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Tractor Talk Discussion Forum

OT - What to do with 17 acres....

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farmerboybill

10-30-2004 06:22:56




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As some of you may know, I'm on a dream deferrment program. Can't afford to pursue my dream of farming as there is no way to make money if you owe everything to the bank. So here I sit, renting a farmhouse and working for an agronomy center until my ship comes in.

My wife and I just found a great little house to buy near by. This place is an old farmstead on the very edge of a smal but fast growing small town. It's literally next door to the last house in town and is on city water and sewer. It's kinda small at 1100 square feet but the price is VERY right. As long as our offer is accepted, we're definately buying the house and a half acre.

HOWEVER, what I'm toying with is buying the 17 acre corn field offered for sale kitty corner to the house for 40 grand an acre. I know it's insane for me to even think it, but I thought I'd run some sort of specialty crop off it until I can rezone it and parcel it off, maybe paying for buying the first house and getting me a very healthy down payment when I actually do buy my real farm...

Whaddya think? Does this sound like a good idea? Parceling off farm land grates my teeth as I hate urban sprawl, but it's gonna be done with or without me.

I could also just rent the acreage but that would be boring as compared to running it myself!

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Mark - IN.

10-30-2004 23:04:32




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
$40K an acre? Not for AG. AG around me's about $2K an acre, but start getting into 100+ acre plots. If start talking rural building land for homes, $7K - $10K per acre. If get into subdivisions, then start seeing $24K for 1/3rd acre lots. Now that's in rural Indiana.

When was in Illinois, one of my buddies paid $95K for 3/4 acre in Darien (DuPage County) in 1986, then put another $250K in building a 4000+ square foot home. I thought he was nuts, but was appraised at well over $1/2 million some 5 or 6 years ago. Was a good investment? Is up to him.

$40K an acre? Not for AG, that's for sure. But, if is on the edge of town, and are building up as you say, may not be a bad investment to hold onto for a few years, then sell of for $40K 1/2 acre lot subdivision. Is up to you, if you can swing it, and the town don't condem it and sell it to some developer, out from under you - IT HAPPENS.

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Mark - IN.

10-30-2004 23:26:01




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 Sorry, didn't catch the $4K correction in reply to Mark - IN., 10-30-2004 23:04:32  
$4K per acre? Go for it, if you can swing it. But better make sure is zoned AG quick and then make it a working farm(ette) before town annexes it. Town can still steal it, seen it happen. Sit on it, let a developer buy you out, use it for your retirement or to buy something bigger, if tractors still exist that long. I sure do like that black smoke and the smell of burnt diesel - and sure am gonna miss it when those good for nothing hydrogen/solar powered hybrid tractors get legislated into law in 5 or 10 years, or so.

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leland

10-30-2004 18:07:12




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
Try putting in a track for ATVS, or dig a hole and have mud bogs, or build a 300ft long track and host pulls, or racing gocarts or just let weeds grow.



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TomR Ont.

10-30-2004 17:57:06




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
Go crazy - If you have at least 30% equity in it
after you buy it and don't go over 70% of your total annual income, to head off a possible 3-4% interest increase or a 20% decrease in value or both, so you can get a mortgage renewal in say 5 years.

Always remember the '80s 10%, going up to 26% for renewal mortgages.
Land is always a good investment, if you can hang in there when it gets, rough & tough.

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coloken

10-30-2004 13:23:49




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
See the new price. If you can swing, it the answer is all most all ways go for it. Land is the best thing you can own.



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Bill Drew

10-30-2004 13:17:19




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
Beyond local zoning and utility issues, keep in mind that the price of land can go down as well as up. The biggest issues that seem to drive the price of land down is interest rates (higher interest rates mean higher monthly payments so fewer costomers) and local unemployment (higher unemployment means fewer jobs so fewer customers).

Zoning could be a real killer for subdivision: some townships near here require a minimum of 300 feet of frontage before you can build a driveway. Pretty much all townships require a five acre minimum lot size. And they are getting tighter every year, so even if it is OK now, it might not be in a few years.

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Loren-MN

10-30-2004 10:33:55




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
Farmerboybill,
Where the heck are you located, where bare farm land is bringing $4000 per acre?
About a little over a year ago, we sold my Dad"s 120 acre farm, including building site (nice older house, barn, etc.) for $320,000. All tillable, and we thought we got a very good price.



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kyhayman

10-30-2004 21:13:23




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 Re: OT - What to do with 17 acres.... in reply to Loren-MN, 10-30-2004 10:33:55  
For farming land in farming country thats a really good price. Here land is all over the board. In the county where I live $6000 an acre seems pretty common on bare land, next county closer to the major urban area it may run $30,000, next county south can get a good farm for $1500 with buildings. All depends on the zoning and the housing market. building lots in my home county are running around $30,000 for a 1 acre tract, that county to the east are selling for close to $70000 for a quarter acre, the county the south requires 5 acres and tought to get $25000 for the whole 5.

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Tim(nj)

10-30-2004 18:48:03




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 Re: OT - What to do with 17 acres.... in reply to Loren-MN, 10-30-2004 10:33:55  
We could sell our family farm for $10,000 an acre to a developer . . . . if we wanted. Instead, getting paid for the development rights to permanently preserve it. We can still sell it, but it must stay a farm. Actually works out better. What it"s worth as a preserved farm and what we"re getting paid puts us over the $10,000 an acre from the developers. Gotta have patience though, takes 3-5 years to get paid for your DR. Too bad most other landowners around here don"t have the patience.

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Paul in Mich

10-30-2004 09:57:11




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
Bill, Actually one can do a lot with 17 acres. You don"t say how much frontage it has which would dictate the extent to which you could parcel it out. Still, there are many ways you can farm it. You can put it into hay, vegetables, sweet corn, pop corn, or you could set up a poultry operation. You can raise a whole lot of chickens or turkeys on 17 acres. You just have to remember not to plant them too deep or too close together.

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kyhayman

10-30-2004 08:18:14




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
Before you made the price correction from $40,000 to $4000 I was going to say, if you can cash flow the interest in that location go for it, at $4000 an acre that advice certainly doesnt change. There are many variables to be considered, utilities, zoning, etc but 'land in location' is priceless. I bought 2 (5/7 acre) tracts 4 months ago (at auction) of class VI land, rocky, unfenced, covered in scrub for $6300 and acre. Planned to use one for access to another tract and then sell them, maybe over the next 5 yrs or so. Guy offered to double my money and build me a county spec road in to the tract I wanted access to so I sold it, still makes my head spin.

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Dug

10-30-2004 08:02:27




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
I've looked at buying and splitting land, but the key point to consider is the amount of money it takes to actually develop the land. Initial impact studies, zoning, meeting city requirements for roads (many will require upgraded road with curbs, very expensive) upgraded sewers, etc. On the other hand, simply buying it and waiting for the value to increase then selling to a developer is a more reasonable financial option if funds are limited. The drawback is your reward will be substantially diminished.

In your case, it sounds like you just want to have a little land to toy with, if that's the case, go for it. Just be sure you have ample income to cover your costs without depending on an income from the land.

Dug

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rustyfarmall

10-30-2004 06:56:20




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
The only way you will come out on $40,000 dollar land would be to develop it yourself, build houses, and then sell those houses. That would be a real haedache unless you are already in the house building business. I think I would leave that one alone. Buy the half acre with the small house, move in, and then watch the market. I will bet that in just a few short years that half acre will be worth considerably more than you paid for it, and then you can start looking for your farm.

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Coloken

10-30-2004 06:54:01




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
40 grand per acre?...Miss print??? At 6 percent that would take 2400 dollars per acre just to pay the interest. You are talking about farming not a shopping mall in down town Chicago.



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farmerboybill

10-30-2004 07:00:32




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 Re: OT - What to do with 17 acres.... in reply to Coloken, 10-30-2004 06:54:01  
Sorry, misprint. Arghhh! Curse you, disobediant fingers! It's 4 grand...



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Jay (ND)

10-30-2004 07:50:00




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 07:00:32  
ok - 4 grand, that's WAY saner than 40. I take back my original comment. You are only borderline nuts ;)

At that, I would go for it assuming you can rezone and put in the utilities at a reasonable rate.

Crop? I think I would put something on it that you can grow and harvest with a minimal amount of equipment. I mean, you probably don't want to buy a bean combine for 17 acres. What comes to mind is alfalfa. In particular, organic alfalfa. I think your market will come to you. There are a tremendous amount of people that are willing to pay a huge premium for organic. I think it can be profitable, but you have to do it different than the guys around here do. You have to control your weeds by regular mowing and/or tillage. They look more like thistle plots around here.

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buickanddeere

10-30-2004 07:19:38




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 07:00:32  
At $4000.00 per acre buy it. And set one of those late model double wides that look like a decent house. Live there until the developers are banging on the door and offer serious bucks. Then move out and up. Either take the double wide with you or sell it. If you build a house it will be a liability rather than an asset on the property. If you can get zoning for a summer tent camp ground and golf course/driving range/mini putt, all the better. The thin edge of the wedge is in to zone it for future development. I can't believe I just said all that. Everytime I hear of Toronto I remember that it is built on 1/2 of all of Canada's Class 1 farm land. And curse the greedy developers who paid off the politicians to pave over cropland.

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Jay (ND)

10-30-2004 06:37:35




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:22:56  
I mean this in the nicest of ways - You're nuts!

I think there is only one crop that can be profitable on $40k an acre land. Right now I think we import a lot of it from Mexico and Columbia. If the land is worth that much per acre sold, it must be renting for $1500 - $2000 per acre? There again, what could you grow to make any money?

Can you get a return on your $$$ after you rezone, run the water and the sewer? If you can make a decent profit, I would do it. But if it's skimpy I'd run.

I have no advice on crops. I have heard of people renting out garden plots to city dwellers though. You could seed grass roads in it for access. Just a thought.

Have a great day.

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farmerboybill

10-30-2004 06:59:10




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 Re: OT - What to do with 17 acres.... in reply to Jay (ND), 10-30-2004 06:37:35  
You don't realize the value of land around Madison. My landlord just paid 6 grand an acre for crop ground. They're selling 1/2 and 1/4 acre improved lots around here for $65000. 4 grand an acre for crop ground around here is actually a song. Rent is going for 120 to 175 an acre. As I said, it's rather hard for a young guy to get in without lots of help from parents and grandparents.

I wouldn't be making lots of money off running it. that would come with selling it, like you said. I just wanna run it to keep me sane... Err insane, no, definately sane... Oh Never mind! :-P

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dkasey

10-30-2004 23:27:36




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 Re: OT - What to do with 17 acres.... in reply to farmerboybill, 10-30-2004 06:59:10  
Buy it. They aren't making dirt anymore. I failed to buy a small parcel (10 acres) for $30,000 six years ago. Today the same parcel went $100,000. There are 2.5 acres aross the road for sale asking 1.4 million for it, just land, zoned residential, no buildings. This was vineyards in Southern Calif.



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