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cropsey, il 61731 | Most of us are not very different from each other and as long as we grow about the same crops our economics are similar. For sure during the really high prices we made a great return even at pretty high rent, but usually most of us run a pretty tight margin most years. What that means is that we could out bid the neighbor by a $5 to $20 if we think we have a sharper pencil, but not $100. So on the other side how bad does a guy want to farm for a land owner that will throw you under the bus for $10/acre? It wouldn't sound like a long term commitment to me and we tend to need that to stay in business.
As far as land goes, it's important that land owners know who you are and have a generally favorable opinion of you. That means do a decent job and keep current landowners happy. The best situation is having your hat in the ring when a current tenant retires or otherwise leaves the business. The 2nd best may be where someone is really 'taking' the landlord. You can be the white knight in this case, but there may be some bitterness on the landowner's side to deal with. OK, the best is to figure out a way to just buy the ground. Anything else is just paying too much for land hoping the economics swing in your favor and make it work. Frankly, just paying customary rents involves a little hope in favorable economics, so paying away the cushion is not like starting from firm financial ground.
For me I have manure and a little more cushion, but way way more work and it's not free. Other folks may have other advantages that helps them be more aggressive (it's not economy's of scale), but if it involves burning equity or subsidizing with other less expensive land it's not an advantage and will eventually burn up. That's not to say that folks won't still do it and even go to jail trying to make it happen. In any business it's important to develop any advantage you can. Keep in mind this advantage has to work year after year (saying you're a market genius won't get it done). It can be done lots of different ways and is often is outside the box. Some landowners are good with outside the box, some not so much.
Expanding acres is not expanding a business. Making more money is expansion.
OK this isn't the last word | |
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what happen to easymoneys post-landlord-rent?
