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Honored Advisor

Renting land South Korean style.

In the case of renting an apartment, a tenant "loans" the landlord $300,000, the landlord can use that money to invest and the tenant doesn`t have to pay monthly rent for the 2 year term.  At the end of the 2 years, if the landlord can`t pay back, the tenant can continue to live there until he is paid back. 

 

http://qz.com/183412/koreas-crazy-system-for-renting-apartments-is-driving-the-country-deeper-into-d... 

 

I wonder if farmers would like to rent farmland in that system?  Smiley Happy

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8 Replies
Honored Advisor

Re: Renting land South Korean style.

Renting residences and farmland have very little in common, to me. The $300,000 ante in today's crazy economy wouldn't generate as much as the monthly rents return to what a property is worth.

I get as much in rent on a singlewide trailer every month, doubled, as what that much money would earn in the bank in a year...so, "No thanks!"
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Honored Advisor

Re: Renting land South Korean style.

I think there`s a "story behind the story" as far as the price of an asset comparing to it`s usefullness worth.  The way it sounds in Korea it`s an old system and many are happy with it given the low interest rates.  One way of looking at it, is $300,000 is a heck of a "damage deposit"  Smiley Happy  and a trailerhouse in the US might be more spacious than a Korean apartment...I don`t know.

 

But as far as farmland, assuming that a "safe return"  1.5%, to achieve a $300 rent per acre, a tenant would have to put up $20,000 per acre for the equivalent.....Aw heck just spend $12,000/acre and buy it   Smiley Happy

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Senior Contributor

Re: Renting land South Korean style.

Interesting, I have an opening on a 320 acre farm I own in North-Central Iowa for the 2014 crop year. My custom guy is retiring and feels this 320 acre farm is more than he can handle now, with his own farmland that he owns. If someone wants to rent this the Korean way. I will accept a $4.5 Million Dollar Payment from the new tennet in 2014 and we will do it the Korean way. This is around $14,000/acre, the dirt CSR Rating is 83 for the entire farm. Easily, 220+ bushel corn. Also, 4,500 gallons per acre of hog manure has already been applied in the fall of 2013. It is ready to go for corn since I had it in beans last crop year. Let me know if you are interested in farming this the Korean way.

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Honored Advisor

Re: Renting land South Korean style.

Well, if you figure the "safe return" is 1.5%, that on $14,000/acre is $210 equivalent "rent" hmmm that`s `6 of one, half dozen of another`.  I supose if one had a "sure fire, can`t miss" short term investment opportunity and needed to raise cash..... the only thing a renter that could raise $14,000 for each acre that he wanted to rent, wouldn`t need a landlord only a upcoming auction listings  Smiley Happy

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Senior Contributor

Re: Renting land South Korean style.

I was joking about farming it the Korean way. However, I wasn't joking about my custom guy retiring and giving up doing the custom farming on this 320 acres I own. I have narrowed the Custom Farming down to 2 guys now to farm this dirt for me and expect to make the decision this week. I am loooking at paying the new custom guy around $115 to $130 per acre for his custom work. This is for planting, spraying, and harvesting the crop. I pay for all production costs of course as usual in a custom farming arrangement. I had over 20 local farmers inquire about doing the custom farming on this dirt for me. Guys in Northern-Central Iowa are really looking for any dirt to farm to increase there land base and there just isn't much land coming up for sale or cash rent. This is why there are very interested in custom farming this 320 acres for me. It gives them a 100% risk-free cash flow to include in there farmland base acres. I have pretty much picked a relatively new guy in his 20"s to do the custom farming for me on this piece. He doesn't have the top of the line equipment that alot of the guys have, but he also extremely cabable at keeping his equipment well-maintained since he haas done alot of work for a JD Dealership. He is going to be very happy when I call him on Friday to tell him I would like to hire him for the custom farming on this dirt of mine. He is very capable and hard-working, but as most new younger farmers are, very short of equity and cash flow for his operation. This is why these younger guys like custom farming, they don't need to borrow any money for corn inputs.

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Veteran Contributor

Re: Renting land South Korean style.

 Sorry to say I wouldn't move my equipment out of the shed for your $130 acre custom work. You must have a lot of dummies out there in IA., or too many people who will work for nothing. Reminds me of what the owner of one of the largest Deere dealerships said, "farmers are greedy and dumb and I am here to take advantage".

 

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Veteran Contributor

Re: Renting land South Korean style.

I custom farm some ground and thats a fair price. I would rather cash rent it but hey this ok too. At least RSW is giving a young guy a chance-I applaud you for that.

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Highlighted
Senior Contributor

Re: Renting land South Korean style.

whether $130/a custom rate is a deal or not would depend on how many farming operations and applications are expected.

And, what all is expected at harvest. If it is just NH3, no till planting, one pass spray, combine--it would work. But if there is more expected, such as a field cult pass,  dry 11-52-0 application, 2-pass spray, grain cart and trucking, then chisel corn stalks, then forget it.

Better get it in writing what RWS expects for his $130/a.

 

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