long term.
Don't know where you're at or how far away the land is from your house,this would be a big factor to me.
We don't have a crystal ball,but I think good probability were going to see urban sprawl,some inflation,interest will be going up some,all positives to buy now.
It won't pencil out a profit,thats the negative side.
I guess it depends on what it's worth to you and your family?Lifes fulfillments are sometimes priceless.
Our place would'nt pencil out either when we bought 30 years ago,best thing we ever done.
Whatever you decide I wish you well,and if you buy,just stay away from that shiney new metal and you'll come near making it.I still don't own a stock trailer and I've had cows since 1979.

 

[backhoeboogie]

But seriously, takes a lot of time and money to get started and do it right! But hey, there's no harm in trying, right?

100 years ago people did more, with less. Think about it. People farmed with oxen.

My grandfather did everything with a medina gate. No squeeze chute. We've lost a lot of know how. Drovers rounded up wild cattle and drove them to New Orleans for decades. Then drove them north for a decade. Wild long horns.

It is not impossible. It is a lot of work tho.

 

[dieselbeef]

you can make more money in a good investment portfolio..youll never make 80k profit..ever

 

[Son of Butch]

Sometimes it isn't all about the profit potential. Some people only make moves that make money.
Speaking of which, you do realize that marriage and children are (is) unprofitable, right?

:bs:
I know 2 fellows that married doctors and a 3rd guy that topped them both marrying an only child whose parents
were 1% ers also a girl that married a tribal member of a very well known Indian Casino.
A spouse can be the best investment/lottery around. IF you struck out doesn't mean he did.

First thing I mentioned was to talk it over with his accountant/wife, if she not at least 94% on board with the idea
(which I suspect she isn't given neither have cattle backgrounds) best to leave it on the back burner for awhile.

I also know a few that followed the old "they ain't making land anymore" reasoning in the late '70s that lost it all in
the land market down turn of the mid 80s.

 

[Margonme]

Wait until you have a net worth of $2 million. Then buy your land, tractor and build your infrastructure. After five years, you can say farming made you into a millionaire because you will only have one million left.

 

[Dave]

I also know a few that followed the old "they ain't making land anymore" reasoning in the late '70s that lost it all in
the land market down turn of the mid 80s.

I also know a couple of people including an uncle who made multi millions because they bought up cheap land and held on to it for a while. If you subtract the timber value from this land the price per acre is pretty cheap. Then once again it would be nice to know the location.

 

[jerry27150]

only you can know what you want. if they gave me a million , I would just keep farming til I spent it all & still be happy. you have to be risk taker to enjoy life. talk to someone who has almost died & they will tell you money doesn't buy happiness. people have laughed at me & said I would go broke all my life, with the help of god I am still going strong & bow to no one.

 

[uplandnut]

First of all thank you for your service, and in his beginners board post it says he is located in Smithfield KY.
If you think the land is a good value for the area and if it wont strap you financially I would say jump on it. I would log it and put that on the loan right away. As far as the buying cows I think I would think about that for a little longer. Maybe you can find someone to rent the pasture if it's fenced or give someone a free pasture rent for a few years if they fence it.
Maybe with all the members from the Kentucky area you could find one that would be willing to let you help them with there operation for a while to see if you really want to have cows or maybe you just decide you'd rather not get into a cow/calf operation and something else strikes your fancy. Some people are more than willing to help out a person looking to get into the cattle world, and the free help is a huge thing too.

P.S. Buying cows is addictive, started with 4, 3 years ago and have 20 now.

 

[SIMMGAL]

Wait until you have a net worth of $2 million. Then buy your land, tractor and build your infrastructure. After five years, you can say farming made you into a millionaire because you will only have one million left.

:lol2: :lol2:

I like the way you think! :lol2:

 

[Margonme]

Wait until you have a net worth of $2 million. Then buy your land, tractor and build your infrastructure. After five years, you can say farming made you into a millionaire because you will only have one million left.

:lol2: :lol2:

I like the way you think! :lol2:

Well, thank you.