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ottertail co mn | I have bought land that I have no desire to own long term. It is an investment. I have land that I have bought land and have zero desire to sell and want to keep as long as I am alive. All the land I have ever bought costs me more to own than rent. I can rent land around here for say $50 per acre. Land I buy costs me around $175 per acre , taxes interest, and principal. So basically $125 an acre per year for land free and clear after 25 years.
Sooo, I sell a piece that I don't want other than investment after I bought it in 3 years. Those 3 years I farmed it, made Money and paid down principal. I sell it for a profit of say $200 per acre, I rent it back for $50 an acre for 10 years. The only way I would have ever had a chance to rent it is to buy it first... so, on an 80 acre chunk, I make $16k on the sale, made the payment 3 years and have $30k left over after the sale and paying the bank their note back, I get to rent it for $125 an acre less than I was paying for it to the bank.
This scenario only works in a few instances. If you can't find a buyer and you are in financial trouble it can take you down quickly.
I have one piece currently I would like to sell and do a rent back on, the rest of the land I Own is hopefully generational.
Btw, there are probably 6 other pieces of land i would like to make part of the generational program but there are probably 50 pieces I would buy and take the chance of a rent back sale down the road.
I don't have opportunity to by family land or neighborhood land at a discount due to long term relationships. My grandpa quit farming in 1984 and I started in 2006 so a generation was skipped on the genetic inheritance.
If my kids want to farm I will be there to help and they will definitely have an advantage over how I started, as far as having a land base.
One thing to remember, I am farming in a unique area, people are moving here daily to buy land and retire. I don't really worry about land going down in value, I worry about staying current with the bank and not have my family sacrifice for my desire to buy more land.
Every one has ways of doing things, and I am sure very few do it the way I do but...
More often than not I am interested in a rent back lease after the sale.... | |
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Farmland market observation
