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Senior Contributor

Faust- video of recent Iowa Farm Auction

Faust- a fairly recent NE Iowa farm auction. Just low CLASS B Dirt, nothing special and needs alot of drain tiling. But if low CLASS B dirt and needing alot of tiling, $12,700/acre isn't to bad. Over $190 per CSR Point. Below is the video:

 

 

http://www.youtube.com/watch?v=EZI2dXu5rFY

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9 Replies
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Senior Contributor

Re: Faust- video of recent Iowa Farm Auction

how  can we  go  short?

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Senior Contributor

Re: Faust- video of recent Iowa Farm Auction

Say Faust, an auction south of I-80 for you in the SE part of Iowa. Look at the pictures from the Satellite that show the extremely  low quality of this Iowa farm. But the entire 239 acres still sold for an average of $6,296/acre. Pretty amazing. Video of the farm is below and per tract sale prices:

 

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http://www.youtube.com/watch?v=bnei6wNqr2s

 

 

 

Tract 1: $9,100 per acre

Tract 2: $5,500 per acre

Tract 3: $4,800 per acre

Tract 4: 4,700 per acre

Total: $1,504,758.00

 

 

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Senior Contributor

Re: Faust- video of recent Iowa Farm Auction/Shorting the Farmland Market?

Do you mean shorting the current farmland market to hedge or preserve the huge amount of money that our farmland has appreciated in value the last 10-12 years? I believe this is what you mean, correct?

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Advisor

Re: Faust- video of recent Iowa Farm Auction

rsw - great auction.  I remember not too long ago when it took a good 160 in rsw country to bring a million dollars, now it only takes a good 80.  I sure am glad this country is experiencing deflation and zero inflation, God knows what land would be bringing if we had a FED printing money like it was going out of style.

 

On the Southern Iowa Farm, kinda nice to see that the ratio between class II land North is still worth twice as much as class II land South of I-80.  Thanks for the posting.  $190 per CSR is pretty close to $200 per CSR point.  I am sure with this run up in land prices we will soon consider $200 per point not unusual. 

 

I guess we should point out that a million dollars is not what it used to be. LMAO!   John

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Senior Contributor

Re: Faust- video of recent Iowa Farm Auction

Yes Faust, seems like just yesterday that it took a 160 to bring a Million Dollars. Now an 80 can bring close to over $1.2 Million dollars. You want to hear something funny? One of the first farms I bought was an 80 in 1986, only paid $85,000 for it. And at the time I thought $85,000 was big money!!!!! LOL

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Senior Advisor

Re: Faust- video of recent Iowa Farm Auction/Shorting the Farmland Market?

I heard a republican senator ask chairman Bernanke if the quantitive easing has created a bubble in farm land values. Kind of scarey when you think the bubble might burst with land prices and crop prices tanking. So will be still be brilliant when land drops to $6000 and rents to $200?

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Senior Contributor

Re: Faust- video of recent Iowa Farm Auction/ FAUST

Say Faust, another totally piece of junk for sale below. They are asking $8,250/acre or $130 per CSR Point. I am starting to wonder if we are getting into the top price range now if pieces of junk such as below are actually going to sell at this price level. Sometimes watching the absolute bottom of the farmland market such as below can be an indication of what the top-quality dirt will go for, top-quality being 80 CSR and above. With absolutely no CLASS A/80+CSR Dirt even for sale in Iowa currently we have no gauge in which to compare it too. Anyway, the junk farm for sale is listed below.

***********************************************************************************************************

 

60 acres-Linn County, Iowa

Good quality Linn County farm located in a strong area!

CSR/PI Rating:

63.6

Property Type:

  • Farmland

Price: $495,000.00

60 acres, m/l, with 57.7 crop acres (including 4.3 acres in CRP) with a CSR of 63.6.

4.3 acres in CRP contract pays $745 annually and expires 9/30/2020.

 

 

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Advisor

Re: Faust- video of recent Iowa Farm Auction/ FAUST

RSW - here in the rural backwater, I noticed an ad with pasture available for rent this Spring . . . $150 an acre.  

 

Now I know the cropland I have rented out in two other counties is under priced.   I mean, pasture is selling for around $2,000 -$3000 an acre down here, so that makes ROI on it 7.5%  which is more than the ROI on cropland values.  I guess the cattle guys are reaping a bonanza paying $150 an acre for pasture.

 

Look at it this way it takes about 3 acres to run a cow and calf down here, maybe a little less . . . so the actual cost per acre is $450 per stock cow.  If you sell the calf at 500# this fall @ $1.20 then you have $600 for the calf less the pasture rent of $450 so you have a profit of $150 before you figure the hay it will take to feed the cow during the winter.  Man . . . maybe I should be in the cattle business. 

 

Obviously, I do not know jack about the stock cow business, because these guys would not be paying $150 acre pasture rent to lose money . . . would they?    John

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Senior Contributor

Re: Faust- video of recent Iowa Farm Auction/ FAUST

Faust-  You make some very good points on cattle and the ROI Ratios. And I have zero knowledge about beef. Before I started buying farmland in 1986, I did alot of reading about the ROI Ratios and which type of farm operation had the best LONG-TERM ROI Ratio. I read though all the research papers written by the college guy Duffy, And his research showed that the best or highest ROI Ratio was obtained by raising just corn and soybeans, and with zero livestock. After grain farming the next highest was hogs, and the lowest ROI Ratio was cattle. It's been a few years since I read Duffies Research papers, but I think grain ROI Ratios were 10%, then hogs at 7.5%, and then cattle at 6%. And again this is for the long-term, not just a 3 year time period, this was over a 10+ year time period. So those ROI Ratios is why I choose to invest in Iowa farmland for corn and beans as my starting point. That was 27 years ago and I should probably review the ROI Ratios again since alot can change over 27 years.

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