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SD | Both. I treat rental ground like its my own. I have great relationships with all my landlords and voluntarily raise my rent at the end of the lease.
I wouldnt be able to farm without my landlords, so I keep them happy. I enjoy seeing their families grow and I have a sense of helping the community out by helping them pay their bills as well.
You have to keep in mind, purchasing land requires 20-30% cash down (working capital). Then you have increasing property taxes to contend with.
Renting ground is similar to leasing equipment IMO. You do it to make a profit without the liability. If you dont think land can be a liability, ask anybody who farmed in the 80's.
IMO, land is over valued with the low returns it has seen over the better part of this decade. Why pay $200-300k down on a quarter of land and still have a mortgage payment of $200-300/acre? If you mortgage owned land against purchased ground, your owned ground is now at risk when land values drop. If the lender foresees any inabililty to repay they will call your loans, even if you never missed a payment.
If you are flush with cash its probably a non issue. If land is your biggest asset, it might be a problem depending on ratio of % owned to % mortgaged. | |
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happier on owned ground or rented ground?
