cropland hits new high in my area

[Tony Eickman]

There was 80 acres for sale on a special auction on Monday 1/2 mile from my mom and dad's farm.  The bidding started at 6700 and quickly climbed to an astonishing $8200 an acre.  The crop rating is 66 for corn and 60 beans.  It was a beginning farmer who bought with family help which I commend him for but at the same time he will not make money on that farm for a while.  Everyone at the auction thought it was insane to spend that much on land. 

[Nick]

With a 30 year loan at 5% interest his payment will be around $500 an acre. Surely he can figure that out?

[Adam]

heard of an 80 up in IA somewhere that went for $13,500/acre how insane is that?

[Jonathan Dansel]

Probably had a wad of cash to throw at it right out of the gate...I placed a sealed bid on some ground just this morning and will not know until Friday at 1pm if i got the bid...i think i have a chance but there is no way i would have bid what i did if i didn't have a little wad i have saved up the last few years to throw at it on a down payment. I didn't want to spend what i bid but it is an irrigated circle right across the road from our farm and if it sells local to someone else i will never see it come back up for sale in my lifetime...sooooo, I had to put in a "stupid bid" to try to get it. Also the only way i can swing this thing is i have access to all of my father-in-laws equipment, that helps a bunch. Everything i net off of it the first two years will go back into the ground, so i hope to hammer away at it for two years and then refinance it to get the payments reasonable. You never know the situation at hand, he may be in a similar situation...i figure i could buy ground at a much lower price and put it on a 30 year loan, but by the time you pay all of that interest and you figure it back, you would probably pay about double whatever you financed...I'm gonna pay double, but i think i can pay it off in 4-5 years (wife has a good job and i have a growing seed business), then it is free and clear to borrow against to buy my 2nd piece of ground..i want to build slow and not have debt keeping me awake at night. But regardless, i would agree with you...$8200 an acre is insane.

[Adam]

I'd be quite scared of borrowing against land.

[Jordan]

in my area, 8000-9000 an acre has become the norm, not the exception. Its expensive to buy, but I would like to build some equity while gaining complete control of ground rather than just renting.

[Tony Eickman]

yeah they actually had 100+ people wanting to vollunteer bottling the stuff.

[James Kelly]

Probably betting beans will be 25 doallars a bushel in thirty years lol!!

[Jonathan Dansel]

“ Real estate cannot be lost or stolen,
nor can it be carried away.
Purchased with common sense, paid for in full,
and managed with reasonable care,
it is about the safest investment in the world.”
--Franklin D. Roosevelt (1882 – 1945)

Just came across this...makes alot of sense.

[Jason]

I would say that is mostly true but, if it is ever "paid in full" explain property taxes to me. If it can never be stolen what about eminent domain. Just something to think about. :)

[Robert Walz]

I am curious to know why you think eminent domain is a threat. Usually any land taking is for an improvement to the farm like an improved road. Power poles are an inconvenience but do not take up much land. The government taker must pay fair market prices and the price paid for that parcel of land is the strongest indicator of market value.

[Jonathan Dansel]

LOL..i was kidding myself thinking i would be in the "running" for the ground i put a sealed bid in the other day...I bid $2400 an acre for a 140 tract...95ac irrigated pivot with a 2005 valley, and the well and 200hp electric motor had about 30K of work done in the last 15 months....I got BLOWN out by $1000 an acre..wow..and I thought i had a chance. $3400 an acre...guy in the oil business with a lot of cash he wanted to throw at ground....SUCKS!!! I give up on trying to get some ground for now...i will let the land price bubble burst and keep building cash for now.

[Jonathan Dansel]

Interesting, very interesting