| Tileman2 - 11/1/2017 06:25
And in a declining land value market, at what point have you overextended your equity and cash flow using the paid for 500 acres as collateral?
Run a financial stress test using 500 paid for acres losing 50% of value against another 500 that was purchased in the top 10% of the market. Makes for a scary looking balance sheet in a hurry. Exactly. Kills me how guys use paid for ground as an excuse to overpay for more ground, under the premise it all averages out. The only way that idea makes any sense is to use a fixed dollar amount, say for example, $500,000, and buy a piece of land of that amount each and every year over a long period of time. And pay cash for each purchase. Then, and only then, will you achieve a true average. But that is hard to accomplish in farmland. |
It is what it is
