farm land price

[Anonymous-0]

Could one buy good farm land, pay interest on the payment, crop farm it with hired custom help to plant and harvest and make any money? ( based on 300-400 acres, Iowa)

 

[Anonymous-0]

I am going to assume this is a serious question. Iowa may be different than North Dakota, probably worse as land is 5 times as costly, but save for a 90% down payment the answer is no.

 

[Anonymous-0]

Good ground 6000A times 7% interest if you could find a lender for that then cost of planting,taxes,harvesting,grain storage and then someone to do the work no way it will pencil out.

 

[Anonymous-0]

OK, How about if a guy had enough money to pay upfront for the ground. Could you then make a profit after hiring custom field work and taxes on land? Thanks for your replys.

 

[IaGary]

You can maybe make a 6% return on your money.

5000 to 6000 invested.

Taxes custom hire, and inputs= $350

175 yeild= $700 income at $4.00 a bushel.

Leaves you with $350 with a $5500 investment.

Gary

 

[Anonymous-0]

If I had that much money to invest.I would not be farming with it.

 

[kyplowboy]

I am going to say no. With the prices around here, you could not borrow the money at 6%, make payments, pay inputs, and clear a profit. The 56 acre farm I just got I have a FSA loan, and I am going to have to have 3 acres of tobacco to break even at current prices, five year average yield, and input cost. If you have the money up front I think it would be a good investment. As Gary said, you can get a 6% return and you will have the farm and as they say they ain't make'n any more.

Dave

 

[Tradititonal Farmer]

Now is not the time to buy crop land when wheat,corn and soybeans are near their peak.Let the fools rush in and buy land now and wait for 2010 or 2011 after the commidity market crash and you can buy foreclosed crop land for a fraction of the present selling price.Many got their 'nads busted in the late 70's/early80's by jumping on the bandwaggon late and its going to happen again.

 

[Anonymous-0]

300 or 400 hundred acres in Iowa is going to bring top dollar. I've seen it hit 6200 an acre right down the road from me. I have been looking at a 60 acre piece they are asking 4500 for. I can't even make that pencil out. If you had the cash to buy the land outright, there are better investments around. Most of the investors around here quit buying land two years ago. Farmers trying to expand are the only ones buying ground because the profit margin per acre is getting thin. $4 dollar corn is great, however $3 diesel, $800 anhydrous, and new seed prices are going to eat that up quickly.

 

[paul]

Kinda takes 20-30 years to 'pay off' land, if not longer. So..... What are you asking?

Today land prices are at record highs, corn & bean prices are near record highs.

Buy land now, will corn & bean prices remain this high for the next 20 years?

Seems unlikely.

You can make your plan work for one year in 2008.

What happens when crop prices return to $2.50 corn, $6 beans? And seed, fert, fuel, & chemical prices are also at record highs - will they remain there or lower?

You can make your plan work on paper for a year or 2, but the future does not look to good for it.

Of course, how long will you hold the land, and where do you think land prices will go? Land is an investment, making money from production might not be needed, if you can buy it low & sell it for high. However, you are buying at a known peak of land value - it may continue going up, but you are not at a smart position for that.....

Lot of folks are getting greed in their eyes when they see these crop prices Some feel they will go up a few buck higher. I think if that happens, in an election year, the crys from the masses on food prices will cause the politickers to do something - embargo, release all CRP land, etc. - to drop crop prices quickly to a cheap food policy.

We are on thin ground, as farmers, as folks will always complain about high food costs, and when the govt 'fixes' that then those same folks will complain about govt subsidies to farming. No-win.

If you have $2 million sitting around with no place to invest, it's hard to know where to go with it I'm sure. Stocks, bonds, etc. are going to heck, cheap dollar is hurting most investments.

Long-term, I think you would lose money with your plan if you pay average price for average land today. might look smart for 2-3 years, but I think the odds are costs will remain higher as crop prices fall back, and you will not make the payments. Anything can happen tho.

--->Paul

 

[kyhayman]

You cant pay principal on farmland farming it. Interest, usually but not principal.

400 acres at 7000 an acre will run you 2.8 million. Interest on that kind of loan will run you at least 500 an acre. Opportunity cost if you've got the money would be 350 an acre at 5 percent.

If it runs 180 bushels per acre at 4.00 you've got 720 per acre gross. I dont know what annual operating cost is in Iowa but here, with custom harvest that will run at least 300 an acre probably 400 an acre. 400 an acre above operating cost at 400 acres would be 160,000. Thats good money but interest on borrowed money will eat up that 400 an acre and then some. Lost interest on your money if you have 2.8 million on hand would leave you with 50 an acre, IF the 4.00 market holds. 400 acres at 50 an acre would leave you 20,000. I couldnt see risking 2.8 million to buy a 20,000 a year job and I sure cant see working for less than nothing if you have to borrow that kind of money.

 

[randy47]

what is the price per acre of the land ?? I just bought 20 acres for 20,000.00 and if I had waited could have gotten it cheaper in my area 500 acres would sell from 800 to 1200 so I would say yes you could..I live in northen Michigan 6 or 7 years ago you could not have bought the same 20 acres for 80,000.00. NO jobs No people and No money thanks to our govner jenny Randy

 

[Anonymous-0]

You didnt say anything about having the money to buy. Yes it would work if you bought good ground and took care of it as the tax thing will make you some money

 

[Stinky Cheese]

Maybe. Farming is a gamble and hard work. You might do well and you might not make it very far. Most businesses are like that though. Government jobs are about the only sure thing.

 

[1936]

In a word NO. Have a banker do the math to show you that 300 cash rent on borrowed land money you are in the deep end of the pool.

 

[Anonymous-0]

Around here some "town people", meaning people who have full time jobs in town, have decided to be a "farmer". They have bought some land with intent to make BIG money. No machinery, so they hire everything done. A couple years later, they are the first at the FSA office trying to get the land into CRP. The grass is not always greener on the other side of the fence. It you are hiring everything done, I don't think it will work very well.

 

[Allan in NE]

Oh Yes,

I've heard of ways how to make farming pay.

Let's see now, where did I leave my notes? I know there's just got to be a way. Just can't remember what it was.

Oh yeah, now I remember; sell out or die. :>(

Allan

 

[centralilbaler]

20 acres just sold next to me last week. it didn't have any improvements on it, just good ole black corn gound for 5,250 /acre. I'm still trying to figure how anyone could make it payments like those

 

[E.B. Haymakin']

The going rate for land in my neighborhood is $52,000 acre. The 80 acres that I hayed two years ago is now a unfinished subdivision because the developers went bankrupt after paying 1.7 million for it. The future is scary.

 

[MOMassey]

It seems like I have stepped into a time machine and it's 1979 all over again except I have 30 years experience.

Land prices are out the roof, oil price is at an all time high.

I shake my head at the prices some people are paying for land.

I am concerned when people base a long term purchase on these inflated commodity prices.

 

[JoshuaGA]

Ain't gonna make it cropping it, neither are you have money hiring work done. Only way to make money is to sell a product over which you have the ability to control the price. For instance, let say your land has a few hills, so there is erosion problems. Now, if it made money in crops, you would crop it, but for what you have invested in land, the wiser decision migh be to buy a few calves from local farmers, fence that land, raise grass fed beef, have it processed, find your market, and sell direct to your niche market. Or, if times on your side, just sit on your hands and either wait for a better deal, or wait for the market to correct itself. Something will give, it will hurt, and farmers will be selling land and assets to their losses. Probably won't see $500 land, but you will see cheap land. The post is right, were in almost the same set of circumstances as we were in the 70's. I do believe a recession will be here by 2012, and probably sooner than that. And lastly, if you insist on buying land, let me give you the advice our banker gave us. "Don't farm harder, farm smarter" Have a good day.

JoshuaGA