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Old 11-04-2012, 10:31 AM   #11 (permalink)
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If investors expect a 5% return on $ 240,000 how do you pencil out rental rates of $75 / ac ?
Plus taxes, so about 80. They may get a ROI for awhile, then we will see the correction.

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Anything to do with grain land in sask is the hottest investment on wall street right now. Will it last I don't know but my costs on equipment and inputs is going up just as fast as some of this land and sooner or later where going to get another crop wreck and lots of young guys are going to get a lesson in Risk Management.
When it takes 350-400 an acre to break even and crop prices are at historical highs sooner or later where going to take a real big loss
I think both some young and older farmers are going to get a lesson in risk management when mother nature throws a wrecking ball. Changes to Agristability plus an inevitable increase in interest rates means you better be able to survive on what you produce, not on what you have been producing. Food for thought
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Old 11-04-2012, 10:34 AM   #12 (permalink)
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Investment company named maxcrop has been buying up land in our area and been renting in back to farmers. They are driving up land prices in this area. Tough for young farmers to buy any. The part that makes me angry is the neighbors dont even give us a call or chance at it. You would think that it would be in their best interest to get as many trying to buy the land as possible. The land what they are paying for is not what it should be. My land that i own is not worth that but i guess it is now. I do think in time it will come crashing down. When interest go up. And they will. Land will not be as appealing
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Old 11-04-2012, 10:59 AM   #13 (permalink)
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Between land prices and labor shortage makes it interesting. Glad I was able to buy a few quarters 15 years ago when I started farming If I had to start now probably wouldn't be able to.
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Old 11-04-2012, 11:42 AM   #14 (permalink)
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One man from an investment group said. His most hated question is if we are in a land bubble. His theory is land in gold was .85 ounces an acre back in the 60's about .60 in the 80's and now it is back at to about .90. Whether this numbers hold true for your area where ever you are. That is true.
Gold can be the only measuring stick. IMO this strategy will give you good advice if your land is over priced
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Old 11-04-2012, 07:18 PM   #15 (permalink)
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What all these investors don't understand is that THIS is farming. They might be able to see 5% ROI but they have to actually get PAID. Heard of some ridculous cash rent deals not being payed up or paid in full this year, that can't be good for ROI...

At this point in time I like to take the new assesment value of the parcel of land and dividing by 10 equaling yearly cash rent. Seems fair in most circumstances, but varys depending on grain storage, oil revenue, etc.
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Old 11-04-2012, 09:54 PM   #16 (permalink)
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Here is a risky venture: Buy land at lets say $1800/ac get a loan from FCC for 3.8% pay only interest on it...that's $68.4/ac plus $8 - 12/ac taxes is about $80ish/ac cost of land after 5 yrs of farming it you sell it at $2800/ac and don't look back.

I wonder if there are some young farmers or some investment companies are thinking this way...in other words they are in it only for instant gratification/profit. If the whole thing goes bad, who cares cause land prices just seem to be going up no matter what. I just don't know if this is sustainable in the long run??????
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Old 11-04-2012, 10:12 PM   #17 (permalink)
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Will a time come when liquidation occurs and its beautiful/ugly twin deflation will follow...how many will think its beautiful and how many will think its ugly...only time sheds light
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Old 11-04-2012, 10:42 PM   #18 (permalink)
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Here is a risky venture: Buy land at lets say $1800/ac get a loan from FCC for 3.8% pay only interest on it...that's $68.4/ac plus $8 - 12/ac taxes is about $80ish/ac cost of land after 5 yrs of farming it you sell it at $2800/ac and don't look back.

I wonder if there are some young farmers or some investment companies are thinking this way...in other words they are in it only for instant gratification/profit. If the whole thing goes bad, who cares cause land prices just seem to be going up no matter what. I just don't know if this is sustainable in the long run??????
Or in 5 years it could be worth only $600 ac.
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Old 11-04-2012, 10:54 PM   #19 (permalink)
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Or in 5 years it could be worth only $600 ac.
Yes with 12% interest and 8 dollar canola
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Old 11-04-2012, 11:56 PM   #20 (permalink)
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The scary thing will be if the US economy crashes and there dollar falls to .50 against ours.
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