Save the farm?

[ivinsfan]

What kind of farm are we actually talking about here? What crops are grown?


Many people call acreage a farm, which is a catch all term.



Has has to be a reason why the one actually living there doesn't want to or can't buy it.

 

[Stormy Kromer]

I can't think of a more emotionally charged asset than a family farm.

I am a 5th generation farm owner. DW is going to a 5th generation farm owner when her 96 year old father leaves us.

I'm keeping mine to pass to our children since I own it free and clear. DW plans on selling hers since she will own it undivided interest with a sister and doesn't want the headache of owning property together with her. Each situation is different.

From a financial standpoint I'm pretty confident buying the farm is not the best investment option for your money. Emotionally it may feel good to own the family farm and that I understand completely.

Have you had the farm appraised ? Farmland has appreciated a great deal in the past couple years, even the last couple months. Auction prices are stunning people these days.

What would concern me the most is your sibling living on the farm. I have an extensive background in farming and farm succession. I've seen numerous families torn apart forever over the farm succession. If you own the farm will your sibling expect you to subsidize his farming by letting him live there and run the farm for less than fair market price ?

How old is your sibling and how long will he be farming and living there ? Another important question is what would you do with the farm at your passing ? You may be passing a head ache to your heirs without knowing it.

Good luck to you and keep peace in your family. Your first family loyalty needs to be your spouse and children. Then your siblings.

 

[Rocky mtn high]

Yes, that is the biggest problem. Farm land has increased dramatically and the cash flow usually does not come close to justifying the price especially as a landlord tenant situation.

 

[brett]

The challenge is this.

Sell the farm now.

Or, keep pumping more and more money into it over the next five years. Then sell it.

Just do not expect to recoup a dollar of the money you invested over the past five years.

The end result will be the same no matter which option you choose.. Your siblings, especially the one operating the farm, will not be happy either way.

 

[pb4uski]

Way to too small of a farm to pay debt service by leasing or farming. Definitely business decision is to sell unless I could somehow get at a bargain price and that really isn’t fair to other siblings except for father was also trying to give his son who farms a chance to keep it. No way he can do it unless I am involved.
I APPRECIATE EVERYONE’S INPUT. Obviously this has happened to several of us.

While from what you have written I suspect that you are right when you say "No way he can do it unless I am involved" at the same time, given how difficult farming is as a business, it might well be that he can't do it even if you are involved and it will be a money drain for you.

My BILs family faced a similiar situation with their family farm. Only 2 of the 6 kids... 2 males... had an interest in farming. I'm not sure of the details but I think those 2 bought the farm for a bargain price when my BIL's dad decided to retire from farming (more accurately, his body wore out).

The two boys gave it a hard go for many years and struggled financially despite hard work and eventually gave up farming and went into construction.

The land and buildings are still there but no farming that I know of though they let someone come in and hay their fields.

Farming is a very difficult business... I would advise that you pass... it sounds like there is loads of potential downside and not much upside.

 

[pacergal]

It is so hard to keep emotions out of this type of decision!
Dads side owned a 600 acre farm in the midwest, one sibling farmed it, never made much profit. And after his sudden death, Grandma had to sell to pay the bank loans. Dad did not want it. It was hard but the right decision at the time.
We drive by the property when we go back. The last time, it had been sold to a larger conglomerate, and the entire landscape had been leveled.

 

[ivinsfan]

Way to too small of a farm to pay debt service by leasing or farming. Definitely business decision is to sell unless I could somehow get at a bargain price and that really isn’t fair to other siblings except for father was also trying to give his son who farms a chance to keep it. No way he can do it unless I am involved.
I APPRECIATE EVERYONE’S INPUT. Obviously this has happened to several of us.

In a 100 years of farming Dad should have been able to make this happen if he really wanted it.



That it didn't, means one of two things. Dad couldn't let go and now you are supposed to kick in money to help "keep" the farm. Or number two which is more likely that each generation needed so much money to run the farm on and live on that no pile of assets was ever accumulated.



Anyhow don't assume you'll be doing your brother a favor by helping him continue to farm. Sometimes you just have to learn when somethings over it's over and turn to the next thing.


I've seem way too many farmers dig their hole with their own shovel and not stop until they buried themselves.



Farming...one of those things that always sounds more romantic then it actually is.

 

[street]

You obviously did not grow up on a farm where some well maintained 100+ year old barns still have your great grandpa's tools hanging on the walls. If it was just a "business" decision then more than likely the farm would have been gone a long long time ago. I understand the OP's burden and do not envy anyone who HAS to sell something that has been in the family for generations. Not everything is about money.

All parts of your reply hit home. I just bought some land and on the land is a early 1900's 3 room tar paper shack and a shop. Their is so much history in the building and objects left behind it is incredible. Every time I'm their and in the shop I'm reliving the past. I'm not sure what I will do with all the antiques, old shop tools, fishing equipment and all the things of life back then. I have sold tons of scrap iron and removed a lot of junk but a lot of great history left to deal with.

I am rescuing to old shop and things are coming along, even thou it has cost me time and some money.

I just hope that my place is handed down through generations. I will ask for that, not sure if that is what will happen.

 

[ivinsfan]

All parts of your reply hit home. I just bought some land and on the land is a early 1900's 3 room tar paper shack and a shop. Their is so much history in the building and objects left behind it is incredible. Every time I'm their and in the shop I'm reliving the past. I'm not sure what I will do with all the antiques, old shop tools, fishing equipment and all the things of life back then. I have sold tons of scrap iron and removed a lot of junk but a lot of great history left to deal with.

I am rescuing to old shop and things are coming along, even thou it has cost me time and some money.

I just hope that my place is handed down through generations. I will ask for that, not sure if that is what will happen.

Street can you articulate why you are going to ask your kids/heirs to hold on to the land even though it might not suit them or even be what they wanted?


There is something primal about land that people can't really express. Our friend who co owned a small animal feed mill, was just a lovely kind man.


This same man told me that he didn't know what to do, as his only son was married and childless by choice. Because if friends son died his wife would own it and he really wanted to keep it "in the family". For some reason he felt that a "blood" relative would do right by the farm and not sell it. Fantasy land and hurtful thinking.

 

[CRLLS]

From only an emotional side, I would say keep it. However OP stated "I care and could afford it but it would be a big bite for me. Borrow money and use IRA to service the loan." This changes your overall financial plans. If you are good with that change, and can still meet your plans then go for it. Life is not all about money.

Here in the Midwest, DW's family had farm. That passed to her mom and aunt some 20 years ago. Neither one personally farmed the land but they rented it out. It was a continuous source of income year after year but far from the best financial investment IMO. The next generation is 6 individuals who have no interest in farming it themselves. Fortunately for her, DW's mom sold her share to her aunt just before her mom passed. Decision was solved for her.

 

[DaveInMi]

After our parents passed, my brother and I split the farm up into 2 sections. He lives in the home place. I took the more rugged part of the land. 14 years later, I took a buyout and built a house on my portion.
The total farm is 84 acres with about 56 tillable. We lease the tillable acres out. The profit from the crops pays the taxes and there is plenty left over.
I have some expenses in managing invasive plants, briars, vines, etc to keep the place nice so we can walk through it. Bought a Kubota compact tractor with a bush hog, front loader, and a grader blade to maintain hiking trails, meadows, the driveway and a couple of gardens.

 

[street]

Street can you articulate why you are going to ask your kids/heirs to hold on to the land even though it might not suit them or even be what they wanted?


There is something primal about land that people can't really express. Our friend who co owned a small animal feed mill, was just a lovely kind man.


This same man told me that he didn't know what to do, as his only son was married and childless by choice. Because if friends son died his wife would own it and he really wanted to keep it "in the family". For some reason he felt that a "blood" relative would do right by the farm and not sell it. Fantasy land and hurtful thinking.

That would be my wish for them to keep it. Like I said, that may not happen. My wish is to keep it but if they need the money they should sell it. If they didn't need the money but no longer want it, I would wish they, give it to the state for a bow hunting, walk-in hunting area for all to use. Under state management.

Part of me will always be there!

 

[JP.mpls]

Exactly, great grandfathers freight wagon still in barn!

Rocky and Monty,

I recommend the movie Sweet Land.
Based on this topic, and done very well.

A warning, it could affect Rocky's decision.

JP

 

[Stormy Kromer]

In a 100 years of farming Dad should have been able to make this happen if he really wanted it.



That it didn't, means one of two things. Dad couldn't let go and now you are supposed to kick in money to help "keep" the farm. Or number two which is more likely that each generation needed so much money to run the farm on and live on that no pile of assets was ever accumulated.



Anyhow don't assume you'll be doing your brother a favor by helping him continue to farm. Sometimes you just have to learn when somethings over it's over and turn to the next thing.


I've seem way too many farmers dig their hole with their own shovel and not stop until they buried themselves.



Farming...one of those things that always sounds more romantic then it actually is.

I couldn't agree more. Unless you've been involved in a family farm I can't explain it. To the OP. Since you asked, I would contact the best auctioneer in the area and sell the place. If you buy it and rent to your sibling at a subsidized rate you're only enabling him.

My brother was an entitled son and lived rent free on our family farm for 40 years before his debts piled up so high Mom had to sell the building site to get him out of the hole. He lost a farm he never even bought or owned....

Farming is hard enough when its going good. I wouldn't do it. My favorite uncle who was also a farmer told me "Heartstrings are expensive, and the dead loved ones aren't coming back to see you at the farm".

 

[FIREd]

My father and his brother decided to break up my grandparents' farm. Neither one of them was interested in farming but they were attached to the estate. My uncle got the house and the land adjoining to the building while my father got the arable land. This land is leased to local farmers for a modest sum, which covers property taxes.

 

[CardsFan]

My father and his brother decided to break up my grandparents' farm. Neither one of them was interested in farming but they were attached to the estate. My uncle got the house and the land adjoining to the building while my father got the arable land. This land is leased to local farmers for a modest sum, which covers property taxes.

You bring up a point OP could consider. Is it possible to subdivide the land in such a way that each sibling gets what is valuable to them? The farmer gets land he can farm. The disinterested ones get land they can sell. OP gets a piece of the farm he can use as he wants. The pieces do not need to be the same size, just reasonably similar in retail value, or not.

 

[prudent_one]

My good friend's FIL has a farm of 70 acres. One child tends to it. All children including the one who farms it live 50 minutes away. It was supposed to be one of those "handed down through the generations" things. All the children are now retired and it now seems the farm is an albatross on elderly children given no one in the next generation has a scintilla of interest in farming. It's not worth a great deal. My friend told me the sentiment is moving toward "sell" but they aren't there yet, although my friend thinks one more winter of 50 minute drives that become 90 minutes due to snow-covered winding two-lane roads between the farmer's home and the farm might seal the deal.

 

[foxfirev5]

Yeah I endured one with a right of survivorship for the heirs. My DGF actually thought he was preserving the asset for future generations. Needless to say as the only son of the oldest son, who died first, I got nothing. BTW he was the one that actually did the work and farmed the land. Still nothing until my Grandmother willed me 25K bypassing my Mother. Worse than a slap the face. I hope they enjoy their 400 acres divided 6 ways and growing.

 

[Rocky mtn high]

Entitled is a good way to say it. My brother has never moved more then 10 miles from the place and has never had any money. He and his son, my nephew is now doing the same thing. So yes, I guess you are right. If I help keep it, I am contributing to their entitlement.

 

[ivinsfan]

Entitled is a good way to say it. My brother has never moved more then 10 miles from the place and has never had any money. He and his son, my nephew is now doing the same thing. So yes, I guess you are right. If I help keep it, I am contributing to their entitlement.

So you brother has son who probably has or will have a son or SIL and on it goes. Rocky don't make your heirs deal with your siblings...just let it go and offer whatever verbal support you can to the farming sibling who will no longer farm. Believe me this is actually the best way to keep family harmony.

 

[MC Rider]

I'm thinking keep the interesting antique tools and equipment and sell the land, or most of it.

 

[pb4uski]

We will have a similar thing when my Mom dies with the family "camp"/summer home.

Dad built it in 1961. It was about 30 minutes from home and where he worked so we lived there every summer from the day after school ended to the day before school started up again. My 4 sisters and I and our families all spent lots of time there. Kids were baptized there and some weddings and wedding anniversaries were held there. 60 years of family memories in that place.

Two of the 5 of us may have an interest in owning it. Two have moved on to other things and I have my own place 5 doors away on the same road. Property taxes are $10k a year, plus repairs and maintenance probably put the costs of owning it to at least $12k a year ignooring opportunity costs.... pretty expensive for the two who end up with it if they are only there a couple months a year.

Luckily, there is probably enough in other assets for whoever wants it to just buy us out.

 

[audreyh1]

You obviously did not grow up on a farm where some well maintained 100+ year old barns still have your great grandpa's tools hanging on the walls. If it was just a "business" decision then more than likely the farm would have been gone a long long time ago. I understand the OP's burden and do not envy anyone who HAS to sell something that has been in the family for generations. Not everything is about money.

Well we had to tear that huge 100 year old barn down! It was gradually collapsing and a major safety hazard.

Obviously once my grandfather passed away no one maintained it.

 

[Mulligan]

You obviously did not grow up on a farm where some well maintained 100+ year old barns still have your great grandpa's tools hanging on the walls. If it was just a "business" decision then more than likely the farm would have been gone a long long time ago. I understand the OP's burden and do not envy anyone who HAS to sell something that has been in the family for generations. Not everything is about money.

Ya, one of my best friends is in same boat. Is determined to keep multigenerational farm intact. Its gonna be tough financially after buying out the others when time comes. And being near 60 he is no spring chicken himself. It just seems like the problem wont go away as his kids will be put in an impossible situation to keep it in one piece when it becomes theirs.

 

[EastWest Gal]

When my father and his 3 sisters inherited their parents’ almond orchard in the late 80s, no one bought anyone out. Each retained a 25% share. One sister gifted her portion to the youngest sister, who was quite poor. When I took over managing the finances, created a spreadsheet apportioning the capital account and transactions proportionally by ownership percentage. I also drew up a partnership agreement. I now own it with two cousins. At the end of the year we all get checks based on the net profit for the year and our percentage of ownership.

The orchard is managed by a local family business that cares for their own orchard property as well as other leased orchards, probably over 2000 acres in the county. The family has been in the business for a very long time and has cared for it since not long after my grandfather died nearly 50 years ago. They are in their second generation of this type of arrangement.

In the lease agreement, it is spelled out what they do and pay for, and what we pay for. They do the work and pay labor costs. A few expenses are split between the lessee and ourselves, but we pay for trees, fertilizer and other chemicals, taxes and utilities. The gross profit is divided 50/50 between us and the business.

You could consider a gradual buyout, or just own it together, working out an contract with the one farming the property leases the other portions from the siblings, getting more of the profit commensurate with his/her effort. As landowners you share in the costs but also some of the profit.

Making such an arrangement seems less costly than buying each other out with cash.