cancel
Showing results for 
Search instead for 
Did you mean: 
Senior Contributor

Re: Land price comparison

$2,600 sure looks cheap now! Smiley Happy I never thought rural farmland would be 5 figures, or even well into the teens. Maybe close to city limits for development, but not out away from town. I just checked on Halderman's site for recent results in Indiana. 2-1-12 Tippecanoe County 80 acres for $720,000. That is where Purdue University is located for a reference. Then yesterday, 2-2-12 in Wabash county there was 110 acres for $400,000. Like you said BSF, there is not that much yield potential between the two areas as they are less than 100 mile apart. Not enough yield difference for double the price!
0 Kudos
Contributor

Re: Land price comparison

My wife and I bided on a 40 in December it was a seal bid auction and we lost it by 5.00 dollars a acre and my bid was 4185 acre. Southeast Michigan

0 Kudos
Senior Contributor

Re: Land price comparison

You have ground free and clear, so if you over pay and make a poor investment it doesn't matter?

0 Kudos
Veteran Contributor

Re: Land price comparison

Buying farmland is a business decision. Every farm I've bought never seemed to be a bargain. Anyone buying a piece of ground hopes it increases in value. However that is not a sure thing. Being able to spread the cost over ground that is already paid for eases the financial strain of an operation if we get a correction in land prices. I'm not smart enough to know when that correction is going to occur ,but it will occur, the question is at what price. One thing I do know is when a piece of ground comes up next door or adjoins another farm you may own you may not get another chance in your lifetime to buy it. I guess thats what I meant why a person would over pay for a piece of ground. Assuming of course a 25-30 percent correction would put financial strain on an operation.

0 Kudos
Senior Advisor

Re: Land price comparison

It's pretty tough to make it cash flow even at $8K per acre when you may have $500 per acre interest and real estate taxes. But then most of the time  we are betting on the future with inflated land prices and inflationary impact on crop prices. Who would have ever predicted that we would have $6 corn and $11 beans as the norm. Perhaps it is not the norm but we have had a pretty good run at it.

 

However, if you have money to invest and want a place to park it , land may be as good a place as any. You can take income from other sources and save a chunk of it every year without worrying about whether it throws off immediate income. You sure won't get fat on interest payments on CD's or the like. So that makes the land purchase more attractive.

 

I know friends that bought land at the peak of $3200 per acre just before the bust of the 80's. There were more than a few regrets but they cashflowed based on other earnings and came through that farm crisis whole and today that land is paid for and a whole lot more valuable. Some times it takes a little patience to realize the reward.

 

 

 

0 Kudos
Senior Contributor

Re: Land price comparison

We've bought two farms in the past year.  Right at $5000 an acre in North East Indiana.  Half that would be a bargain.  And we bought them because they were close not because they are a good deal.  They aren't making any more though.

0 Kudos
Veteran Advisor

Re: Land price comparison Gotta go with Kraft t

I was working two jobs, besides farming a quarter section, when I bought my first 80 acres when prices were on the way down in the 1980's. Thought I had a good deal, but before the deal even closed, I knew I was on the wrong side. A smart guy would have left his down payment go and bought twice as much land later, but then I guess I always thought if you agreed to do something, you should follow through on it. Today , the 80 is worth many times what I paid for it, and it has stood up as a "good deal". Plus, people know that my checks don't bounce and I don't renege on a deal, and for some, that is still worth something.

I do think that many of the current farming generation have learned the wrong lessons from the 80's , as they grew up watching the most honest, hard working farmers get sold out, and the shifty, beady eyed BTO's renege on deals, and get bigger and apparently more successful each year. I guess most feel now that bailouts are part of normal operating procedure, and do not put any moral judgement on them. Why should they, when we have witnessed one bailout after another on the national scene.

Having said that, I would say that those thay have averaged $6 per bushel for corn over the last five years are in a great position to buy land at the current  inflated prices, especially if they are going to average that and more for the next decade. I know that I have not averaged anywhere near that price, and don't expect to for the next ten years, either. And at the current high prices of land, I am not buying anything. I bought a couple of quarter sections in the last five years and feel pretty good about the prices I paid. The land cash flowed from dollar one at the time of purchase and was a no brainer each time. It is amazing how when attitudes about land prices switch, how fast everyone gets on the same train. I just hope the track is smooth and long for them.

Senior Contributor

Re: Land price comparison

How long have we heard "Land is too high right now?" Certainly all of my lifetime. I was still playing with toy tractors in the sandbox when the 80's land bust happened. Heard too high at 3,000, 4,000, 5,000 etc all the way until today. I think it will level off sometime and remain steady for some time afterward, not pop and go back to half of what today's prices are. Also, who would sell once prices come down? There would be a flush of new sellers once prices top off and dip slightly. There is a flush of unconventional sellers right now. I've seen churches, school corporations, counties, investors, and also the normal heirs and retired farmers listed as sellers.
0 Kudos
Senior Advisor

Re: Land price comparison Gotta go with Kraft t

Kudos for doing the right thing!

0 Kudos
Senior Contributor

Re: Land price comparison

I had a friend attend a sale the next county over from me last night. Texted me when it was going on. 160 acres of decent ground, slightly rolling with a few waterways went for $6850. This was 1 township over from the $12,400 last fall. He said it was more of a back to earth feeling in the room and most in attendance thought it was well valued at that price.
0 Kudos