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Post by kevlar on Jan 10, 2023 9:32:49 GMT -6
I was thinking that the way the economy is looking and the general costs of farming being what they are that rent prices would be fairly flat, boy was I wrong. Some just came up for rent around here, we took on just one quarter of it, but we got it for pretty much the going rate here, which is still too high in my opinion/experience, we lost money last year on some rented land that we aren’t paying as much for. The guy we’re renting from said he had offers on some land that is swampy and not all that great for $80 an acre more than we’re paying. Makes a guy wonder why I’m trying to farm when you could rent it out for these prices. I said years ago that we’d see people not getting paid their rent when there was a big run up in prices, but I was wrong. The difference then was those paying higher prices also had several other prosperous side businesses, the people offering these prices now are strictly farming, I wonder if that will make a difference?
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Post by meskie on Jan 10, 2023 11:12:46 GMT -6
Only way I can figure is they are subsidizing the rented land with stuff that’s owned and paid for. Either that or some guys use different math then me.
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Post by cptusa on Jan 10, 2023 12:17:59 GMT -6
Land rents crazy here too. I know of some verified at $450/acre.
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Post by kevlar on Jan 10, 2023 15:23:35 GMT -6
Holy crap that’s nuts! At these prices an average crop would be considered a disaster. Not sure what people get out of doing this.
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Post by cptusa on Jan 10, 2023 16:20:53 GMT -6
Takes around $600/acre to stick corn in the ground, $450/land rent gets you to $1050/acre total. 225 bpa at 5.44 new crop price is $1224. It does work.
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Post by kevlar on Jan 10, 2023 17:52:00 GMT -6
Does that $600 include machine costs, fuel etc?
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Post by Oatking on Jan 10, 2023 19:17:35 GMT -6
I know of one guy close by grossed over 2000 dollars an acre with his corn crop this past year. The stars aligned big time for him. Over by my area it would be safe to say rent is anywhere from 80-160 depending on land and relation of land lord to renter. I think It makes more sense now to rent than buy land and short term leases at the current prices can net some good returns. I thought land rent bidding would turn real nasty this year but so far it has been quiet.
As interest rates rise to 5 -6 % I think some land renters will want at least 200 plus for there land. Interesting thing to watch is when it hits the peak and people start missing payments. Than we may see a slide in prices. Most farmers should have a healthy back stop, but I know its not like that everywhere. It is already happening to folks who took out more than they could handle with there house or car loans.
good on you kevlar for expanding!
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Post by cptusa on Jan 10, 2023 20:14:19 GMT -6
Does that $600 include machine costs, fuel etc? Oh, now you want to figuring in everything? |
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Post by kevlar on Jan 10, 2023 21:55:25 GMT -6
I know of one guy close by grossed over 2000 dollars an acre with his corn crop this past year. The stars aligned big time for him. Over by my area it would be safe to say rent is anywhere from 80-160 depending on land and relation of land lord to renter. I think It makes more sense now to rent than buy land and short term leases at the current prices can net some good returns. I thought land rent bidding would turn real nasty this year but so far it has been quiet. As interest rates rise to 5 -6 % I think some land renters will want at least 200 plus for there land. Interesting thing to watch is when it hits the peak and people start missing payments. Than we may see a slide in prices. Most farmers should have a healthy back stop, but I know its not like that everywhere. It is already happening to folks who took out more than they could handle with there house or car loans. good on you kevlar for expanding! Some of this stuff was going for more than that, and you have to remember, on a good year we might get half the crop you guys do. This is why we’ve had such a hard time expanding, we just can’t make those numbers work. I think most of the people paying this haven’t been farming long enough to see what can happen, but then they will likely just wipe their hands clean and move on. I know one guy a few years ago rented his land out for a big price, he was sceptical I think as well because his rent had to be paid in full in January. |
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Post by meskie on Feb 21, 2023 16:05:40 GMT -6
Had some land sell here kinda locally recently that went for more then $4750/acre. Only know that cause the guys who bid that said they didn’t get it cause they were out bid. You would need some high rent numbers to make that pay.
I guess it makes the land I own not far away from there worth a lot more now.
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Post by Oatking on Feb 21, 2023 18:07:09 GMT -6
Wow, your land is sure appreciating well! Over here in the RRV , land seems to have not cooled off yet, even with higher interest rates. I have concluded that no amount of money will pry land away from some farm families. I think some just want to keep it for the next generation. If land is moving it is behind closed doors and next to no for sale signs .
We are in the 8000 range if a buyer is serious. Not sure that would take it though on good river lot land. Not enough pain yet I guess !! Good thing we have laws to prevent americans from buying our land. Yikes a 70 cent or less canadian to US dollar would make land pretty cheap!
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Post by meskie on Feb 21, 2023 18:19:07 GMT -6
I bought my first 3 1/4s of land 7 miles from there for 10% of that in 2001. This fall picked up a half section right close to my other land for way less then the 400 acres that just sold. It was assessed higher but not by much. I guess i got a deal on mine…
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Post by iamwill on Feb 21, 2023 22:39:09 GMT -6
A couple quarters sold here recently for over 3.1 million each with no pivots included according to fcc. Can rent out for I would guess 550/a, maybe a bit more on a 5 year lease. Not a very good return. Bought my first quarter in 1993 for a little over 1% of what this land brought. Land prices here have went up almost 50% in the last couple of years, I wonder how much farther it can go? At least the seller shouldn't run out of beer money but the buyer may have to start drinking!
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Post by hardrockacres on Feb 22, 2023 8:24:37 GMT -6
I am a bit south of you Meskie and we had land sell this fall at just under 5k/acre as well. This was for a block of 3 quarters and around 450 cultivated acres. Not the best land in the RM by assessment but not the worst either. I see a realtor has another 3 up for sale now with 478 titled / 410 cult acres these are not in a block but all within 1.5 miles and the listing is opening at 1.28mi, offers are open for 5 days in march, with the renter having rite of first refusal on all offers. I expect it to go well over 4k/acre as well even though it is not the best land in the area once the guys over that way try and outbid each other.
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Post by kevlar on Feb 22, 2023 10:47:30 GMT -6
I wonder where the breaking point is? The stuff we bought, if only paid for buy revenue created off of it, technically wouldn’t pay for itself for at least 30 years, likely more if you throw in a string of bad years. So at my age, it’s not really going to make me any money, basically bought it in hopes that the kids will farm. The only bright side is we won’t have to borrow much for it as we worked out a deal with the owner.
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