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Senior Contributor

North Dakota Goverment Rent Check Farm

Say Faust, you are always looking for SD and ND Land. Interesting sale at $1,232/acre, with 127.4 acres going into the CRP Program at $41.04/acre goverment rent. Pretty low CRP rent compared to Iowa, but land prices are about 1/10 of Iowa. But the total CRP Payment is $5,228.49/year, which on the purchase price of $196,000 equals a 2.66% ROI. This kinda shows my theory that farmland owners may except a Return on Investment Ratio as low as 2 to 3% because they feel land would be a safe parking spot for there money for 10 years, which is the time period of the new CRP contract on this ND farm. If you put a 50% downpayment, the CRP Rental income would cover the yearly mortgage payments on this farm for a 15 year term and then the farm would be paid-off on just using the goverment yearly rental check. The sale terms are below:

 

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4/29/2013 

159± Acres, Griggs County, North Dakota, were sold by sealed bid sale on Monday, April 29, 2013, at the Farmers National Company office in Cooperstown, North Dakota.  For additional information, please contact Rob Loe, Agent, at (701) 797-3276 or click here

$196,000 

 

Property description:
SEALED BID SALE! Panoramic view of Sheyenne River Valley terrain. This property is in the 1st year of a 10 year CRP contract. Recently built equipment storage buildings. Property is located eight miles west of Finley, North Dakota.

 

 

 

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Re: North Dakota Goverment Rent Check Farm

rsw- it has buildings on it, so that may have helped the price.   The last farm I purchased in South Dakota was NHEL wheat farm, for $400 an acre, farms in the area are now selling for around $1600 an acre.  Buildings seem to add a lot of value to land up there, whereas in Iowa, we doze them down. lol.   

 

There is a sale in Bowman on the 9th of May, I wanted to go up and see what the cropland sold for, they were breaking the farm down into quarter sections, but most were only 75% tillable, plus the annual rainfall out there is about 16 inches.

 

Real Kamakazie farming country.  But when you get out that far in Western S.D., you are payng for minerals,and land out there has sky rocketed in value. The mineral rights are usually worth more than the surface rights. .  

 

I received 8 inchs of snow, a few days a go, I may take off and go up to the auction.  If I buy anything I can't pay for, I will call you and you can just wire the money. LMAO!  John 

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Honored Advisor

Is it just me?

Or, are the numbers out of whack in this post? Half down on $196,000 would leave a debt of $98,000....right? Fifty-two hundred a year or 15 years is nowhere near this amount of principle, much less any typical interest on a loan of this term, even with rates at fifty-year lows.
Your numbers just don't add up on this one...
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Senior Contributor

Re: Is it just me?

I was doing a rough calculation in my head, according to the on-line mortgage calculator the payments would be $724/month at 4% for 180 payments. If you wanted to go a 30 year loan at 4%, it would be $467/month for 360 payments.

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Re: Is it just me?

Well, hat do you get when you multiply $724 by 12?

Let's see, 10x724is $7240, plus $1448 for months 11and12....looks like the $5224 of CRP income is over $3000 short of making principle payments as you amortized the...then, you have that pesky $700- plus in property taxes.... Interest is cheap, but not free, let's be generous, and say about 3% on almost $100,000.... The. CRP is about half of the costs of taxes and debt service, as I see it.

Like I said, am missing something?
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Re: Is it just me?

if it quacks it's probably a duck

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Re: Is it just me?

In addition, the CRP contract seems to have only nine years left n it, so whatever income there is guaranteed on this land is reduced by 10%...we have no idea what programs will exist in another decade. CRP paid to idle a lot of land, which in effect reduced crop surpluses and, in theory at least, raised commodity prices, by taking out that much excess capacity from production.

We have to get realistic here...someone has already figured out that it takes several times over as much money to purchase and export food aid to foreign countries as it does to simply take them seed and technology, and teach then to raise their own in place. Once we export food independence to others - which, let's be honest, is the really humane thing to do - that "market" evaporates.

If not for food stamps and feeding programs in poorer schools and communities, there wouldn't be much of a USDA budget anymore anyway. Charity begins at home; but, it doesn't have to end there, does it?
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Re: Is it just me?

Yes Kay, I would say that most of the farmland in the CRP Program and other types of programs like the Buffer Strip Program in North-Central Iowa consist of mostly unfarmable land. I have over 5 acres in the Buffer Strip Program that pays over $200/acre in goverment rent, but this 5 acres is really unfarmable most years due to the fact that the creek that runs though this 160 acre farm of mine floods out these 5 acres of land most years, so I would never farm it anyway. My experience with the CRP Program, Buffer Strip, etc is that most farmers put there completely unfarmable land in the program. So basically these programs are only used to collect some sort of money on these unfarmable acres. At least that is the case for Iowa.

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Re: North Dakota Goverment Rent Check Farm

 Kamakazie farming country.

 

Yes Faust, that type of farmland scares us north of Iowa I-80 guys in farming it. Don't worry about us trying to buy any of this SD and ND farmland. We just like farmalnd that very little suprises, flat as a pool table, and dirt such as Nicolent Loam, 0 to 2% slope. Our main problem in Northern Iowa, as it always has been is too much rainfall, which keeps our soils water-logged, and hence turns our corn that really nice yellow color and a big yield loss. Not the yellow in the middle of the corn leaf that is the sign that the corn has run out nitrogen, we do alot of side-dressing of nitrogen to avoid running out of gas/nitrogen in the corn which helps big-time. However, we get a very short payback time, most times less than 4 years on all that drainage tile we install. If this weather keeps up our drainage tiles will get a real workout in draining our corn fields. But at least with tiling you can spend $20,000 one year and then the next year spend another $20,000 on the same tiling project to finish it.

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