Anyone else own a farm?

[Stormy Kromer]

The reason I ask is that farms are an extremely personal piece of property, let alone an investment property. Most of us that own farmland have bought it and suffered a long time to make it feasible. There are a lot of family dynamics involved over many generations that can't be explained unless you're in them. And, many families have been torn apart by promises involving hard work and sacrifice that didn't come true.

That said. Farm land sales are going crazy. I bought a farm ( 160 acres) with my dad in 1982 when I was a Junior in high school. Paid $1,600 an acre, borrowed the whole works. . Two years later in 1984 the farm was worth about $800 an acre for 160 acres.. I was $100k under water when I graduated from high school. College was out of the question, I had to stay home and help pay for that farm. I pulled through and paid it off.

Yesterday, the farm next to us sold for $13,400 an acre. Cash rent is about $300 an acre which isn't a huge dividend percentage, but, if you held onto land you're doing OK.

I know I would have done better if I had been in the S&P index the last 40 years, but is kind of fun to watch the crops grown outside the window as I type this.

Anyone else have farmland as a significant part of their portfolio?

 

[ivinsfan]

Stormy you know I do...


An interesting question but the time to "invest" in farmland has passed IMO.



As far as your cash rent number as a % of todays number not a huge dividend agree. But in terms of actual purchase price it's a winner...



Anyhow we still farm so rental return isn't an issue.

 

[luckydude]

The reason I ask is that farms are an extremely personal piece of property, let alone an investment property. Most of us that own farmland have bought it and suffered a long time to make it feasible. There are a lot of family dynamics involved over many generations that can't be explained unless you're in them. And, many families have been torn apart by promises involving hard work and sacrifice that didn't come true.

That said. Farm land sales are going crazy. I bought a farm ( 160 acres) with my dad in 1982 when I was a Junior in high school. Paid $1,600 an acre, borrowed the whole works. . Two years later in 1984 the farm was worth about $800 an acre for 160 acres.. I was $100k under water when I graduated from high school. College was out of the question, I had to stay home and help pay for that farm. I pulled through and paid it off.

Yesterday, the farm next to us sold for $13,400 an acre. Cash rent is about $300 an acre which isn't a huge dividend percentage, but, if you held onto land you're doing OK.

I know I would have done better if I had been in the S&P index the last 40 years, but is kind of fun to watch the crops grown outside the window as I type this.

Anyone else have farmland as a significant part of their portfolio?

DW and I own a ton. Right now, they make up around 55% of our NW.

We've been buying and selling and subdividing (for development) farmland/ranchland for 15 years. Great returns. We've also made $ from utility easements (water and power) and oil & gas exploration (small hit so far).

Recently we were approached by a wind farm company to put up wind turbines and electricity easement on a couple of farms. We bought these two properties for a couple of hundred thousands a long time ago. Company is proposing to pay us low six figures for an easement to run the transmission lines underground, plus USD $100k/year for 50 years (inflation adjusted) to have two wind turbines on the two properties. We'd still be able to continue to lease them out to farmers for rental income. We're still considering/negotiating but it's easy money and neighbors are all doing it.

 

[street]

I had farmland and pastureland and I have a ranch with some irrigated now. Dirt was the best investments I have had in life. I look back and I should have bought a lot more through the years. I really messed up on an old subdivision that never took off and I was this close to buying. The guy that did became a millionaire many times ovah.

I have talked about here before but sold a farm I bought in eights and didn't have a dime. I farmed a small portion of it and rented out most of it. Sold it about 10 years ago now and sold for 14 times more than I paid for it. It was irrigated farm and I always bought bare land no buildings.

Land is something I wanted as a kid, we were poor and that was my life desire to own land and I did. We raised sheep and cattle and rented everything couldn't afford to buy. I begged my dad to buy, and he just smiled and said he just couldn't. Owning dirt has been so rewarding to me in life and worth more than all the money in the world.

 

[skyking1]

It's an interesting subject. I grew up on a small berry farm, then my sister and BIL partnered in and we added a 21 acre old orchard that we had to clear for the berries. Before my sister sold out completely and left the area, a local orchardist bought all but the home and a couple of acres and put it back into orchard. That was sweet.

 

[Bamaman]

I used to work in the tractor and equipment business. I had one dealer that farmed 8,000 acres of the most perfect Mississippi River Delta land ever, and 100% of his crops went into seed. Another dealer I dealt with owns and farms 46,000 acres on both sides of The River. Another dealer's family owns and farms 50,000 acres in the Bootheel.

I had a close friend from Memphis, and his family owned and farmed 10,000 acres in the Mississippi Delta. His furrows were 10.5 miles long--without making a turn on his tractor. He went to college driving an older car, but he had a Cessna 182 sitting at the Memphis Airport. The family had 4 mansions and a tennis/pool house at the end of a private street. And he was sent to Virginia to prep school in the 7th grade.

The county I grew up in was just south of Nashville--where all the country music stars live. Farm land there has been sucked up by real estate developers at well over $100,000 an acre. A close friend sold 750 acres there, and 650 homes @ $1 million average are being built on his land.

I bet those guys are all having heart attacks at the cost of diesel fuel and fertilizer costs going up 350% in the last 18 months.

 

[street]

I used to work in the tractor and equipment business. I had one dealer that farmed 8,000 acres of the most perfect Mississippi River Delta land ever, and 100% of his crops went into seed. Another dealer I dealt with owns and farms 46,000 acres on both sides of The River. Another dealer's family owns and farms 50,000 acres in the Bootheel.

I had a close friend from Memphis, and his family owned and farmed 10,000 acres in the Mississippi Delta. His furrows were 10.5 miles long--without making a turn on his tractor. He went to college driving an older car, but he had a Cessna 182 sitting at the Memphis Airport. The family had 4 mansions and a tennis/pool house at the end of a private street. And he was sent to Virginia to prep school in the 7th grade.

The county I grew up in was just south of Nashville--where all the country music stars live. Farm land there has been sucked up by real estate developers at well over $100,000 an acre. A close friend sold 750 acres there, and 650 homes @ $1 million average are being built on his land.

I bet those guys are all having heart attacks at the cost of diesel fuel and fertilizer costs going up 350% in the last 18 months.

Those with land are and can be as wealthy as they want to be. Land in geographical places like you are talking doesn't surprise me of the price. I live in fly ovah country with seasonal people coming to the area for hunting, fishing and going to national parks etc. I'm just far enough from that tourist traffic and still very quiet, relaxed atmosphere here yet. We get way more outdoor enthusiasts than I prefer though. So, land isn't as high priced but still people are catching on and buying further away from those most popular areas.

 

[EastWest Gal]

We own an almond orchard in Northern California-family owned since 1908. We took down the old trees in 2021 and are replanting this fall, with newer varieties. I keep getting letters from corporations in Texas offering to buy the land-for 1/10th the value. I guess since it isn’t currently planted the corporations think we’re financially stressed. I call the number on the letter and tell them to remove us from their list and that their offer is an insult.

 

[Markola]

I grew up in south Georgia in a family that had thousands of acres of timberland that my great grandfather put together, mostly by owning a profitable pharmacy during the Great Depression when people were selling land. It was wonderful to grow up hunting, fishing and enjoying it, and it was a large part of our family’s identity in town. However, it was all sold off two generations later, due to the “family dynamics” the OP talked about. It only works if people want to stay and work it but we later generations wanted to live other places and do other things.

 

[street]

We own an almond orchard in Northern California-family owned since 1908. We took down the old trees in 2021 and are replanting this fall, with newer varieties. I keep getting letters from corporations in Texas offering to buy the land-for 1/10th the value. I guess since it isn’t currently planted the corporations think we’re financially stressed. I call the number on the letter and tell them to remove us from their list and that their offer is an insult.

How long will it take for new plants to produce and be a productive orchard again?

I'm very uneducated in such a crop.

 

[old medic]

We have only 4 acres but setting it up as a homestead farm. Around here its turning into horse county. Many of the old farms are becoming horse farms or high end developments. Where is the food going to come from once everything is paved and developed?

 

[Aerides]

but is kind of fun to watch the crops grown outside the window as I type this.

Perhaps it was when I read the whole Laura Ingalls series as a kid, but ingrained in me was the stories of farmers losing entire crops back-to-back years, usually due to early or freaky weather, and facing losing the farm due to mounting debt issues as a result. Not romantic or easy by any means.

 

[street]

Perhaps it was when I read the whole Laura Ingalls series as a kid, but ingrained in me was the stories of farmers losing entire crops back-to-back years, usually due to early or freaky weather, and facing losing the farm due to mounting debt issues as a result. Not romantic or easy by any means.

I believe that true in the years gone by. Today's world the farmer gets a lot of help and is hard to fail unless you are a very poor operator and businessperson.

IMO but I been on both ends of this and you are setup to succeed.

 

[ERD50]

A lot of this sentiment, the good, the emotional ties, and the challenges could apply to any family owned business. Farming isn't unique in that regard.

I grew up on a small family farm, I was interested in it and considering going down that path. But the up-front costs (or debt if you could get it), compared to the risks - weather, crop failures, a good crop year meant excess supply so lower prices (you might lose money, and try to make it up in volume!), and the hard work and danger. BLS lists farming among the most dangerous occupations - when we got together with a group of old farmers, there would always be some missing fingers, hands, arms, limping - lots of powerful machinery. My uncle fell off a hay wagon and got the hay hook right through his lower calf. His helper had to get him out and back to the house on the tractor, so he was in pain a long time, and had a long recovery. A friend of mine lost an eye when a hay mower (the flail kind, forget what they call them) threw up a rock. He died a few years later in a car accident, possibly due to not being able to see out of that eye (got hit from cross traffic at an intersection). My own father was missing fingers from a farming accident when he was a kid (kept him out of active service in WWII though).

I decided against it, and never regretted it. As far as gains, we did some calculations, Dad would have done far, far better investing in the market (he did some, had some of the old, I think original "Fidelity Fund" - that was the name, simple "Fidelity Fund").

[edit - ivansfan pointed out this only applies to building, etc, not the land itself: [-]And don't forget that your cost basis will be zero, original purchase price will have been allocated to depreciation over 20(?) years. Big tax hit when it is sold. [/-][/edit]

As far as your cash rent number as a % of todays number not a huge dividend agree. But in terms of actual purchase price it's a winner...

This subject comes up in the "dividend" threads. It is a number, but is meaningless and not helpful in evaluating an investment. I'd call it harmful if you actually think it means something, as it creates a distortion. If it's just a "look at that!" comment, well, whatever.

-ERD50

 

[googily]

My brother and I own a couple hundred acres of pastureland in eastern Wyoming that are the final parcels of about 2500 acres that were homesteaded in the early 1900s by my great great grandfather and his three sons. We lease it for a pittance to the cattle ranch "next door" for grazing. It has an absolutely amazing view of Devil's Tower, but it has no nearby electricity or water and is on a hill accessible by a gravel road that becomes pretty treacherous in rain or snow.

I imagine we will sell it in the next decade or so. I don't have kids, and his kids have no connection to the area (he and I grew up on the east coast). It makes me a little sad to know that we will probably let go of land that our ancestors were the first to "own," but time marches on, I guess. I might feel differently if we still owned the portion where my grandfather was born and grew up, but he and my grandmother refused to sell it to my mother after granddad's brother died and instead sold it to a very very rich man, so I guess if they didn't feel the emotional need to keep it in the family then I shouldn't feel too guilty about letting go of what's left.

I keep hoping that Steven Spielberg will decide he wants land with a view of the place he made iconic in Close Encounters, but the phone hasn't rung yet.

 

[REWahoo]

I don't own a farm but I'll be buying one at some point in the future.

 

[Mr._Graybeard]

Mom and Dad were farm kids who moved to the city to find work. In 1962 they bought a beaten-up old farm halfway between Madison and Milwaukee for a weekend retreat. Tillable land was mostly marginal, and some nice hills were mined for gravel when the interstate went through. The vintage-1870 house had no plumbing and was renter-occupied for quite a while. We spent the first year clearing out trash that had been left behind.

Most weekend getaways are for rest and relaxation. At the farm there was always a chore for us kids. For three years running we planted 500 white pine seedlings -- Dad was a native Yooper and loved his evergreens.

The folks passed on, and sister and I finally sold the place in 2019 for 600 times what mom and dad paid for it. The manager of a bond mutual fund was the buyer.

 

[ivinsfan]

A lot of this sentiment, the good, the emotional ties, and the challenges could apply to any family owned business. Farming isn't unique in that regard.

I grew up on a small family farm, I was interested in it and considering going down that path. But the up-front costs (or debt if you could get it), compared to the risks - weather, crop failures, a good crop year meant excess supply so lower prices (you might lose money, and try to make it up in volume!), and the hard work and danger. BLS lists farming among the most dangerous occupations - when we got together with a group of old farmers, there would always be some missing fingers, hands, arms, limping - lots of powerful machinery. My uncle fell off a hay wagon and got the hay hook right through his lower calf. His helper had to get him out and back to the house on the tractor, so he was in pain a long time, and had a long recovery. A friend of mine lost an eye when a hay mower (the flail kind, forget what they call them) threw up a rock. He died a few years later in a car accident, possibly due to not being able to see out of that eye (got hit from cross traffic at an intersection). My own father was missing fingers from a farming accident when he was a kid (kept him out of active service in WWII though).

I decided against it, and never regretted it. As far as gains, we did some calculations, Dad would have done far, far better investing in the market (he did some, had some of the old, I think original "Fidelity Fund" - that was the name, simple "Fidelity Fund").

And don't forget that your cost basis will be zero, original purchase price will have been allocated to depreciation over 20(?) years. Big tax hit when it is sold.




This subject comes up in the "dividend" threads. It is a number, but is meaningless and not helpful in evaluating an investment. I'd call it harmful if you actually think it means something, as it creates a distortion. If it's just a "look at that!" comment, well, whatever.

-ERD50

ERD land does not depreciate...improvements such as tiling and such are but land no. Any buildings can be too, but not the bare land.

 

[Ronstar]

I don’t own a farm, but I’d like to. 10-30 acres. No livestock, just garden vegetables.
I keep looking but haven’t found the ideal property yet.

 

[pacergal]

We had a family farm on my dads side, Mom and Dad moved away, family members died, Dad was established elsewhere and had no desire to return to farming (it's very hard work!). My Grandma sold the farm off to distant Great Uncle when I was in high school. He had a kerfuffle with his sons and instead of keeping it in the family, sold it off to a corporation.
600 acres prime farm land in the midwest.

 

[VanWinkle]

We had a small family farm that Mom, Dad, and 6 siblings helped raise cattle and horses for 25 years. Dad sold the house in 1977, but kept the 35-40 acres around the house. Dad passed away in 2014 and we kept the farm for sale for 5 years hoping not to have to sell it. My sister passed away in 2019 and we began thinking about how the heirs of each one of the siblings would add up to 20 or more. We decided to accept an offer for 12,000 per acre to an attorney who turned it into a farm to table vegetable farm. The income was minimal but there was sentiment to keep it in the family. Many times the sale of farm land is not an investment decision, but an emotional one.

 

[ERD50]

ERD land does not depreciate...improvements such as tiling and such are but land no. Any buildings can be too, but not the bare land.

OK, thanks for the correction. I was aware of depreciation affecting a sale, but I guess it must have applied only to the buildings and improvements on that land. (got in in time to edit/ strike that line from my post).

-ERD50

 

[pjigar]

We grew up owning and working land. Only a few acres but Dad grew tobacco which was a high value crop back then. We produced enough to live but never enough to have any savings. Naturally I love land. I own and live on a small acreage now. My plan is to grow as much food (produce, fruits and grain) as we can on the homestead. But farming in general is not a very profitable activity. Not in this country or where I grew up. Too little return for too much labor. For me, it is labor of love. YMMV.

 

[Winemaker]

I don't own a farm but I'll be buying one at some point in the future.

At a very steep price, no doubt.

 

[REWahoo]

At a very steep price, no doubt.

Yes, and the price is fixed - no discounts.