Author Topic: Bought Another Farm  (Read 619 times)

Fishindude

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Bought Another Farm
« on: September 25, 2017, 10:08:46 AM »
Having recently retired and sold a business, I am trying to reinvest the proceeds into things that I understand, are safe, will preserve the money and provide some income.  A 69 acre piece came up for sale down the road, so it's easy to keep an eye on and take care of things, and has a fair amount tillable ground to generate income from.   I will cash rent the ground to a neighboring farmer.   taxes on the ground aren't too bad, and the non-tillable ground is in a wildlife program that gets taxed at a very low rate, almost nothing.   This purchase will net out about a 3% annual return on my investment and unlike investing in stocks you can't lose $$, somebody will always rent the farm ground, or I could put it in a government CRP program.  Farm ground also sells pretty good in the midwest and it could be unloaded pretty quickly should we ever need the cash.

Not a killer investment by any means, but a very safe one, and there should be some good long term gains in the value of the ground over time.  Also gives us another place to play around, hunt, etc. right down the road.

Mr. Green

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Re: Bought Another Farm
« Reply #1 on: September 26, 2017, 04:30:00 PM »
Sounds like a nice play for wealth preservation. Does crop insurance cover Dust Bowl-like scenarios? That's the only real risk I see to a farmland investment.
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Fishindude

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Re: Bought Another Farm
« Reply #2 on: September 26, 2017, 04:43:39 PM »
You make your deal with farmer in winter, before he plants in the spring, then it's his problem if he can't produce a crop, he is still obligated to pay. Most carry some crop insurance to mitigate bad years of drought, flooding, hail damage, etc.

I suppose you could have a multi year dust bowl scenario, but then we're all in trouble.  We have had the occasional low yield bad year around here, but I can't ever recall farmers not getting a crop. 

maizeman

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Re: Bought Another Farm
« Reply #3 on: September 26, 2017, 04:56:34 PM »
Did you already know the neighboring farmer? I've been thinking prime farmland would be a good investment for the last several years ever since prices (for both corn and midwest farmland) peaked in 2013 and started slumping back down,* but I wouldn't know how the first thing about how to get it rented out.



*Long term, we have more and more people eating more and more meat (the latter particularly in China and SE Asia) and growth in crop yields isn't keeping up with growth in demand anymore, so crop prices (and hence land prices) are going to have to come back up eventually.
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Fishindude

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Re: Bought Another Farm
« Reply #4 on: September 26, 2017, 05:22:15 PM »
Getting your ground leased is easy.  If you buy a piece, the guy that farmed it last year will probably want to keep farming it, and good chance he will get in touch with you first.   The person you purchase from will also be able to tell you who has been farming it.  With a little observation spring and fall you can see who's out working ground around your neighborhood and just stop and talk to them.
Most are pretty fair but I suppose there is a chance someone would try to shortchange an inexperienced land owner on the cash rent, so it's a good idea to check around your area and see what others are getting.

maizeman

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Re: Bought Another Farm
« Reply #5 on: September 26, 2017, 05:29:28 PM »
Very good to know, thank you Fishindude.
"Itís a selective retirement," Richard explained, "a retirement from boring s**t."

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hoping2retire35

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Re: Bought Another Farm
« Reply #6 on: September 29, 2017, 10:56:03 AM »
I love land. Anything beyond what we need to maintain FIRE will be to expand landholdings (mostly). Finally picked up some sheep and a guard donkey. We started off just trying chickens but they always were picked off once a fox or hawk(usually just smaller, young chickens) caught on to their location. Hopefully the flock and donkey will keep the fox and dogs away. If our little, Joel Salatin style, farm works out and we can expand' our neighbor has 25 acres of well kept fields that I would ask to rent.