Author Topic: Sell or keep the family farm  (Read 3058 times)

mooseman

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Sell or keep the family farm
« on: August 24, 2013, 02:13:45 PM »
Im writing from Norway, please excuse any bad spelling or grammer.

Last year my wife and I bought the "family farm" (100acres) from my mother. I call it a farm even thought it is has not been used as such for 30 years, it is only being used as a house. We bought the farm for two reasons, part investment and part sentimental value. The "farm" has been in our family for 150 years. 

A month or so ago I stumbled upon this site, and have been reading eagerly ever since. One of the first things I did was make plenty of cuts in our budget. Our biggest expense is naturally this property, but what I have begun to realize more and more is that this probably is a bad investment. Let me explain why.

1. The house is big and old. This past year almost all our savings went towards maintance on the house. Putting in new windows, floors, paint etc. We are nowwhere near finished...

2. The house is far fram the nearest town, 20 miles. And the nearest town is small ( population 10 000). This means lots of time and money wasted getting places.

3. We have an extra appartment in the house, but after months of looking we have no tenants.

4. The house requies large amounts of electricity, which of course means big bills.

5. Since this is a rural area with few jobs and oppurtunities the value of homes is not increasing as much as in other areas.

Therefor, we have a big mortgage ($330 000, 30year, 4% interest), big expenses, no income from the property, and the property will most likely not increase in value at a normal rate. Did I mention we moved hundreds of miles from all our friends?

There are possibilities. The property is big, and I may be able to re zone parts of the property for vacation homes (this is nice and popular vacation destination). But this is a long and expensive process, most likely not yielding results.
Is we get tenants it will pay for 60% of our mortgage payments.

In my opinion, considering risk vs reward, we should sell. What do my fellow mustachians think?

Dulcimina

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Re: Sell or keep the family farm
« Reply #1 on: August 24, 2013, 07:26:02 PM »
Can you rent the farm land to a farmer? I know someone in the US who does that.  Neither she nor her siblings farm, so they leased the land to a farmer and kept the house for her parents.

mooseman

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Re: Sell or keep the family farm
« Reply #2 on: August 25, 2013, 03:44:17 AM »
Most of the property is forrest and mountain, no money in leasing out the remaining fields, only 5-6 acres.

A few people have showed interest in having horses or sheep here.

Numbers Man

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Re: Sell or keep the family farm
« Reply #3 on: August 26, 2013, 12:07:05 PM »
mooseman - You should sell. I think you already know that. You are just feeding a hungry property that seems to eat more cash than you have.

Rust

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Re: Sell or keep the family farm
« Reply #4 on: August 26, 2013, 01:30:21 PM »
This may make some cringe, sorry but this is purely from the micro (what's good for me approach to the world)

Can you clear cut the land and sell the timber off the property to open up additional pasture or field space to lease?

« Last Edit: August 27, 2013, 02:00:20 PM by Rust »

ncornilsen

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Re: Sell or keep the family farm
« Reply #5 on: August 27, 2013, 11:33:29 AM »
Are you underwater on it?

Is that 150 years of history worth the expense to you? It's something you're not likely to ever get back.

Any other family interested in buying in, allowing you to move elsewhere, and use it for family functions/whatever?

Could it be rented on day-to-day intervals to people vacationing in that area? (You say it's a popular vacation area...)

mooseman

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Re: Sell or keep the family farm
« Reply #6 on: August 27, 2013, 02:43:13 PM »
numbers man - you are probably correct from a financial and risk vise point of view.

rust - clearing out some timber and creating more "farmland" would create some negative tax issues as far as resale value and possibilities. I could sell some timber regardless of this but it would generate a very small return, basically not worth the effort.

ncornilsen- we are not underwater, but we are spending more than we like every month all things considered. No one else in the family is interested or capable of buying the property. 
I have tried renting it out on a week too week basis during the summer, but hardly any interest. A lot of the vacation homes in this area are closer too the water or the city. We are about half a mile from the ocean with no view of the ocean.

Basically there is only one financial reason to hold on to it. To see if some land can be re-zoned for vacation homes ( the property itself stretches almost down to the ocean). If that where possible we could pay off a great deal of our mortgage and hold on to the property with a "mustachion conscience".