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land auction

billonthefarm

billonthefarm

Member
Location
Farmington IL
Just got back from a land auction. Here is the web address if you want to take a look.

http://www.biddersandbuyers.com/ads/081910cowser.html

It is 217 acres of good farm ground. Not the best in the neighborhood but good. All tillable. The three tracts sold to the same buyer for a total of $1,657,400 or there abouts. I sat in the back corner, talked with neighbors, enjoyed a glass of water and couple free cookies while trying to sit very still. It was big gathering and with alot of interest in the land. I guess this means farmland is still holding its value!
bill
 
There's must be some off-farm money buying that land. If the buyer is a common farmer who has to borrow the money he's going to need maybe 60% down, possibly more, which is 994,000. That leaves about 663,000 in principal or 102.00 per acre per year principal on a thirty year note. I don't know how much the interest would add to that. The 102.00 plus interest per acre wouldn't be too hard to swing, but what common farmer has a cool mil for the down payment? Jim
 
Out here people pay twice that much, between the indians,menanights, and vineyards, Fella down the way supposedly got 14 per acre. On a pretty decent hill over looking the lake. Itll be another vineyard. Things are only bound to get worse. Toby.
 
I will know next month, 600acres next to me sells then, They turned down 4 million,hope they did'nt make a mistake. Central Ky. horse farm area.
 
You guys sure live in better country than I do. Around here a 217 acre farm will go for around 350 thousand if it has a nice home and barns.
Oh well,
 
WOW,,,,Did you say 1 Million 6 for less than a quarter and a half,,,,,
I got 13 and a half that MIGHT bring half that,,,,,,,,,,,And thats a a Maybe,,,,a Big maybe,,,WOW
 
no interest being paid by the banks. I'm looking to add more farmground to my acres. in my neighborhood, their are no bargins!
 
What is rent around your area right now? That comes out to $7635/acre. With zero down and 4% for 30 years, that's $437/year/acre. With $160k down (10%), it's $393/year/acre. It's all fine and good until $4 corn goes away. I sure wouldn't want to be holding on to it then.

By chance do you know who bought it? Anyone local or was it an investor?
 
Had a farm around here sell lately,offered to a long time tennant for 1.3 million,said at 81 one years old he'd have to live to be 103 to pay it off.Property has some resdential value but for the most part the 236 acres,187 tillable seemed to add up to bad math.Sold for 1.9 million not long after that.Makes I person wonder?
 
The farmers who have dads and grandads that have left them with a thousand or so acres of paid for land. They are able to cash flow just about anything they want.

I saw such a family drop a million and never even slow down their other spending.
 
Thought you put 25% down at least, closer to 50%, on farm land these days.

The big players have big cash sitting around.

If you put 33% down, think that brings it to under $300 a year, which is close to rent prices for top land around here.

Now, I wouldn't sleep good knowing grain prices don't hold up to historic highs for 30 years, but some folk sleep well using othe rpeople's money, so it could work for them. :)

--->Paul
 
Two hundred acres just west of me, about two miles. It is all tillable and has a SCR of 92. It brought 1.8 million. Two different farmers where bidding on it. It is prime corn growing ground butttttttt $9000 per acre?????.
 
That is about $8000 per acre, WTF?

Is there gold or oil under the land?
Where is this at.

There is a guy 2 miles from me that has 100 acres of all wooded rolling land that he want to
sell to a developer and he is asking 1 million, but that is to be split up into home sites. But with the Michigan economy in the crapper he is sitting on it and waiting.
 
Can someone please help me with the math, as I dont understand all this from a pure investment strategy: I currently have some guaranteed 5% investments so I had to try n figure out the economics of paying $8,000 to $10,000 per year to farm??????????????

Let's use $9,000 per acre and say you had that cash available.

1)If you put $9,000 in a good safe blue chip type (yeah right) investment at 4% interest, thats $360 per year INCOME (if you can get 4%???)

2) If you only got 3% thats $270 per year INCOME

3) If you raised 160/bushel corn and sold it for $4.00 per bushel, thats $640 per acre MINUS production and equipment etc costs, say $300 per acre, that leaves $340 INCOME PS NO WARRANTY ON THESE COSTS, I JUST HAD TO USE SOMETHING

What Im saying is, when considering the cost of todays equipment, seed and fertilize if you pay $8,000 per acre for farmland and even figuring $4.00 corn HOW DO YOU COME OUT??????

Wayyyyyyy back in the seventies I farmed and got near $3.00 for corn when seed n fertilize wasnt half what it is today AND I MADE GOOD MONEY FARMING (used old two cylinder Deeres BEFORE they were collectibles lol) buttttttttttttttt if production costs have doubled and land prices tripled since then yet corn is still $2 to $4 I JUST DONT SEE THE MATH AND ECONOMICS GRRRRRRRRRRR

Ol John T (used to farm but outgrew all that)
 
Hi John T: Your are not adding in the fact that the "value" of land is leveraged to the price of crops taken off that land. If the price of corm would go from $3 to $6, as an example, you would see the price of land go up a huge amount. Example: In SW MN during the 1950s corn was $1 and land was $250..( aprox example) Now corn is $3.50 and land is $5,000.. Plus the farmers are betting they can get 185 bu/acre rather then 90bu and that having more acres farmed with higher power equipment will cut labor per acre and etc etc so the farmers pay higher land prices.. Simple idea is land is leveraged to "hope for the future." ag ret.
 
John T.: ... By the way, your item #2. Where can I get 3% right now and not be tied up for years? Current money market rates are real sick right now. ag
Ps: I bought a small piece of farm land 4 years ago and it just feels good to have it.. Hows that for an excuse.. it "feels good" to own farm land :)
 
1)If you put $9,000 in a good safe blue chip type (yeah right) investment at 4% interest, thats $360 per year INCOME (if you can get 4%???)

=================================================

Let me know where you can get 4% on a safe investment.

I've been with the same company for 10 years. I've deposited over 76,000 in my 401k in that time with 1/3 in a money market fund the entire time and the rest are in "safe" American Funds investments. Current value is $68,954. After checking some of the other employees statements I'm actually doing pretty good - some have lost nerly half what they've "saved" in the same time frame.

Good thing social security will save us all.
 
Maybe not in this case but most of the time it is speculators (not locals) paying that kind of money. Great for sellers but if you are still coming up by the boot strap (trying to increase size) like I am it is terrible news.
I'd be interested in talking to the local Farm Credit guy out there and see how many people are financing these purchases to any degree as I would anticipate few are.
 
I'd say they didnt mess up. Not sure which farm it is or where but in the good part of horse country I've not seen much sell for under 10K per acre. Even out here in the not so good part with wire fences nothing is movind under 4500. Let us know what it brings when it sells?
 
Bill, I am also in Wisconsin and this just leaves me shaking my head. I spent a lot of time looking at this and running the numbers and I can't see how someone can earn enough off the land to justify paying more than about $2,500/ acre for it, (assuming of course one wants to farm it.)

There is just no way you can generate enough of anything there to service that kind of debt assuming one didn't pay cash. If you do have cash, I can't understand why you would spend it on something like this and have to work so hard to maybe break even.

The only possible positive outcome is to develop the land. That would effect the taxes of everyone else in a big negative way. Moreover, I just don't see it happening in this economy.

Who bought this, how are they financing it, and what are their intentions?
 
Word has had it from a very few private sales this spring and summer land prices had slipped a little around here. What good ground for around here is worth will be known
Octorber 6th.
 
Good tillable land in my area goes for $1800-2000 per acre.Since 2004 we have averaged 140 bushel corn as year after year we have had timely rains in June-July..Cash rent is only $60-80 per acre for about a 4% return.One of these years it will forget to rain and we will have 50-70 bushel corn.Soybeans run from 25-40 bushels per acre but last year everyone was in the 50's.

For the most part farm ground is well past paying its own way.The money has to come from elsewhere.Farmers that have 1000 acres or more paid for can often afford to bid up on an 80-160 that joins them.
 
Tom, land has NEVER been cheap. I asked an "old-timer" about 20 years ago, "What's the cheapest that you've ever seen land sell for?" He thought for a few moments and then said, "I remeber once some land close to me was priced at $12.00 an acre". I asked him if he thought that was cheap and he said, "NO! I couldn't even figure out how to pay the interest on $12.00!"
 
Here in ohio i"ve seen farm ground bring 11000 per acre.That"s not developement,just farmers.
 
Farm in west central Iowa, near schleswig brought $7600 an acre last week, nothing special, just farm ground.

Most banks will only loan about $2000 ish an acre on farm ground around here.

I have heard rumors if you can cash flow it, farm credit has been giving up to 80% of purchase price (I know one case they gave 100%).
 
I may need to hire you guys . Money in money market for 12 months is 1% or less. shoped hundred thousand cd the other day and 3% for 5 years was absolutely the best anyone was offering. Land is a good hedge against inflation but i try to stay 2500.oo and down in this part of the country. ( Tn. ) Hard to find any large tract of farm land much less that that.
 
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