Buying a farm

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Cress27
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Buying a farm

Post by Cress27 » Sun Feb 23, 2020 4:57 pm

What’s everyone’s thought on a young person going in debt and buying his own farm. Not only having to buy the farm but buy cows and equipment to farm with. I’ve tried to wrap my head around going in debt that much. I’ve always dreamed of farming my own land. Is it feasible or should it just have to be a dream. I’ve farmed along side with my dad but our land is just not enough for us to both do what we wanna do.



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Re: Buying a farm

Post by Stocker Steve » Sun Feb 23, 2020 5:32 pm

Been there. A common issue is that the farm cash flows for the current owner, but does not make enough profit to allow the buyer to make payments... So you have a couple options:
1) Buy at a discount
2) Reconfigure the farm to generate a lot more income
3) Work off farm to subsidize a hobby
4) Sign up for a government program and pray for land inflation
5)
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Re: Buying a farm

Post by Cress27 » Sun Feb 23, 2020 5:41 pm

Stocker Steve wrote:
Sun Feb 23, 2020 5:32 pm
Been there. A common issue is that the farm cash flows for the current owner, but does not make enough profit to allow the buyer to make payments... So you have a couple options:
1) Buy at a discount
2) Reconfigure the farm to generate a lot more income
3) Work off farm to subsidize a hobby
4) Sign up for a government program and pray for land inflations
.
5)

’ve got 2 farms in mind both are at an affordable price ones 2,100 an acre and the other is around 2500 an acre both have good working facilities and are mostly open ground. Ones 205 acres and the other is 70 acres. If I buy the smaller one my plans was to produce hay as hay is at an all time shortage. If I buy the other I was going to do a cow calf operation.

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Re: Buying a farm

Post by greggy » Sun Feb 23, 2020 5:50 pm

Down here, you could not even buy scrub land, cows, equipment etc and make money, interest rates are also high for farm land & deposits required are generally 40%

So only gifted land could see you making money.

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Re: Buying a farm

Post by Cress27 » Sun Feb 23, 2020 5:59 pm

Image
This is the 205 acre farm I know you can’t tell much about it.
Image
This is the 70 acre farm.

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Re: Buying a farm

Post by Bigfoot » Sun Feb 23, 2020 6:33 pm

I haven't spent a ton of time in your part of Ky. The pictures you posted, looks like it's decent land. I pictured the pulaski county area much steeper. Those prices you posted are less than half what land sells for here. Maybe even 1/3 the price. So "price" wise, it doesnt sound terrible. You run the numbers on the larger farm, and its gonna generate $30,000 a year in interest. Thats a lot of interest to stay ahead of. Were not even addressing the principle. Equipment to buy, cattle to buy. I'm just being a realist.........You aint gonna do all that farming. The smaller one, with a supplemented income, that's a different story. Could you even run 20 cows on 70 acres in that area? 20 cows won't pay for the necessary equipment to have them. You young people are in a bad situation.
Your not a small business owner. Your a stay at home mom trapped in a pyramid scheme.

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Re: Buying a farm

Post by Cress27 » Sun Feb 23, 2020 6:53 pm

Bigfoot wrote:
Sun Feb 23, 2020 6:33 pm
I haven't spent a ton of time in your part of Ky. The pictures you posted, looks like it's decent land. I pictured the pulaski county area much steeper. Those prices you posted are less than half what land sells for here. Maybe even 1/3 the price. So "price" wise, it doesnt sound terrible. You run the numbers on the larger farm, and its gonna generate $30,000 a year in interest. Thats a lot of interest to stay ahead of. Were not even addressing the principle. Equipment to buy, cattle to buy. I'm just being a realist.........You aint gonna do all that farming. The smaller one, with a supplemented income, that's a different story. Could you even run 20 cows on 70 acres in that area? 20 cows won't pay for the necessary equipment to have them. You young people are in a bad situation.
Yes the Pulaski county is a lot steeper than in Stanford it’s more rolling. I’m drawing more towards the 70 acres I’ve got a buddy that’s really close that has equipment I can borrow for exchange to help him on his farm we have that worked out. I plan on going through the farm service agency for the loan I can set it up for 40 years. I’ve gotten money from them in the past for cows really low interest rates I think the interest rate on my cow loan is like 2.4% and the land interest last I checked is around 3.5%.

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Re: Buying a farm

Post by Bigfoot » Sun Feb 23, 2020 7:00 pm

Cress27 wrote:
Sun Feb 23, 2020 6:53 pm
Bigfoot wrote:
Sun Feb 23, 2020 6:33 pm
I haven't spent a ton of time in your part of Ky. The pictures you posted, looks like it's decent land. I pictured the pulaski county area much steeper. Those prices you posted are less than half what land sells for here. Maybe even 1/3 the price. So "price" wise, it doesnt sound terrible. You run the numbers on the larger farm, and its gonna generate $30,000 a year in interest. Thats a lot of interest to stay ahead of. Were not even addressing the principle. Equipment to buy, cattle to buy. I'm just being a realist.........You aint gonna do all that farming. The smaller one, with a supplemented income, that's a different story. Could you even run 20 cows on 70 acres in that area? 20 cows won't pay for the necessary equipment to have them. You young people are in a bad situation.
Yes the Pulaski county is a lot steeper than in Stanford it’s more rolling. I’m drawing more towards the 70 acres I’ve got a buddy that’s really close that has equipment I can borrow for exchange to help him on his farm we have that worked out. I plan on going through the farm service agency for the loan I can set it up for 40 years. I’ve gotten money from them in the past for cows really low interest rates I think the interest rate on my cow loan is like 2.4% and the land interest last I checked is around 3.5%.
I would be hesitant to finance anything longer than 15 years. On the other hand, I had no idea interest was down that low, even at the FSA.
Your not a small business owner. Your a stay at home mom trapped in a pyramid scheme.

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Re: Buying a farm

Post by Cress27 » Sun Feb 23, 2020 7:20 pm

Bigfoot wrote:
Sun Feb 23, 2020 7:00 pm
Cress27 wrote:
Sun Feb 23, 2020 6:53 pm
Bigfoot wrote:
Sun Feb 23, 2020 6:33 pm
I haven't spent a ton of time in your part of Ky. The pictures you posted, looks like it's decent land. I pictured the pulaski county area much steeper. Those prices you posted are less than half what land sells for here. Maybe even 1/3 the price. So "price" wise, it doesnt sound terrible. You run the numbers on the larger farm, and its gonna generate $30,000 a year in interest. Thats a lot of interest to stay ahead of. Were not even addressing the principle. Equipment to buy, cattle to buy. I'm just being a realist.........You aint gonna do all that farming. The smaller one, with a supplemented income, that's a different story. Could you even run 20 cows on 70 acres in that area? 20 cows won't pay for the necessary equipment to have them. You young people are in a bad situation.
Yes the Pulaski county is a lot steeper than in Stanford it’s more rolling. I’m drawing more towards the 70 acres I’ve got a buddy that’s really close that has equipment I can borrow for exchange to help him on his farm we have that worked out. I plan on going through the farm service agency for the loan I can set it up for 40 years. I’ve gotten money from them in the past for cows really low interest rates I think the interest rate on my cow loan is like 2.4% and the land interest last I checked is around 3.5%.
I would be hesitant to finance anything longer than 15 years. On the other hand, I had no idea interest was down that low, even at the FSA.
Ive got a buddy that just bought a farm. They limit you to 600,000 but I’m not going to even think about going that far. But he had all his equipment already but he did have to buy cows. He set his up for 40 years. be nice I don’t know how I would be able to afford it other than to go for 40 years and it’s not a monthly payment it’s a yearly payment and there is no payment your whole first year. You only owe the interest the first year. Idk why anyone would go anywhere else to get money for a farm. But that’s just my opinion it’s almost free money. Just coming up with that payment with the way cattle prices are around here is hard to wrap your head around.

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Re: Buying a farm

Post by bmcdonald » Sun Feb 23, 2020 7:38 pm

I would go for it on the 70 acre tract, if you have some off the farm income. Land wont depricate so purchase it before interest rates go up. Ive worked with the FSA on loan you cant beat the interest rate. Sounds like you wiĺl inherent you dad's farm and you can have more land to work with at that time.
Why would you step over a dollar to pick up a dime
Welcome to the cattle business

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Re: Buying a farm

Post by Cress27 » Sun Feb 23, 2020 7:51 pm

bmcdonald wrote:
Sun Feb 23, 2020 7:38 pm
I would go for it on the 70 acre tract, if you have some off the farm income. Land wont depricate so purchase it before interest rates go up. Ive worked with the FSA on loan you cant beat the interest rate. Sounds like you wiĺl inherent you dad's farm and you can have more land to work with at that time.
I’m leaning more towards the smaller farm it’s closer to home and I have a close friend to help out. And yeah hopefully will inherent some I’ve got 2 other step brothers that I would love to farm with.

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Re: Buying a farm

Post by Stocker Steve » Sun Feb 23, 2020 7:58 pm

I hunted Iowa pheasants a lot in a previous life. In one area there was a hog confinement barn going up on most sections. I asked the locals what was up. They said in several families every child had an FSA loan. Most were for confinement barns. If the market was good - - you were a millionaire in your early twenties. If the market was bad - - your filed for bankruptcy and went to college.
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Re: Buying a farm

Post by Dsth » Mon Feb 24, 2020 8:00 am

The first thing that I would like to know is if your dad is thinking of retiring sometime in the near future and if you have other family interested in the farm. Many other factors should factor into your decision like what your personal family (wife, kids) would like to be doing in the next several years. In my case, I rented our 230 acre farm from my mom since she was getting up in age and needed help but wasn't ready to sell. ended up buying under land contract, paying off well before the end of the contract, now enjoying a small cow/calf herd and renting out most of the ground that we don't need for our herd. One comment in a previous post that I do not agree with is about not taking out a 40 year loan if available. My advise would be to take out the 40 year loan simply because it would lower your payments and help you through the not so good times. Pay your loan down as much as you can as early as you can. Hopefully you would have it paid off in the 15 year time frame. Good luck because I think we all would like to see younger farmers getting into the farm lifestyle.

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Re: Buying a farm

Post by cowgal604 » Mon Feb 24, 2020 8:25 am

I bought my first farm at 24. It’s value in land has done very well over the last 8 years. It’s doubled in value. I bought my second farm at 31.

But...I’ve never made money farming really. I make just enough to feed my animals and waste some money on things I don’t need. But we have other off farm income. I would not survive without it.

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Re: Buying a farm

Post by Cress27 » Mon Feb 24, 2020 8:54 am

Dsth wrote:
Mon Feb 24, 2020 8:00 am
The first thing that I would like to know is if your dad is thinking of retiring sometime in the near future and if you have other family interested in the farm. Many other factors should factor into your decision like what your personal family (wife, kids) would like to be doing in the next several years. In my case, I rented our 230 acre farm from my mom since she was getting up in age and needed help but wasn't ready to sell. ended up buying under land contract, paying off well before the end of the contract, now enjoying a small cow/calf herd and renting out most of the ground that we don't need for our herd. One comment in a previous post that I do not agree with is about not taking out a 40 year loan if available. My advise would be to take out the 40 year loan simply because it would lower your payments and help you through the not so good times. Pay your loan down as much as you can as early as you can. Hopefully you would have it paid off in the 15 year time frame. Good luck because I think we all would like to see younger farmers getting into the farm lifestyle.
Dad won’t be retiring any time soon I’m 24 years old and my wife is just as fired up about buying a farm as I am. I don’t have kids and I don’t think we plan on having kids. We both have other income I work as an equipment operator and she is a machinist we both make pretty decent money. Dad just got out of the dairy business about 5 years ago so we are just now getting started with the beef cows. He raises about 100 acres of soybeans too. And I’ve got 2 step brothers one Is 20 and the other is 7 the older brother don’t want nothing to do with the farm the other to young to tell he loves it know but who knows when he gets a little older. I’ve just always wanted to have my own little piece of dirt. My plans are to raise alfalfa hay in small squares on a portion of the farm and do round rolls for the rest. Hay is gold in our part of the world.

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