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Frequent Reader

Would u pass on the farm?

Need to make a decision on purchasing a farm.  I know there is never a guarantee on success but I am having a tough time pulling the trigger.  I know i need to put my big boy pants on but its tough paying $6 price for land when corn isn't $6.  It would be tough to not have it the operation but am very worried about locking in a higher than rent payment for a long time. I know i am not giving many specifics but I am not overly optimistic about the near future. How hard is it to drive by a farm that u could have bought and didn't?

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35 Replies
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Veteran Advisor

Re: Pass. Your talking things coming back

up quite a ways.

 

i have no clue what the per acre price of supposedly $6 per bu dirt is such as you term it.

 

keep in mind, it will likely still be for sale in 6 months too.

 

 

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Senior Advisor

Re: Would u pass on the farm?

Have bought 2 farms in less than 2 years. Several hundred acres.

Your question is worthless cause you give zero details.

That's said, given your comments. WALK. YOU DONT HAVE THE BRASS TO SWING IT

sorry. You asked for opinions.

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Honored Advisor

Re: Would u pass on the farm?

SW...mt's flipant response, while offensive, contains an important point to consider, most of success is found in attitude and reaction to adversity. IF you buy the land, and you face additional adversity from low prices, or low yields, or health, etc. will you always look back at this decision as the one that caused it? If so, let it go. If not, buy the farm, reduce your salary to make the payment equal to rent, and then find other ways to earn back your salary.

 

In my view, which many find faulty, it is a really bad time to buy a farm. That said, we just bought another one that adjoins, but we could pay down enough to make the payment close to rent. Land has had its 30 year run and many things could come in the picture to change its relative value. We bought because the currency is toast and it is quietly on its way to zero (the most obvious and strongest trend in history). Land will be a good investment in that climate. But over the next 5 years land could (should) easily drop 35% in ag only areas. Everything goes up and down for goodness sake. We would just put it on financial statements at 75% of what you paid. IF you need the collaterol to remain stable after a 25% haircut on it value, then you definately have to walk.

 

No one but you and YOUR FAMILY can answer your question. Can Dad chip in 20% to help with down payment? Are the kids ok with a state college, instead of Marquette? Can you sell a 40 that is farther from home to raise the down money? Lots of options, but ultimately buying a farm becoms a family sacrifice, the family should be the one the makes the call. jmo

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Senior Contributor

Re: Would u pass on the farm?

Faced with the same issue SWN. Had to walk away.
Didn't want to work for the bank the next 25 years. Had a fair amount of cash to put down but didn't want to sacrifice liquidity. Bank says well we'll take other land as collateral, I said no thankyou.
It was very emotional for me as I has farmed the farm for over 25 years.
I agree with Time . Land should get cheaper ,keep your powder dry unless you have a boatload of cash that needs a home.
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Senior Contributor

Re: Would u pass on the farm?

Mt
You say you bought several hundred acres in last two years. Pasture or top quality corn and soybean dirt??
Did you pay a premium or buy it right?
Just curios why you pulled the trigger??
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Senior Contributor

Re: Would u pass on the farm?

The only farm I regret buying is the one I didn't buy. If you look at land in foreign countries the good ole USA is pretty cheap yet. In my area if you don't buy there will 6 or more in line to buy so gotta be hush hush till you got a purchase agreement signed. There is also a big push for large dairies cattle feeding ooperations swine facilities some of these boys have some big money backing them. I'd say go for it nothing better than walking on your own dirt gives ya a little more incentive. 

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Senior Contributor

Re: Would u pass on the farm?

If you have enough down payment to lower the yearly cost or other lower cost ground to offset it than maybe yes I would, but if I din't have either than no.  I think this is the time to conserve cash and not get over extended.

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Honored Advisor

Re: Would u pass on the farm?

If you have to ask strangers... the answer is walk away.

 

Shades of RSW/Iowa corn farmer here.

 

 

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Honored Advisor

Re: Would u pass on the farm?

Pretty harsh Hobby. What is the point of networking with peers if you can't ask them tough questions?

 

We talk about real issues on our site...sometimes not every one is as sure of themselves as you are Hobby. Easy to be that way with very low debt levels.

 

I thougth his question was excellent. A serious question and a real issue...seldom found on this site.