| farmerboy1973 - 2/4/2014 09:10
Only 8 percent of the land that we farm has any debt on it. That is rented and owned acres. I am going to go out on a limb and state that is "normal". On the mortgaged acres, (its ours), over half is unencumbered, the debt\asset ratio is around 30 percent at current market value. I am going out on another limb and say that is pretty common also. So, tell me how this land market is going to crash. I will hang up and listen.
P.S. I was around in the eighties, so don't tell me about those years. I'd be happy to; I'm not certified land appraiser, or even just an appraiser, but I do know how to figure out a basis to know what to pay for land and my method is as follows; I have an investment background, and if I were to purchase a farm today for investment purposes, I would expect a 5 percent return on my investment. "Here", our county avg. for corn is 170. A fairly strong rent IMO would be to determine what the value of one third the crop is. So the math is 170 bu x$4.13 cash price locally for October delivery equals$702. One third of that is $234. $234 is 5 percent of $4680. I don't think I would be too far off to say our local land values are twice that number. I've stated before that if there were a futures market for land, these adjustments would already be made, but made it will. Just gonna take a little longer. |
Question for Coup-farm bill, land prices
