| OldMcdonald - 8/28/2021 14:35
Lol... and fair... most times you should avoid excess leverage.
The exception is in times of high inflation... we haven't seen it since the 70's (I was born in 84, so not in my lifetime..), so to be fair most don't understand how you can use it to your advantage...
An EXAMPLE will help:
lets rewind the clock back to 2019... and say the price of farmland is $10,000 /acre. A 100 ac cost a million $$
You borrow against your existing land and finance the whole $million
Fast fwd to today with high inflation, and that same 100 ac might be worth $20,000 /ac...
But the debt you used to buy it is still $1 million.
Thus, you've gained $1 million equity...
For us, the first house and 200ac we bought was $135,000 in 1981.
With inflation, that same house (some upgrades..) & 200 is $4 million 40 years later.
IF we still had the debt from buying it for $135k in 1981..it would be peanuts is today's $$.
The excessive money printing during COVID caused high inflation, and compressed maybe 2-3 decades of price gains on real estate into a few years....
SO LET INFLATION THEY CREATED KILL YOUR DEBT.
We've bought 4 tractors, a bulldozer, 2 trucks, 300 ac (pending), 2 rock trucks and a 27 ton excavator ...in the last 3 months...ALL FINANCED
But,
Your at the whim(in the U.S.A) of law makers.
Just got done watching about the strings attached to some of this help.
I come from a multiple very very very large farming family. I’m on my own to a certain extent.
So I got to hear all the story’s of the past and the reasons. I struggled with this my self and the reality is the top of the food chain is in control.
We lost control through debt and not selling our crop directly.
My Dads , Dad family saw there farm evaporated through taxes.
But through pure will kept farming.
My Grandpa on moms side started with nothing.
Over the yrs through the different changes in policy I got to see the after math.
The running theory in today’s environment is they don’t make farm land and a army moves on its belly.
I’ve got a picture of a grain truck dumping grain on the scales because it was worth no money.
There was one common factor in most changes.
Government involvement.
If ethanol left the scene and China produced food as we do.
It changes everything.
Financially I pay the Gov to run what I run.
It’s silly not to upgrade because it cost me more.
It’s there rules and there game.
Trump in the 80’s used a loop hole as a loss for taxes.
The land market collapsed. His showing losses ontop of a devaluation in land made issues in lending.
Those instatiouuuuuns have a right to recall a loan.
That was a story for the 80’s when banks had to foreclose on ones making payments.
Not fear mongering but this history needs to show.
I’ll tell you point blank.
Today it’s about cash flow and if it goes belly up the Corp takes the hit. But that’s those that have no ties to land.
Not all but slippery slope.
Sorry post or delete
Ahhh post it
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So how do you protect yourself from inflation?
