Next door farm for sale. What to do??

Yale · Jun 2, 2021

We’ve recently bought 100 acres next door.

Bought in three lots over a couple of years,first went to auction and we stood out,the gamble paid off as there was little other interest.

Certainly a process which keeps you on your toes!

steveR · Jun 2, 2021

whindy said:
Set up a new company to buy the land then let it back to your existing business to cover the repayments. Thus protecting your original farm from any risk of not been able to service loan.
Can be done with a lot of paper work.

Interesting idea. I guess as long as the purchased land will more than cover the debt, the lenders should be happy... Maybe.

steveR · Jun 2, 2021

Steel said:
5 years ago a farm next door was going to auction. We had a meeting with our bank manager and he asked what we would go up to. We decided $1,200 an acre. The bank manager said a farm next door was worth $200 an acre more than any other and we should increase our price, so we decided on $1,400.
We got the place for $1,360 and it would now sell for between $2500 and $3000 an acre.

What extra value do you put on a farm next door, as they don’t come up for sale very often.

The problem is that the farm/land is often also next door to someone else...

Rowland · Jun 2, 2021

If you bought it is there any small bits you could sell off at a possible profit

steveR · Jun 2, 2021

Rowland said:
If you bought it is there any small bits you could sell off at a possible profit

I was wondering the other day, if an "overage clause" could encompass pony paddocks?

D14 · Jun 2, 2021

Steel said:
5 years ago a farm next door was going to auction. We had a meeting with our bank manager and he asked what we would go up to. We decided $1,200 an acre. The bank manager said a farm next door was worth $200 an acre more than any other and we should increase our price, so we decided on $1,400.
We got the place for $1,360 and it would now sell for between $2500 and $3000 an acre.

What extra value do you put on a farm next door, as they don’t come up for sale very often.

That’s irrelevant unless your actually going to sell it for a profit. Are you?

Princess Pooper · Jun 2, 2021

You're in a strong position as currently an owner with no debt. Interest rates as low as they are likely to get - we were paying 10% when we bought our farm. Seems a golden opportunity to me, there is always the option of selling off the odd parcel if you think it will be a stretch too far.

Remember farming going forward is likely to be different from farming now and assess the farm in those terms, not just how many acres of crops or head of livestock it will run. What is its environmental and diversification potential?

Whatever your annual repayments look like being, if you spread those over your complete acreage, (owned now + potential) is that a do-able rent? That's basically the way to look at it.

If the figures are eye watering, you could think about 2 loans, if they will do it; one interest only and one repayment. That way you are repaying some of your debt whilst keeping payments slightly lower, but it could also leave you a bit more vulnerable if interest rates go up much in say 10 years time. You would also be paying out more in total. Also have a contingency plan to pay off the capital of the 'interest only' loan. (This always used to be through an endowment policy but became discredited as a lot of the investments never grew enough to cover the debt when it became due).

Good luck!

Ffermer Bach · Jun 2, 2021

my advice would be try to buy it, if things go pear shaped, sell.

Old Tup · Jun 2, 2021

Talk to your accountant .....if he has any quantity of Agricultural clients he/she will have as good an idea as anyone as to what’s available. Should have previous experience of driving a good deal.

chaffcutter · Jun 2, 2021

Owning land is an asset and should be viewed as such instead of trying to justify it in farming terms. This will add value as its adjoining yours especially if it’s in a ring fence.
Used to be quoted that on average anygiven blockof land only comes to market once every twenty five years, don’t miss the chance!

milkloss · Jun 2, 2021

Plenty money in this farming lark from the way everyone says ‘buy it’!

whitefox · Jun 2, 2021

Steel said:
5 years ago a farm next door was going to auction. We had a meeting with our bank manager and he asked what we would go up to. We decided $1,200 an acre. The bank manager said a farm next door was worth $200 an acre more than any other and we should increase our price, so we decided on $1,400.
We got the place for $1,360 and it would now sell for between $2500 and $3000 an acre.

What extra value do you put on a farm next door, as they don’t come up for sale very often.

eh

buying land in your part of the world means its value is linked to its productive ability,in britain that isnt even a consideration

cows sh#t me to tears · Jun 2, 2021

Could have sold our last block for 14% more (possibly even more ) before it even settled. Two other neighbors were severely annoyed when they found out it had already sold. So , no concern over debt as has been said if it goes pear shaped it wont put everything else at risk. Only way that happens is if it becomes an emotional tie that you fight like hell to hold onto. Probably already got to that point now as I've already put to much work into it.

cows sh#t me to tears · Jun 3, 2021

Old Tup said:
Talk to your accountant .....if he has any quantity of Agricultural clients he/she will have as good an idea as anyone as to what’s available. Should have previous experience of driving a good deal.

Your lender will want to talk to your accountant anyway. And they will no doubt form part of a business proposal you will need to get approval from the bank with.

cows sh#t me to tears · Jun 3, 2021

whitefox said:
eh buying land in your part of the world means its value is linked to its productive ability,in britain that isnt even a consideration

So if you cant make it pay, why even be in farming? Your just an unemployed park manager otherwise....Hopefully for your sakes over there, things get away from being paid to sit on your asses and trade deals actually make it worth while farming for profit.
Being in the EU has set the UK back 50 years.

Nick Adams · Jun 3, 2021

teslacoils · Jun 3, 2021

cows sh#t me to tears said:
So if you cant make it pay, why even be in farming? Your just an unemployed park manager otherwise....Hopefully for your sakes over there, things get away from being paid to sit on your asses and trade deals actually make it worth while farming for profit.
Being in the EU has set the UK back 50 years.

Was always going to be the case. Small island. Many folk. Just a glorified dog-toilet to them.

teslacoils · Jun 3, 2021

You can make it pay from farming, but I'd say not on the day you buy it. But you couldn't make it pay at £2k an acre with grain at £60. Clearly that land pays at £150/t.

vantage · Jun 3, 2021

How do we know the op cannot just buy it outright, with no help from the bank?

Rowland · Jun 3, 2021

vantage said:
How do we know the op cannot just buy it outright, with no help from the bank?

Err ! Because he asked which way to finance it and who the best lenders are !

Next door farm for sale. What to do??

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