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highyields
Senior Contributor

Re: Farmland prices: Is the bubble about to burst?

I'm going to know what land is worth after they sell a farm today its 25 miles south of me but its a good farm. I'm going to stay home,  I'm planning on it bring close to a million dollars.  Now I know that the farmers from Iowa, Illinois are saying that's a bargain but in my drought prone soil in SE NE,  Its a stretch.   Last year you had 50 bushel corn after a good rain in June., the year before we had 130 bushel corn.   Best yields upwards of 160-180 on a good year.  If you feed and plant for that high.  

Last spring there was a farm that came up estate sale,  really good farm, I wanted it, I thought it bring $6000/ac and it brought $6050,  the guy who bought it was a guy that owned 3000 acres already, the other guy who was bidding on I think had investment money behind him.   Anyway I stopped bidding before it started, since a million dollar farm around home here is a stretch for a guy that really hasn't had a good start to farming yet.   The rental return is something interesting.  If you give 6000/ac I'm not for sure how many guys will give you $300/ac for rent.  You can't make it at $300 rent with average yield and prices though,   that's nothing new, they have been giving more cash rent then you can make off it for years around here.  Its a cash flow game,  if you have enough cash to pay all the bills at the end of the year,  you can go on next year.  


Back in the 80's some counties in Nebraska lost 90% of the value on Farm ground.  around home it was close to 50% and those loses came in 6 months and stayed for almost 6 years.   Most of the banks that are loaning on this ground are banks that are saying "if we don't loan out money, someone else well"   but I asked four bankers before that sale last spring and two didn't want nothing doing with a loan for million dollar farm.    Two said yes but I need 30% down, the other needed 50% down.   


The percentage of farms selling for cash in Nebraska has held steady at around 44%, that has been that way since the early 90's.   I'm surprised that it hasn't change more but it hasn't change more then a few percentage points.    What that tells me is there are families out here that have 1) either an extremely large land base to start with, or where rich when their ancestor immigrated over here and still are.   2) are smart with money and using, 3) all of the above.   It also tells me that some guys DO WAIT  for that one farm to come up for sale and then buy it with cash.   

 

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Shaggy98
Senior Advisor

Re: Farmland prices: Is the bubble about to burst?

Highyields I am in the same situation as you. I've got a farm that my family has been farming for years through share cropping. The family that owns the land let the legal documents get way out dated and have their hands tied at the moment when they are wanting to sell it. They have already verbal agreed to give me first chance of buying it via private treaty if we can both agree on a price. This particular parcel has been locked up in an attorneys office for over two years while they get all the legal documents in place & straightened out so a sale can even take place. This wait is almost like a blessing in disguise because it has enabled me to rat whole as much $ as I can when the land is released for sale. If and when it is released if I need to borrow money, it won't need to be nearly as much.
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Faust100F
Advisor

Re: Farmland prices: Is the bubble about to burst?

Shaggy, maybe the lawyer wants to buy it, I mean two years to get a title cleared is a long, long time.   I mean . . . unless there are tax liens or a lawsuit going on somewhere or an heir that does not want to sell, I would be down there kicking that lawyers ass. 

 

You cannot trust these jokers,  Once  had a lawyer who was handling land sales buy them right out from under me after they drafted the contract. .   I had a land contract accepted by the buyer only to have the realtor call me and tell me the lawyer wanted to buy it . . . three months later the realtor called me back and told me the wife of the lawyer would not let him buy it and it was back on the market, so I ended up buying it after all.  He is now a District Court Judge here in Iowa.

 

We have another scheister in our area who has picked up where he left off.  They both worked for the same law firm.  They sure would not want to lose their license to steal in this state, or they would starve to death, just like most are doing right now.   I cry every day for those poor law graduates who cannot make  a living stealing from folks. 

 

You just cannot trust anyone of these SOB's when you are doing a land purchase.  I have learned it is never yours until the title documents are recorded.   Might want to send this lawyer a bill for the escalation in price over the past few years, since he has been draging his feet, plus accrued interest.    John

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Shaggy98
Senior Advisor

Re: Farmland prices: Is the bubble about to burst?

Faust, I have kept in contact and agree it is starting to drag on. The problem was the land was still deeded to a family member that was deceased 3 generations before the people who want to sell it to me. I have no idea how this happens, but evidently it does. If the lawyer steals it out from under me, then that is what he does. Our family has been in business with this particular family for several decades, and I've got faith in them. Call me old fashioned, but if it's meant to be, I will end up with it. Thanks for the post, I will stop and visit with the attorney tomorrow.
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