Take a loan, use IRA contribution or do nothing

[MN]

I have 30 acres of tillable land that I rent out that I've been thinking of farming myself rather than renting. Rent collected is about $2000/year.  Farming it myself I could expect to net about $6000/year. This could be very variable however, especially with an equipment breakdown, etc. One major repair could eat a year or 2 of income easily. To do this, I'd have to purchase equipment, the most expensive item being a tractor.

I've been watching for a good deal for a year or 2 now and have come across one. The tractor is $14,000. I have enough cash to buy it, but that was intended for this years IRA contribution for my wife and I. So my options are to pay cash, get a loan (I can get a loan on the tractor at 5% interest), or do nothing.

To actually start farming it myself, I'd also need the rest of the equipment that I'd estimate to be between $10,000 and $15,000. If I wait for deals for the rest, it could be another couple years before I could start. I assume this could complicate depreciating the equipment if don't actually start using it the year I purchase it.

I would be interested in hearing anyone thoughts on where I should go with this.

[Joel]

Do you really want all that extra headache for a risky extra 4k per year?

[MN]

I do think I'd enjoy the work and it'd be something to do when I do retire, but that's probably 10 years away yet. It does seem like it's probably not worth it.

[Joshua]

You need to look at the time invested vs the reward. Objectively look at the time you would spend over the course of the season and figure out the hourly rate on $4,000. Probably not worth the headache.

My other question is how much is the land worth? Around my area farm land goes for about $5,500 per acre. The US average is $2,950 per acre. Assuming the average your land is worth $88,500. An 8% return on that is $7,080 per year. So if you sold the land at the average price and invested in stocks you are looking at more than the value of farming it yourself. Let alone if you live in a state with high land prices. In my area you would be looking at $165,000 and $13,200 per year.

Food for thought.

[MN]

It definitely makes the most financial sense to sell the land, however there'd be nothing to stop the new owner from building a house right next door which we wouldn't want. Also some of the tillable acreage is only accessible though the building site, and wouldn't want to give an easement for that. It does seem like farming it myself isn't going to be worth it.