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Different outlook on things!?
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sand85
Posted 8/19/2017 23:25 (#6198281 - in reply to #6198192)
Subject: RE: Different outlook on things!?


C IL

Congrats on building a 3000-acre operation.  Not a lot of young producers have that.  So ... you are ahead of many in the pack.

First observation.  Easier said than done, but disciplined people who do this get ahead.  Pay yourself first.  So ... if your family expenses are low, great.  Put a portion of your profits aside as (prior budgeted, so you don't redirect them) savings, before the rest goes back into the farm.  That is how people like you get in the same position as your investor landlords.

Second (your first thing).  You don't need dollar for dollar to buy back a position on the market.  You can margin a 5000-bu corn contract for sub-$1500, or buy options for <10-15 cents/bu.  So the amount of capital is not your entire revenue stream.  Also, I find that (my) bankers tend to buy into confident people who have realistic plans.  Not all or nothing plans, just realistic plans.  So ... sit down with a commodities broker, make a plan you can afford, then approach your banker to see about building a plan to make that work.  Your banker wants you to be profitable so you can pay him back, right? But bankers don't like surprises.  I like to keep my banker apprised throughout the year of my general yield/profit expectations, what I am going agronomically to respond to the market, what I think any big upcoming financial moves might be.  Then when I need to make a move, I have already set the stage and have some buy-in on his part to help support his part of the plan (the financing part).

Third, if I had landlords who were smart people with an investment mindset and were going to buy more land and rent it to me, I would think they were the most wonderful people to be in business with - not competition.  Those are people who are going to put you in a position to make money farming their land, so later you can afford your own land.  At some point, it is likely that some of your landlords will want to divest themselves of their land portfolio, or their heirs will, putting you in a position to control some of that land later.  At some point, if you are interested in a piece for yourself and you let them know, they are very likely not going to compete with you for it.  Investors know there is always more land available.  Maybe not across the road, maybe not at the price you want to pay, but there is more land available.  And for every opportunity you take you pass up other opportunities later.  I bought 13k land 4 years ago and could have bought 30+% or more acres today for the same money.  I'm okay with it, not kicking myself, you play your hand, buy what you can for reasons that work that day - I would have been okay if I had kept my powder dry and bought in these other opportunities in the last year at less money, but who knew they would be available, and available at the lower price? 

It's good to be hungry and want more.  It's good to remember all the things that are going well, and all the good choices and good fortune you have had.  I read on a motivational website somewhere recently that most people dramatically overestimate what they can accomplish in a year, and dramatically under-estimate what they can accomplish in a decade.  Write down your goals, make a plan, live the plan, adjust as necessary.

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