Trading your farm in for a bigger model.

[Daniel]

Ok so just as a paper excercise over coffee I notice the following farm for sale: http://m.rightmove.co.uk/quickPage....38569294&goto=RESALE_PROPERTY_DETAILS#details

Now as a 31 year old farmer with hopefully a few years ahead of me can selling our current 330 acre farm, with free range hens, pigs and a collection of houses and purchasing the above be made to stack up?!

For the basis of simplicity I'm assuming I'd have to find half the £8.25 million asking price and that our machinery fleet could transfer straight over and handle the workload.

£4.125 million at 5% over 25 years equals repayments of £292'668 or £407/acre per year.

Gulp. Best be content with where I am, although in 25 years time it might seem cheap?!

Has anyone took the plunge with a venture like this (not that I will be!) best thing you've ever done or did it break you?

 

[Walterp]

I'm probably alone in thinking that the UK (along with much of the West) is headed off a cliff, primarily because of an over-reliance on borrowed money instead of self-funded growth - the difference between the two being that the interest and repayments will, over time, drag us down despite interest rates being artificially repressed to very low levels. This means that asset markets are nearly all in bubble territory.

And the pin is out there, somewhere...

My advice is worthless, 'cos I've paid too much for land, too. But, for what's it is worth, I'd say that now is the time to consolidate, reduce debt, and wait for conditions to change.

Go on holiday in the meantime, or take up an interesting hobby like, err, farming.

 

[Daniel]

I wouldn't say a 50:50 deposit/mortgage split would be 'over reliant' on borrowed money for growth though. It's more the disconnect between land prices and income levels in this case.

 

[exmoor dave]

Interesting thread. I put forward another scenario. This time for renting. Dad and me have had countless hypothetical discussions bout a farm near to us.
Pretty much same type of farm as ours but all round better soils, buildings, fields etc.
Double the acreage. Could do a lot more with it in general.

BUT...
we are on a low rent AHA tenancy. I will be the 3rd gen after dad. The "other" farm would be FBT on double the rent (at least). The landlords would only allow it to continue as organic. Which we are not.
Other factors are I have a brother in the business who will ultimately need a house when I move to the farm house.
"Home" has been home for our family for 120yrs. I know you shouldn't be sentimental bout it but we are! Before anyone says why the hell have we rented for so long- we have bought another farm in that time but no house. Plus home has a nice big old house that the landlords pay the major up keeps.

So stay put with a low rent AHA for life. But as the last on the AHA, Then I can't see any problems with further gen's being allowed to stay but on FBT's.

OR

swap to a farm double the size but at least double the rent. Would need to invest in doubling the livestock up. Almost certainly hamstrung by being organic (tin hat on). on a FBT, most likely only 10yrs at a time. BUT possibly better prospects for future generations who will have to have FBT's on either place?

Answers on the back of a post card!

 

[CORNFLAKE]

One option maybe is for your brother to try and rent the other farm and then he would have a house to live in, you could then pool your resources over a greater number of acres and it would be an opportunity for you both to farm independantly in the future if you wanted. Personally I wouldn,t give up a AHA for a 10 year FBT. It is an interesting thread though because we are all guilty (well most of us) of wanting to stay put just because our father was born in the sitting room and the family have fond memerires of the place.

 

[jamesy]

Prices of land up here are considerably lower than Englandshire but I would still struggle to make the figures of buying more land stack up, not to say they have to stack up!

 

[Daniel]

Prices of land up here are considerably lower than Englandshire but I would still struggle to make the figures of buying more land stack up, not to say they have to stack up!

They do have to stack up, I'm not keen on working all hours to deliberately go bust!

 

[franklin]

They dont have to stack up on day one. But you have to reasonably sure that they will on day three.

At todays prices, its all a bit perilous: Farming is too trendy now with individuals and pension funds etc buying again. Wait until it is untrendy again. When agents start predicting 3 or 4 years of 8% growth, and that it is a no-brainer, then it's time to stop chasing and start consolidating. The time to buy is when farming is the poor man again, when houses and the like are in fashion again.

 

[Elmsted]

Static try reading your pms here.

 

[Yale]

Problem is when farming is on a downer and land is more affordable being in the farming business means your business is on a downer so land is still out of reach.

 

[warksfarmer]

Farming land does not pay for it. Block coming up for sale around here is 210 acres no buildings. SFP to be transferred. Got a quote on it as follows.

Selling price will be £12k/acre. I am 37 yrs old and would like to pay for it in my working lifetime so my children are debt free. Assume I retire at 65 as planned the quote I have had so far is £135,000/year for capital and interest repayment which is £642/acre/year. In terms of collateral they would want 350 acres assuming its valued the same at £12k/ac which I doubt it would be when borrowing.

If I said 50 years it would still be £508/ac/year.

 

[Robigus]

Ok so just as a paper excercise over coffee I notice the following farm for sale: http://m.rightmove.co.uk/quickPage.html;jsessionid=920008A534B667A1DEF66DDCF90AA64E?page=8&cc=html5/homepage.html?pid=38569294&goto=RESALE_PROPERTY_DETAILS#details

Better be quick, on Brown & Co website it is SSTC

 

[Baling Hay]

My great grandfather was offered one of the best 300 acre farms in Northern Ireland after WW2 for £14000, he said it was way too expensive.

The family that bought it sold the tin off the huts which the Americans had put on the land during WW2 and cut down 30 acres of wood. The farm was paid for in 2 years by doing this. Today it is worth about 5 million!

 

[Rural Rob]

What really need to do is sell 10 acres of you current farm for housing and then the 8 odd million becomes cheap with all the tax and inheritance reliefs. I know 400ha was sold next to me under exactly these conditions, wonder if I could rent at 50 quid an acre so he can even more taxable losses!

 

[JP1]

My great grandfather was offered one of the best 300 acre farms in Northern Ireland after WW2 for £14000, he said it was way too expensive.

The family that bought it sold the tin off the huts which the Americans had put on the land during WW2 and cut down 30 acres of wood. The farm was paid for in 2 years by doing this. Today it is worth about 5 million!

Gosh, that's the way to do it Steakeater.

I remember my old pre-College employer telling me in the Depression, he covered his wages by going up to a wood on his rented farm and cadging old bolts off WW1 lorries and selling them in Reading Market

 

[grumpy]

our neighbours started off on a 90 acre farm they now farm 900 acres with only the last 200 acre they bought to pay off,crucially they never sold off farm houses or cottages but rent them out.

 

[exmoor dave]

One option maybe is for your brother to try and rent the other farm and then he would have a house to live in, you could then pool your resources over a greater number of acres and it would be an opportunity for you both to farm independantly in the future if you wanted. Personally I wouldn,t give up a AHA for a 10 year FBT. It is an interesting thread though because we are all guilty (well most of us) of wanting to stay put just because our father was born in the sitting room and the family have fond memerires of the place.

That's basically my thinking. It's a neighbouring farm so would basically be run as one unit if we wanted, as long as we maintain the illusion of separate farms to the land lord. My interest is sheep. My bro cattle.

Unlikely to ever happen....but I can dream.
But in all honesty what I should be thinking is there's no point paying double the rent, keeping double the stock but ending up with the same amount in my pocket for twice the work. But if offered the chance........

 

[Daniel]

Better be quick, on Brown & Co website it is SSTC

Another 'opportunity' goes begging!

 

[Y Fan Wen]

You would think that if you have a farm/estate for sale you would have the area in the basic description!
Can't make head or tail of their website.

 

[Gander]

You would think that if you have a farm/estate for sale you would have the area in the basic description!
Can't make head or tail of their website.

I think the original link might be for mobile viewing. Try this one http://www.rightmove.co.uk/property-for-sale/property-38569294.html#

What a lovely place.