Save the farm?

R

Rocky mtn high

Recycles dryer sheets
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Five siblings. Farm in the family over 100 years. Sibling who farms it has no money. Three siblings don’t care and/or couldn’t afford it. I care and could afford it but it would be a big bite for me. Borrow money and use IRA to service the loan. Just curious, anyone on this site have experience with this? Try to keep it in the family or be part of generation that sells it? Thanks in advance.
 
^^^ I have a business that consistently loses money and doesn't generate enough operating cash flow to service a loan or to provide any income to investors. However, the land that the business owns might be valuable someday... or it might not.

How much can I put you down for?
 
Rocky mtn high said:
Five siblings. Farm in the family over 100 years. Sibling who farms it has no money. Three siblings don’t care and/or couldn’t afford it. I care and could afford it but it would be a big bite for me. Borrow money and use IRA to service the loan. Just curious, anyone on this site have experience with this? Try to keep it in the family or be part of generation that sells it? Thanks in advance.
Click to expand...

If you want the best advice, you'll need to provide much more detailed info. But if you want an answer based purely on what you've already posted, I would say "Sell it."
 
I am assuming the 5 of you own the farm jointly. How are you handling the costs of ownership? Do you split the profits? Or does the farming sibling take care of everything? How about equipment?

Unless you have an attachment to the land, and it has utility to you, you might be best off selling. Would you really want to be your farmer sibling's landlord?

On a side note: We have friends in a slightly similar situation. Three siblings inherited the farm. None were farmers and they leased out the tillable portion of the property (Maybe 1/2 or less) to a local farmer. This pays for taxes and up keep, and they use it as a getaway (along with a lot of friends, including us). No house. A few sheds, and several travel trailers. This works for them (but there have been many disputes along the way), but it doesn't sound like it would work for you.
 
Rocky mtn high said:
Five siblings. Farm in the family over 100 years. Sibling who farms it has no money. Three siblings don’t care and/or couldn’t afford it. I care and could afford it but it would be a big bite for me. Borrow money and use IRA to service the loan. Just curious, anyone on this site have experience with this? Try to keep it in the family or be part of generation that sells it? Thanks in advance.
Click to expand...

Same exact situation, except four siblings and it’s not a working farm (besides a pine tree farm); just land. #1 lived on the farm rent-free for 20-30 years, but they did pay the property taxes for Mom and Dad. They also took care of Mom and Dad in their later years, so I’m not complaining! #2 moved into Mom and Dad’s place when Dad died. #3 and #4 moved away at 18-21 y.o. and became independent.

We went round-and-round for 1-2 years after Dad died with no clear decisions. On day 1, I offered my 1/4 for “land tax value” (1/2 price) for a quick transaction, but no sibling would do that. It was an easy 100% return for them. It was a frustrating 2 years for me. After 2 years, what we concluded was, the only way that was fair for EVERYBODY was SELL IT! So, we are currently under contract with a developer for $1.7 million for the farm. It’s about a 2 year process, and we are at the end of the first year. We are PRAYING the economy holds up!
 
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Rocky mtn high said:
Five siblings. Farm in the family over 100 years. Sibling who farms it has no money. Three siblings don’t care and/or couldn’t afford it. I care and could afford it but it would be a big bite for me. Borrow money and use IRA to service the loan. Just curious, anyone on this site have experience with this? Try to keep it in the family or be part of generation that sells it? Thanks in advance.
Click to expand...

I’m afraid my siblings elected to sell the farmland - 5 generations, since 1865. But no one can afford it even with the property being free and clear.. One sibling is carving out the house plus some surrounding land. The rest will go.
 
Parallel situation, we just bought a piece of a farm and mom/pop resort that was homesteaded in 1895 by great great grandpa Gust. Mom died a year ago and three siblings did not want to operate the place plus did not have much money so a sale was financially attractive. They ended up selling all but the original family home and enough land for lake access. #1 son took that as part of his share and plans to use it as second/retirement home and for his children. 2 daughters took the cash. So far, at least, all seem to be happy with the results.

Another friend bought the family farm in Iowa when his dad died, mom still alive. I don't know any numbers but he seems to be financially happy with just leasing the land to a neighbor farmer. Could your sibling farmer live in the homestead & pay rent, work in town, while farm is leased?
 
latexman said:
Can you go into the legal “weed” business?
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You might be kidding, but a farm up the gravel road from our friends farm is now raising legal hemp for CBD. The aroma when driving by on the 4-wheeler is "recognizable".
 
The first question, and perhaps the hardest.

Does the sibling who operates the farm have the know how and the business smarts (it is a business) to run it profitability. What are the financial results over the past five years.

Is the farm large enough to even have a chance of making money? Is this a hobby farm or a business? Has the farm essentially been operating in full or in part on equity rather than profit or retained earnings from prior years? Is the equipment in good niK....are large capital expenditures required?

Forget about emotion. Look at this in the hard light of day before investing dime one. If not, you will be sending good money after bad. And causing friction and resentment among the sibliings.
 
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Don't let your heart rule your head/pocket. Make a business decision.
 
My FIL and his sister inherited their parent's wheat land. The sister was a spinster, had no children, and passed first. They leased the land to an adjoining farmer for an amount more than property taxes. When FIL passed the family sold the land to the guy who had been farming it.
 
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.
 
Not all decisions are required to be business decisions.
 
If it were me I would try to keep it, some how some way. If you can afford it, I would see what the other siblings are at on price. The one sibling that farms it now, could he be part of the equation for lowering the price and both of you go in on the deal.

If you bought it, down the road you should be able to get more then what you bought it for.
 
marko said:
Don't let your heart rule your head/pocket. Make a business decision.
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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.
 
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monte1022 said:
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.
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Yes lots of emotions tied up in it.

It would be easy to keep it, except it has a somewhat large debt, so it's basically been operating at a loss.

After 100 years had it been profitable, it would be debt free.

So OP has to balance off the emotional issue, with the fact that it's a large burden to take on, none of the other family members are interested, and OP could actually end up bankrupt if not careful.
 
Sunset said:
Yes lots of emotions tied up in it.

It would be easy to keep it, except it has a somewhat large debt, so it's basically been operating at a loss.

After 100 years had it been profitable, it would be debt free.

So OP has to balance off the emotional issue, with the fact that it's a large burden to take on, none of the other family members are interested, and OP could actually end up bankrupt if not careful.
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Agree.
 
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