What a Thursday

So I got a call from a landlord that they want to sell the ground that I farm. They are giving me time to think it over, but I think I have to do it. 110 of the acres are on the east and north of my house and farm and the 80 is right across the road. I've talked here about how I think we may see a repeat of the 80's so I am more than nervous. I've farmed it for years so I have records of the income from it and the oil wells on it are a substantial monthly income. Interest rates are definately not at the level of the 80's.

Land is always a good investment unless it is not useable. This is, but the rate is $3500 an acre. I know in some areas that's nothing, but it sure is higher than the last time I bought ground.

Sorry, just looking to vent I guess and for someone to tell me to do it. You can't afford to loose farm ground and stay solvent, I just didn't anticipate this land lord (the oil company) wanting to sell. Ugh!

Go for it!

If you are getting the land, AND the mineral rights, meaning you will get paid for any oil and or gas produced, and the wells are good, I would have to say go for it. Of course, I would also look at surrounding area land sales just to make sure the price is right, you may find they are a little high and counter with a little less? For my area that price per acre seems pretty good though. Oil companies are in a spot right now with oil at 30 dollars a barrell.

Make SURE you are getting the oil wells.Better then half the farms-land I see being sold is without the mineral rights.Previous owner keeps them.

If you get the Mineral rights with it go for it. The price is 1997 prices in my area.Now the prices around here are 10,000- 12,000 per acre.

Land prices are falling fast in some areas. Neighbor offered to sell a rather poor quarter section (160 acres) to my nephew for $3,000 an acre. Nephew said that he wasn't interest at that price. Neighbor called back and said that they had an offer of $1280 per acre; nephew still declined. Now it looks like prospective buyer can't get financing for his $1280 offer, so the price may drop even further.

You very seldom even get a chance to buy up surrounding ground. Go for it if you can. You won't regret it unless someone else buys it then you will always wish you did buy it !

It is better to buy ground that you have not beeen farming so you get 100% increase from that parcial. Whereas something you have been farming, you only get another 50%. The big thing is the location. That is worth a sizeable amount. I passed up some ground that I rented on 1 side and owned on 2 sides of it. It would have given me mile rows on 240 acres. I passed because we had just bought a piece and were in debt for $300K. It would have taken another $300K to $400K to have done this. That was in 1998 and ground was $3000-3500. I kick myself for not doing it as we had other ground free and clear. Now ground is $9500-12500.

Yes the 80s were different. I had a chance to buy a good laying 80 across the road from some that I was farming for $1600. But I had just bought 45 acres for $3950 in 1979, farmed it for 2 years and sold it for $2700. Then we bought 60 acres that was closer for $2500. It is always easier to look back. But it is much better to lucky than smart.

Good luck. If you have enough cash to not go too deep in debt, go for it. I don't know where you are at but here in central IL, I would give that in a heart beat. Could you buy it on contract and pay the sellers, or some of them more interest than they will get elsewhere but less than banks will charge you? If not, lock in rate and no flex rate or balloon.

Read those terms REAL close. I cannot see an oil company selling land with producing wells and the rights to them.Then paying YOU for the oil. Mighty big hearted of them. A benevolent oil company...Just doesn't add up...

I can tell you that some land out here in Central KS sold two years ago for $4200 per acre with no oil wells. There was also a quarter that they tried to sell at auction just after Thanksgiving that the bid was only $1550 per acre, and the quarter was all farmland, terraced but not bad land. Another quarter a couple miles away that was flat river bottom had a top bid of $1650 per acre. Neither quarter sold. I can't think $3500 would be that bad in your area, WITH the mineral rights, but only you know the amount of debt you can stand. Interest is still low right now which would be another +. Good luck - Bob

I think the price sounds fair compared to our area, without considering the mineral rights. IF those were included, even better. I remember hearing that adjacent land is worth 10% more to you just due to location. As you mentioned, interest rates are certainly not going any lower.

If you can swing it I sure would go for it may not get the chance again but only you know what is best for your situation. decisions decisions

A person needs a really good reason not buy land that is across the fence.

If your getting the mineral rights I sure would think long and hard before I turned it down. We have bought three farms in the last four years. None of them where really what we wanted to do at the time but they are right next to ground we already have. I made the mistake of being too conservative in the early 1990s and passed up ground that we will never have a change to buy again in my life time.

So push the numbers. If you can make it work then do it. If it is going to be too thin for your comfort then walk away and don't look back.

Your going to lose 190 acres of ground/income if you pass it up. Can you find that much more ground to rent that is close to you??? You maybe able too. We have turned down rental ground for the 2016 crop year.

wondering what they are thinking too ,,. perhaps the oil co is in financial trouble ???,.. try to figure out their why? ,, perhaps even outrite ask them why they have chosen to sell,,. but DONT MESS AROUND ,,.land sakes grab it ,, of all the things money can buy ,,, seldom is anyone ever remorseful very long for buying land ,,ESPECIALLY RITE NEXT TO YOU ...if you have to mortgage it all and move heaven and earth to get it done ,,. poor health is only reason I would think hard about turning it down ,,. other than that ,,. do it ,.. good luck