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Latimer Iowa | Cut a few select verses from Merle Haggard for those that don't remember the song, but seems pretty fitting....
https://www.youtube.com/watch?v=sxLtXJzo3Ew
"Are The Good Times Really Over"
"Are we rolling down hill
Like a snowball headed for H***?
With no kind of chance
The best of the free life is still yet to come
The good times ain't over for good"
I have been farming 25 years or so but grew up in the hard times of the 80's so not unfamiliar with negative net worth. Farm with my dad and uncle (now semi-retired with minimal ownership) and over the years have been able to diversify and make everything work. Hogs, manure, low cost production, and oats. When I started we had our name (banks as well) on 350 acres and a cattle feedlot(no cattle for 10 years now). Got those 350 acres paid down and for the last 8 years or so I have been buying about 80-160 acres a year with 720 or so recently purchased on locked in interest rate mortgages, pattern tiled when purchased. Been able to cash flow payments with the rest of the operation and continue the snowball rolling downhill scenario, first piece is 7 years from being paid off in full.
I was just approached about buying another 80 for 14,000 an acre. Will grow 220 bu corn and 60 bu beans, good solid ground, could use some tile, that adjoins other land and is close to home base and manure/livestock. Rents in our area have a 4 in them with no signs of going down which seems like throwing those $ away. Land prices are in this range but this parcel fits my qualifications better than most.
With commodity prices it stands no chance of cash flowing. Do you buy it anyway and just basically eat it for a few years? It seems the first 5 years after buying a piece of ground suck, the next 10 are tolerable, and after that it seems like a decent idea... The price is twice what I started purchasing land for just a few years ago, it now seems like we should have purchased much more land at that time. At what point is it a bad idea to keep rolling the snowball bigger and bigger? "A buck isn't silver anymore" so with inflation and a weaking $ owning physical assets (generally non depreciating) with some debt while repaying debt with deflated value dollars in the future. Buffet buys stocks whether the market is up or down, do we do the same with land? Have also seen land purchased for $ 3600 in late seventies sell for $1600 in the eighties, and be repurchased again for 13,000 recently.
Basically do you buy it planning that the good times ain't over for good?
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Land purchase snowball rolling down hill
