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425Cat
Advisor

Farmland toppy and whose buying

Farmland looking toppy to me. Selling many times over earnings. Who is buying ?? What is the age of most buyers. On the $10,000 plus land. are  these farmers ?? What is farm credit willing to lend on these high price farms.

 

If a guy is flush with cash ok go buy it and you've got it, however not sure its wise to work for the bank for 20 years at these prices.

 

A lot of paid up assets are being mortgaged I suspect to fund this new land buying. Is there something Im missing, ok rates are low.

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10 Replies
Shaggy98
Senior Advisor

Re: Farmland toppy and whose buying

Not that it is considered in the same category as you are speaking 425, but I am working on the purchase of a piece of ground that my family has been renting for over 20 years. The original owner has passed and left the ground to his 3 kids who have no interest in it and have agreed to sell it to me private treaty. They let the legal documents of the ground get outdated, so there is some time involved to bring everything up to date. This is a long drawn out process once you get attorneys involved, we've been working on this for about 2 years now but we are moving in the right direction. This is a reminder to me to never let things get away from me and to keep everything updated.
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425Cat
Advisor

Re: Farmland toppy and whose buying

Just curious did you set the price two years ago and is it still good today. With the cash you put down will it cash flow itself or will it take a acre or two from something else to help

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roarintiger1
Honored Advisor

Re: Farmland toppy and whose buying

130 acres sold close to me last week........$1.34 million.    To a farmer that is around 80 years old.  He has 3 sons or so in their 40s & 50s who do the work.  But it was the 80 year old doing the bidding. It might add that this was his second farm purchase of the year.

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425Cat
Advisor

Re: Farmland toppy and whose buying

Tiger, do you think these guys are flush with cash or what is their story. Big operation other land paid off.??? These values have went strsight up is it sustainsble. Where are you at.
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roarintiger1
Honored Advisor

Re: Farmland toppy and whose buying

I think this guy has quite a bit of farmland already paid off.    The farm that sold is in Hancock county,  NW Ohio.  I think there will be quite a bit of land for sale in the next 10-15 years.... The supply may outweigh the demand.......unless the 80 year old farmers continue to buy it.  Smiley Wink 

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425Cat
Advisor

Re: Farmland toppy and whose buying

well thats what Im thinking if crop prices break and this land softens a bit a guy might buy it cheaper in five/ten years. Maybe its time to keep the powder dry. It sure is tough watching it sell though and not participating. I'm not too far from you northeast of archbold. I see there is a land auction coming up down by van wert next month. Thinking about coming down for entertainment. Maybe try and look you up.

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Shaggy98
Senior Advisor

Re: Farmland toppy and whose buying

We agreed to not set a price until all the legal documents were in place. Going to cost me a few extra dollars without a doubt, but I didn't think it was the right thing to do by locking in a price a few years before the sale. These are nice people out to get no one, we've farmed this ground for several decades and have created a nice family friendship. I'm not concerned at all with them selling it out from under me, they are definitely old school where a handshake still has value. If it's meant to be, it will happen.
iowastateisgreat
Contributor

Re: Farmland toppy and whose buying

Cat,

 

I have sold some to an investment group in the past and they are still looking for more. Most auctions are packed with local farmers that are outbidding investors in many cases. It seems that many farmers are making decisions based on past profitability rather than future projections. Or maybe their projections are for $6 corn the next few years even though the cme price is nowhere near that.

 

Sure seems like a lot of auctions in the next few months. I hope for the sake of the ag economy that the bankers are being smart about it this time around.

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425Cat
Advisor

Re: Farmland toppy and whose buying

Well this land has had a parabolic increase and seems due for a setback. Not sure how one can justify theses land prices with projected future carryouts in corn anyway.3.50 corn doesn't equate too well. Sure some guys are well healed and flush. The crowd is buying and usually the crowd is wrong
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