Show you ag. appraisal superiority.

[smcgrath76]

GF - that extra valuation is important
because it lets you borrow your way into
trouble (LOL).
AF - around here - if it came for sale -
1200 acres would run around $3 million.
Or if you had it sitting around you could
put that same money in ING and generate
$75K a year (2.5%), or you could put it
into bonds or dividend paying stocks, or
even into cows that generate revenue.

[ALLFARMER]

That's where your wrong....it actually is. The
banks will appraise your land and lend you up to
85% of what it's worth.

Farmers don't have to be asset rich cash poor
anymore.

Not something I would do but I do know farmers
who have.

[ALLFARMER]

Also your using the Income Approach to Appraisal
which in Alberta lots and lots of land won't apply
to. Buy a quarter of land anywhere near an urban
area and try to make the payments on it off the
profit made farming it....not gunna work.

Direct Comparison approach to real estate
valuation is the way things are done.

[ALLFARMER]

SMC buddy don't tell the wife .....it's out little
secret. If your wife ever found out what your worth
it's game over for the farm.

[ALLFARMER]

SMC do you know Wayne and Lucy Sampson
from Lloydminister? Kind of in your area. Wayne
sold Herford bulls for years. Land in your and their
area is getting pretty pricey. Wayne says they've
switched from ranching and selling bulls to now
being property developers.

[grassfarmer]

I think the irony of your lol was lost Sean.

[ASRG]

I live in a area where no way crop production, on it's own, could ever justify the prices.
However, here is how my friend who is in the hay business sees it:
$4000/acre land at 3% interest is $120/year....which he says isn't out of line for good land. He sells the majority of his hay either to Japan or Florida. He owns his own hay plant...and processes for a bunch of growers.
He says land is/and has been appreciating here for the last twenty years at a rate of close to 4%.
He says buying is actually preferable to renting for him. I think he has about 4200 acres in production of his own.

[smcgrath76]

AF - I agree it actually is important.
The challenge of borrowing against a
fixed asset like land is that when it
gets overpriced you can't generate
enough cash flow from that asset to pay
the payment. No one ever borrowed their
way into trouble in bad times.
I don't really know the Sampsons but
know their cattle a bit. Based on where
we live we do have a healthy net worth,
and based on that fact there are a lot
of folks developing property. I have a
large personal conflict here, as I am
not philosophically opposed to free
enterprise or making money, but I am
also not of the belief that all of the
development around here is a good thing.
That said, my thought won't slow it down
and I have a responsibility that extends
as far as what I own and control.
I could probably trim 2 or 3 - 5 acre
lots out of our place and ranch debt
free the way things are right now, but
it doesn't fit my personal ethic.
I think we have missed (or externalized)
a lot of the true cost of some of this
development.
GF - it was ironic, but I see it
happening around here for sure.
To my Wife - Love you (even though you
know our net worth) - LOL.