Author Topic: Ask Steve Dave Farm And Cow And Ranch And Tractor And Truck Related Questions  (Read 356113 times)

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Offline ben ji

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Kids,

What are your thoughts.

I need to make a decision by this weekend, an opportunity to buy some good land at below market price.

Here are the details. 

===============================

$2,675 / acre  ($856,000 for 320 acres) Sept 23, 2015.

Current is $1,350 / acre.

===================== 

I've been chatting with banker.  35% down needed on farm loans, however can use existing land as collateral.

Interest rate is 5.18%.  80 x 1350 = $108,000

Crop est $2,400 / yr avg (2 crops in 3 yrs // 35 bu acre, wheat, 26 acres share, $4/bu).


COSTS / YR:

I am calculating about $5,600 / yr interest expense.
There is also property taxes, est $1,000.
Plus principle repayment about $5,400 / yr.

I am estimating cash flow needs for purchasing the property at about $12,000 / yr.

12,000 - 2,400 = $9,600 / yr additional monies needed to buy the property.  (Assuming using farm as collateral).


===============================


What do each of you think ?

Dad




Offline ben ji

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I just dont understand how he can run those numbers and say

"You know what, I should really put up the farm I inherited free and clear to buy 80 more acres of dry crop land in the middle of a commodity downturn."

Offline steve dave

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farmers love buying land. it's their favorite thing in the world. it's the truck nuts of the farming world, if you aren't buying land you are nothing.

Offline ben ji

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farmers love buying land. it's their favorite thing in the world. it's the truck nuts of the farming world, if you aren't buying land you are nothing.
Yes. He has been talking about buying more land non stop since he inherited the farm. He is not even a real farmer (has not driven a tractor since the 70's and leases the land to my uncle).

I typed out a long response breaking down all the reasons it was a terrible investment but I doubt that sways him.

I'm going to call him tonight and tell him that if he puts the current farm up for collateral and loses it we will have no where to hide when the FBI takes down Trump, appoints Obama/Hillary as Interim president for life and the economy goes into a tailspin with riots all over the country. May also throw in the prospect of UN Peace Keepers on American soil, would definitely need a place out of the way to wait it all out.

Gotta speak his language!

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Offline chum1

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lol my dad has 3 or 4 tiny bits of land and all he ever said to me about it was, "when it comes time to sell, don't get screwed over."

His life is a bit of a mystery to me. Apparently, he goes to auctions at least sometimes, maybe lots for all I know. I mentioned it here before, but he told me Jordy Nelson has been buying a whole bunch of land around Manhattan and the local farm land owner people get pissed about it. Like, they know who his rep is and scowl when he bids or something.

Offline steve dave

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you know who farmers hate more than anyone? other farmers with more land than them and who buy more land than them. they become enraged.

Offline steve dave

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also if they rent/lease land from someone they believe they own the land somehow. like if someone else buys the land and tells the leasee that they need to GTFO it's against the farmer code or some crap.

Offline steve dave

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I guess those weird Bundy guys are the most prominent example of this but it's systemic

Offline steve dave

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and every region of the state has their own evil land baron guy like in old west movies but irl. the guy will buy up all the land that goes on sale in the area and the other small time farmers lose their crap about it.

Offline michigancat

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Ben ji, given the fact that I am having a really difficult time following your dad's email, and it seems like an awful lot of money, I would advise him against making this move.

Offline steve dave

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the fact that your dad isn't 100% invested in crypto currency right now is very surprising to me tbh

Offline wetwillie

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the fact that your dad isn't 100% invested in crypto currency right now is very surprising to me tbh

Yea it's the snake venom of the currency world
When the bullets are flying, that's when I'm at my best

Offline yoga-like_abana

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and every region of the state has their own evil land baron guy like in old west movies but irl. the guy will buy up all the land that goes on sale in the area and the other small time farmers lose their crap about it.
you guys see the freaking andersons bought up the thompsons old land??

Offline sys

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ben ji, what county?
"experienced commanders will simply be smeared and will actually go to the meat."

Offline Institutional Control

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When my uncle died back in November my aunt had people inquiring about their farmland the next day.

Offline ben ji

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ben ji, what county?
Thomas

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Offline ben ji

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the fact that your dad isn't 100% invested in crypto currency right now is very surprising to me tbh
He did buy some Bitcoin a month or two ago, have not heard him talk about it recently.

Also he was day trading some penny stock and made 30k in a day. For about 24 hrs that is what he was going to use as his down payment on the land, spent a whole dinner talking about it ....but then he didn't sell it and my mom texted me the next day to tell me the stock had crashed and he was back to even.

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Offline sys

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https://www.agmanager.info/usda-nass-2016-rental-rates-kansas-maps

gives you a cap rate of about 4%, which is below your cost of capital.  that's a pretty poor investment, you'd just be betting on land price inflation.


i'd still consider it, if i lived there and the land was contiguous with my other property.  you gotta spend your money on something.
"experienced commanders will simply be smeared and will actually go to the meat."

Offline michigancat

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Dryland in Thomas county is $2300/acre? Damn

Offline star seed 7

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Is that cheap, expensive, or normal?
Hyperbolic partisan duplicitous hypocrite

Offline michigancat

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Is that cheap, expensive, or normal?
Seems expensive. I also don't understand how income calculation at all.

Offline mhkpasa

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For 2016, Kansas' state-wide average price is $3,000 per acre, a 10.4% decline from 2015.

Offline michigancat

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I also can't tell if the price is $2600 or $1300 or how many acres he wants to buy

Offline star seed 7

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1350 and 80 acres
Hyperbolic partisan duplicitous hypocrite

Offline ben ji

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1350 and 80 acres
Correct. He thinks it's a great deal since the price of the land was double that a couple years ago.

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