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Senior Contributor

Re: Strong Cash Rental Auctions In Iowa

So, what was the tone of the room? Was it nuts? I about fell out of my chair when Jim Hughes told me they had 350+ people there at the Mason City sale. Wow! How many of those were just gawkers, do you think?

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Honored Advisor

Re: Strong Cash Rental Auctions In Iowa

An engineer friend said about the $530 rent, "That`s not so high, only a little over 1¢ per sq ft, just plant your corn a little thicker" Smiley Happy  In about 1990 everyone seemed to have decided that farming was no longer a "way of life" but a "business" so these auctions do make sense.  Land has always been locked into tight hands never coming up for rent, shutting a starting farmer out.  At least with an auction if a young farmer can scrape up $80,000 he can rent a quarter and is in business.  For years unscrupulous BTOs have rented a portion of their base below fair value by "sending out birthday cards" and "blowing snow out of the landlords driveway"...talk about buying the Island of Manhatten from the Indians for trinkets! $530/acre rent buys alot of birthday cards and blows alot of snow. Call it `schadenfreude` or whatever, but auctions are the way to go it turns the whole transaction into a business proposition of dollars and cents no fringe extras of mowing ditches(unless specified at the auction and in the lease) all that balony out the window "you give me $530 and you get to rent 1 acre for one year...period".   JMHO 

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Senior Advisor

Re: Strong Cash Rental Auctions In Iowa

Jeff i suspect there were lots of landlords taking inventory. By the time that event radiates throughout the ag community, there could be some really interesting conversations between landlords and tenants.

 

Fellows, don't blame the landlords. The market has been established.

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Senior Contributor

Re: Strong Cash Rental Auctions In Iowa

I assume most retired-farmer landlords understand top dollar double the going rate rent may not get you the best tenant. But if the landlords are heirs, or investors you better be sharpening the old pencils up! And you thought "hobby farming" meant a little goat ranch or something. Net profit of $0/acre from giving it all to the landlord is hobby farming.
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Veteran Contributor

Re: Strong Cash Rental Auctions In Iowa

Farmers are there own worst enemy. Paying them rents for that type of ground is absurd. As the word gets around everyones rent will probably go up 100 dollars next year unless corn has a 3 or a 4 in front of it. Regardless its going to be used as a benchmark. Sharpen you pencil is right!!!!

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Advisor

Re: Strong Cash Rental Auctions In Iowa

We were  counting the chairs and I'd say the no. was closer to 250 than 350. At least half the people their appeared to be retirement age or older, so i suspect many were landlords. They don't come with a label, so not sure. I'm guessing now, but suspect that 90% were just veiwing. I was.

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Honored Advisor

Re: Strong Cash Rental Auctions In Iowa

Thanks Idalivered,

 

For sharing an inside look with us.  Hate to see this started.  Would save a couple of farmers in our area a lot of driving.

 

Locally they have been selling land on phone auctions.  You never know if there is actually another bidder. 

 

I'm not comfortable with either idea.

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Advisor

Re: Strong Cash Rental Auctions In Iowa

Don.....you are absolutely correct, but...don't forget how it felt to be 23(or 18). At  52, I'm not stepping aside for anyone yet , but there are a few younger farmer's that along with our attention might just earn my respect.  I'm not making the case for charity, but hope the last rentaldollar is not rationalized into my pocketbook. There were people that took a chance on my wife and I. I'd like to think that I'd return the favor.

 

 

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Senior Contributor

Re: Strong Cash Rental Auctions In Iowa

This kind of activity isn't good for farming!   The term "fair market value can be obtained at an auction"  I don't know.  If you want to sell something put it on an auction.  Most people lose their sense when they bid at an auction. 

I have no idea but can you give $530/ac and have anything left at the end in that area??  What are you going to do when corn is only $4/bu a year from now?  Can that corn yield 200bu/ac on an average year?   

 

Back when farming was sane the idea was that the land owner and tenant should have about the same income or close to it, off of a parcel of ground, and honestly that is the way it should be yet.   Why should the landowner sit in the Caribbean while getting $500/ac for rent while the tenant is making less then $100/ac.   

Farmers did it themselves.  If and when things get tough in the next two years I don't want to hear any whining about losing money,

 

 

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Honored Advisor

Re: Strong Cash Rental Auctions In Iowa

You had better buy some earplugs....

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