Anyone else own a farm?

[ivinsfan]

Sorry, I didn't mean to be sarcastic in my last post. But, being a child on a farm is a whole lot different than being a child of any business owner.

You have to be there to know it. I can't explain it.

One explanation is a business owner doesn't take their kids to work. Ours would go to the dairy barn to play with the cats. They would go to feed shed and pretend they were the local feed plant and count bags and make orders. Between us we had 5 kids with a 12 years age span and kept a pretty tight rein on them. None of them farm but they all do well.

 

[luckydude]

You have a personal but interesting take on owning land. I don't agree with some of you views and question some of your other thoughts and experiences. Not sure if all your holds are in CA but that may be why some of your views are what they are.

Thanks for sharing your experience on owning land.

I live in CA but my farmland investments are in another state, so I think the challenges of remote management/ownership color my experiences to some extent. I think if my investments were local to where I live, my perspective would be different.

Also, some of my experiences owning land in a different state are really unexpected/weird/cultural shock things that I as a CA suburbanite would never have known/expected. Looking back now, they are funny/amusing, but when it first happened, it was annoying/concerning as a remote owner dealing with the issues for the first time.

For example, we once gave a hunting lease on a parcel in town A to a guy who lived 10 miles away in town B. Well, the guy complained that when he went to town A to try to hunt on my parcel, some locals in town A would harass him, saying that he wasn't local and thus wasn't supposed to be hunting there. The guy showed them the hunting lease and called the local cop, AND THE COP TOLD HIM TO GO AWAY. He told me this stuff and I just shook my head. This sounds like something from the 1910s instead of 2010s.

Eventually the guy suggested that we transfer his hunting lease to his cousin who lives in town C and is a marine. The cousin showed up to hunt one day with his marine buddies, and when the locals tried to harass them, the marines told them to f*** off. They were never harassed again after that.

I have many stories like this as a remote investor. Like the guy who was used to dumping his stuff illegally on a parcel that we bought. The previous owner turned a blind eye. When we bought it, we tried to put a stop to it, and it was cat-and-mouse for a while before we finally tracked him down.

It's funny and amusing to look back now but it was annoying as f*** when they happened and it just took a lot of energy and effort to deal with them as they arose.

 

[ivinsfan]

lucky let me put as politely as possible. Some guy from Cali sends his money to buy local farmland, maybe even driving up the price, which could be good, but OTOH will drive up my property taxes and means my boy can't buy as many acres. And to top it all off he's too good to live out there with the rest of us simple folks...don't support the local bar. Then he up and sends some dude from another town to hunt our local wildlife...


Tongue in cheek of course and then you can queue up the banjos!!! Of course if it was their farm you were buying it would be a different story.

 

[luckydude]

luckydude 20 years is a long timeline....traditional farmland will perform very in that timeframe, paying cash would be a key....we cashed out all but one of our farms and that owner asked for payments and not a lump sum. only 3 years so it wasn't an issue.

Yes, I agree that traditional farmland will perform reasonably well and will appreciate in value.

However, what I am looking for in my investments is to hit home runs---xx times my initial investment by turning farmland into development land. That for me is the ultimate payoff, and I'm willing to wait 20, 30 years for that to happened, whether in my lifetime or my kids'. Nothing is guaranteed of course, but so far so good.

 

[luckydude]

lucky let me put as politely as possible. Some guy from Cali sends his money to buy local farmland, maybe even driving up the price, which could be good, but OTOH will drive up my property taxes and means my boy can't buy as many acres. And to top it all off he's too good to live out there with the rest of us simple folks...don't support the local bar. Then he up and sends some dude from another town to hunt our local wildlife...


Tongue in cheek of course and then you can queue up the banjos!!! Of course if it was their farm you were buying it would be a different story.

I plead guilty as charged.

BTW, I did consider moving out there or at least have a second home to live there part-time. It's lovely country with wonderful rural settings. The problem for me is I am an avid mountain biker and that area is flat as a pancake---no mountains with downhill trails to bomb down on. So I scratched that idea.

 

[latexman]

The OP is wise to understand the importance of proactively subdividing his land across his children, because, latexman, your situation inevitably develops and people need to be be bought out. Pain can be avoided this way. Otherwise, loggerheads are likely.

Yep. The 2 that wanted to keep the farm could/would not buy out the other 2, so the only fair thing to do was to sell and split the $.

 

[Stormy Kromer]

One explanation is a business owner doesn't take their kids to work. Ours would go to the dairy barn to play with the cats. They would go to feed shed and pretend they were the local feed plant and count bags and make orders. Between us we had 5 kids with a 12 years age span and kept a pretty tight rein on them. None of them farm but they all do well.

Playing with cats wasn't an option. For us it was get to work.

Unfortunately, my skills aren't in demand anymore. I can labor a cow in calving and get her to calve, I could stack bales 8 high on a rack, I can cultivate on a side hill, I can corner a mad boar pig and best of all...I have calmed mad bulls who had me cornered in the barn ( a big old angus cuss....) He had me down and could have easily killed me.

I did it all before I was 10. Because all of my farm kid neighbors did too in MN in the 1970's. Then the farm crisis of the 80's hit and we all had to get different jobs. None of us got hurt after that, let alone killed.

I liked it all, best of all I helped my dad reach his goals to be an independent farmer. I didn't do it for me.

 

[ERD50]

How many of them woke up there 10 year old children and pulled a calf at 2 am...

Who else stood on a state highway as the cattle were on the road dodging semis?

Who picked his dad off the road when he got hit by a drunk driver ?

I did it all before I was 10. Then it got serious.

I meant to drop this with my "But whatever, just different viewpoints I guess." close. But since you continued...

If you haven't been in other family businesses, how can you have any claim that they were so much different from farming?

And your examples could be considered child abuse. I find it incredible that child labor laws, and basic worker safety protocols don't (or didn't at the time) apply to children working on farms. And I have done some of those thing at around age 10 (cattle loose on the road at night). And when I look back at that, some driver could have been seriously hurt, because my Dad (and apparently yours) were not proactive enough to assure the cattle were fenced in well enough to keep them off a highway. It's irresponsible.

I ran extremely loud equipment for many hours as a kid, and it is probably responsible for some of my hearing loss and tinnitus today. I'd come in for lunch, and could hardly hear a conversation for most of the meal, my ears were ringing. At mega-corp, there were OSHA regulations for noise exposure, and they were enforced, and I think that was a good thing. The noise level was nowhere near what I was exposed to as a kid. And that was for adults, farm children who didn't know any better were just left unprotected.

I worked around powerful, dangerous machinery that had little in the way of guards around it. I remember being near a power take off driving the discharge of the chopped hay wagon, and my Dad calling out "Tuck your shirt in, it could get caught on that!". I didn't think much of it at the time, just did as he said, but I later became aware of just how powerful something like that would be, and the almost instant damage it could cause if it grabbed my shirt-tail. I know better now, and am much more careful in my workshop, and around power equipment. I mentioned before that I was up close and personal with farm accidents and the crippling effects.

You can attempt to glamorize all that if you want. I don't get it. And as I said before:

"But whatever, just different viewpoints I guess."

-ERD50

 

[street]

Sorry, I didn't mean to be sarcastic in my last post. But, being a child on a farm is a whole lot different than being a child of any business owner.

You have to be there to know it. I can't explain it.

Yep, Lol!
We never farmed as a kid just cattle and sheep. I pumped and hauled a lot of watah and feed before most kids even opened an eye in the morning. Don't get me wrong not padding myself on the back in any way shape or form. Just adding to your last sentence. Quote>> You have to be there to know it.


I could go on and on about what was sacrificed being a country kid. The best thing that ever happened to me was being raised as a country kid and taught me how to work and gave me my character and drive to succeed. Lol

 

[ivinsfan]

Yep, Lol!
We never farmed as a kid just cattle and sheep. I pumped and hauled a lot of watah and feed before most kids even opened an eye in the morning. Don't get me wrong not padding myself on the back in any way shape or form. Just adding to your last sentence. Quote>> You have to be there to know it.


I could go on and on about what was sacrificed being a country kid. The best thing that ever happened to me was being raised as a country kid and taught me how to work and gave me my character and drive to succeed. Lol

Well we went from owning farmland to swapping growing up on a farm stories I have to agree with ErD each family has their own stories from military families, to clergy, to farming families, to business families that live and breathe their homes town. They are all different and in each case you have to live it to understand it

 

[street]

Well we went from owning farmland to swapping growing up on a farm stories I have to agree with ErD each family has their own stories from military families, to clergy, to farming families, to business families that live and breathe their homes town. They are all different and in each case you have to live it to understand it

You could not have said it better! Thanks.

Those unique bring ups and place of childhood IMO play a huge part of who we are in one shape or form. IMO

 

[ivinsfan]

You could not have said it better! Thanks.

Those unique bring ups and place of childhood IMO play a huge part of who we are in one shape or form. IMO

I'm a military brat crossed with a farmer so no wonder I'm odd

 

[street]

I'm a military brat crossed with a farmer so no wonder I'm odd

LOL!

 

[ERD50]

Well we went from owning farmland to swapping growing up on a farm stories I have to agree with ErD each family has their own stories from military families, to clergy, to farming families, to business families that live and breathe their homes town. They are all different and in each case you have to live it to understand it

Thank you, that was the point I tried to get across (and apparently succeeded with you, but probably failed with one/some others).

But to provide some balance to my previous statements, there sure were a lot of positives to growing up on a farm. Helping Dad fix stuff gave me a pretty good working knowledge of all sorts of mechanical stuff. When the equipment you are operating breaks down in the middle of the field, you try to find a way to fix it, or patch it up enough to get back to the barn with the tools on hand. You learn to improvise. For a guy who went the Electrical Engineering route, I had a pretty good grasp of practical mechanical things, which was a big plus in my career, supporting production lines, which had a lot of mechanics/automation in addition to the electronic test/measurement/programming side of things.

You learn about crops, soil, geology, fertilizer, diseases, weather, how supply/demand drives crop/cattle prices, how futures contracts work. Countless other things.

And while I might be envious of my in-town friends that don't have chores to do after school, at least I was glad my Dad didn't decide to have a dairy farm, which means milking cows before school and again later in the evening - every...single...day. And I had a place to drive our dirt-bikes around, which was a ton of fun.

-ERD50

 

[ERD50]

... each family has their own stories from military families, to clergy, to farming families ...

I'm a military brat crossed with a farmer so no wonder I'm odd

If your Dad was a Military Chaplain, you'd have hit the Trifecta!

-ERD50

 

[Stormy Kromer]

There are many family businesses where the family members are totally involved, and identify themselves with the business. Some are passed down through generations, and they have generations of customers, that consider themselves as 'family'. And when those businesses close for whatever reason, the customers seem to get as emotional as the family.

I don't know how you can say it's so different.

But whatever, just different viewpoints I guess.

-ERD50

Sorry I got defensive of my upbringing on a farm compared to other small businesses. It was my only example. I'm not familiar with child labor laws and small businesses (including farmers) but I can certainly agree that many children of small business owners paid sweat equity in their youth. Not nearly as much now thank goodness.

I wasn't trying to glorify myself as a farm kid. I got a bit too personal from past issues regarding farming and my youth.

I did have an opportunity to purchase a small business and run it for over 30 years, I didn't let my children work there. They found their own jobs and identity. I'm glad.

Sorry for polluting the thread. Owning a farm is good. Not easy, not the best investment return, but to finally have some return after almost 60 years of effort is something I wanted to post about. Have a good weekend everyone.

 

[ivinsfan]

If your Dad was a Military Chaplain, you'd have hit the Trifecta!

-ERD50

If you knew my Dad the Navy/Army enlisted grunt you would know funny that is!

 

[ivinsfan]

Sorry I got defensive of my upbringing on a farm compared to other small businesses. It was my only example. I'm not familiar with child labor laws and small businesses (including farmers) but I can certainly agree that many children of small business owners paid sweat equity in their youth. Not nearly as much now thank goodness.

I wasn't trying to glorify myself as a farm kid. I got a bit too personal from past issues regarding farming and my youth.

I did have an opportunity to purchase a small business and run it for over 30 years, I didn't let my children work there. They found their own jobs and identity. I'm glad.

Sorry for polluting the thread. Owning a farm is good. Not easy, not the best investment return, but to finally have some return after almost 60 years of effort is something I wanted to post about. Have a good weekend everyone.

You didn't pollute anything, sometimes living on/owning a farm comes with baggage and sometimes it's just an investment. It's OK to point that out to people...

 

[ERD50]

Sorry I got defensive of my upbringing on a farm compared to other small businesses. It was my only example. ...

Sorry for polluting the thread. Owning a farm is good. Not easy, not the best investment return, but to finally have some return after almost 60 years of effort is something I wanted to post about. Have a good weekend everyone.

No problem, it was an interesting back-and-forth. These are things we end up having a lot invested in (personal/emotional investment that is), so we might get a bit worked up from time to time.

But speaking from a financial investment view, I don't have all the numbers, but one family member mentioned that Dad had an offer at $X/acre in 19xx, and thought Dad was really brilliant to not sell for that at that time. I looked it up, and S&P beat the farmland by maybe 10x or more. And this was close enough to Chicago that demand for land for housing had increased quite a bit. I think the same was true based on when he originally bought it in the early 60's, after selling his successful construction supply business (he was raised on a farm and wanted to get back to it). Of course, every situation is different.

At any rate, good luck with whatever route you take.

-ERD50

 

[Rocky mtn high]

I know a farmer who is giving his son a chance to buy at 65% of appraised value, trying to keep the farm in the family since prices have gone up so much. As he said it might appraise that much today and drop 25% next year. It has in the past. The other children will have to deal with it as they are not interested in farming and don’t need the money. Fair or not, that is the way it is.

 

[KRABE]

So to keep this fire related. How do you manage asset allocation when 80+% of your networth is in farm land?

 

[Markola]

^^^^ It’s probably unique to each situation. One could view a farm as an income source, or one could view it as an appreciating-but-expensive asset, like one’s house, or both. An investor cannot practically rebalance a portfolio that includes real property, which is illiquid and subject to taxes, so I’d personally include it in my net worth but think of it as a separate branch of my managed portfolio, like a wholly-owned subsidiary.

 

[wingfooted]

Sure, I have a farm. It’s a long story.

We bought 157 acres in 2007. This is Eastern Oregon about an hour drive outside Boise. Irrigated ground with senior 1888 water rights. About 100 acres was crop land, the rest is bush along the river. The plan was to retire there after working in mega corp.

Retired and began house construction in 2017, finished in 2021- it was a long and involved process.

In 2018 bought the neighbors property , 90 acres with 60 irrigated.

So I’ve ended up with 250 acres with 160 irrigated. Very scenic and historic property. Not enough irrigated land to be deemed commercial in this part of the country, but not a hobby farm either. Crops are corn, wheat, pinto beans and alfalfa. I also run a small herd of 20 mother cows and sell the calves. Operations are on an asset lite basis - all the tractor work is contracted out, I take care of irrigation , spraying, management and drainage. Water is applied via siphon tubes from a cement ditch and then into the crop furrows. With an old 66 year old body this can be physically grueling and relentless task - 7 days a week during the water season which runs from May until September.

On a cash basis I break even most years, not including my time and major improvements which are depreciated assets. So many expenses when you first start out and every year a major project such as field leveling, irrigation pipe installation or stock corrals. The cows are probably the worst, hard to see how anyone can make any money ranching.

With the land, house , equipment and major improvements this farm is a $4MM investment. Land prices have went up considerably in the last five years or so. That results in a healthy balance sheet. It’s a non liquid investment and selling could take years. I wouldn’t recommend having a farm solely from a financial angle. The sunsets are great, the satisfaction of growing crops and feeding the planet is something I never experienced in a corporate job. Hopefully I can maintain a level of physical stamina to do the work for many more years, that will be the biggest challenge.

 

[ivinsfan]

^^^^ It’s probably unique to each situation. One could view a farm as an income source, or one could view it as an appreciating-but-expensive asset, like one’s house, or both. An investor cannot practically rebalance a portfolio that includes real property, which is illiquid and subject to taxes, so I’d personally include it in my net worth but think of it as a separate branch of my managed portfolio, like a wholly-owned subsidiary.

As far income planning and spending as soon as we quit farming , we will probably segregate it off and simply think of it as an annuity. IE it's an annuity that produces X in net income every year and we need Y to live on so we simply plug that number into our annual spend. Kind of simplistic but that's how we will do it. The benefit having an annuity type income and still owning the appreciating corresponding asset is pretty sweet.

 

[luckydude]

So to keep this fire related. How do you manage asset allocation when 80+% of your networth is in farm land?

Our asset breakdown is as follows: roughly 55% in farmland/ranchland, 25% in other forms of RE, 2-3% in alternatives such as gold and art, and remaining 17% in our financial portfolio (stocks, bonds, cash, etc. in pre- and after-tax accounts).

We treat our financial portfolio as our core holding---enough for us to FATFIRE. The rest we're treating as long-term plays that we plan to pass down to our heirs. We have zero debt.

The RE components are self-supporting and managed separately; they throw off more than enough rental income to pay for taxes, maintenance and repairs, etc., with plenty left over for further investments. Also, we will opportunistically dispose of a parcel or two here or there if prices are good; such proceeds are plowed back into additional investments via 1031 exchange.

The RE components used to be considerably smaller, but due to a huge run-up in valuation since the Great Recession, they've become 4/5 of our NW. That said, we don't have a target AA in mind. As long as our financial portfolio has a certain minimum $ amount to allow us to FATFIRE, we're okay with letting the RE components of our portfolio grow in terms of relative AA%.

The biggest challenge we face now is estate planning: how to pass down our RE holdings to our heirs in a way that will minimize estate taxes; what's the best way to hold these assets; how to provide liquidity to pay estate tax, which will be substantial; how to get our heirs interested in managing the RE holdings and figuring out who is best to manage it.