Mortgage rate direction?

[AlbertaFarmer5]

I am still paying and will enjoy the lower floating rate for the time being.

What do you define as the time being? Before you lock in?

My issue is that floating is higher than 5 year. If the market is working that tells us that investors/banks see lower rates going forward.

[Oliver88]

Doesn't really matter what the rates are if you are a 14000 acre farm and 18 million of debt or a 24,000 acre farm and 40 million of debt.

Those that get scammed into a lease would have debt over and above mtg debt and at higher rates.

Interest is a slow bleed that can get of control very fast if not managed properly or the farm is not profitable. Lowering interest rates any further will just drive up prices of certain things. I sort of wished they would have left the rates as is instead of the last change. I am still paying and will enjoy the lower floating rate for the time being.

As to the opening numbers, just throwing them out there as I don't think anyone in the right mind would have such a level of debt to acre ratio. If they do, then I would be very worried.

$1285 per acre debt and $1666 per acre debt seems like a banker might be asleep at the wheel?

In your opinion what is an acceptable debt/acre or debt/equity ratio?

[mbratrud]

The 5 yr rates are appealing, but a 10 year at 3.4 sure offers security for a long time.

[blackpowder]

$1285 per acre debt and $1666 per acre debt seems like a banker might be asleep at the wheel?

In your opinion what is an acceptable debt/acre or debt/equity ratio?

Your banker would be happy to share those ratios. Those numbers would possibly fly here.

[tweety]

$1285 per acre debt and $1666 per acre debt seems like a banker might be asleep at the wheel?

In your opinion what is an acceptable debt/acre or debt/equity ratio?

Those things like debt/equity, ROI etc don't matter in farming.

[farmaholic]

There is no doubt that I have missed the cheapest time to borrow money in my farming career.

Nothing like lazy capital. Land cost inflation/appreciation has taken a bite out of any resources kept to purchase new land.

If the right opportunity presents itself maybe its not too late..... other than being alot more expensive to purchase the asset(it's cost).

Schtoopit.....

[farmaholic]

Why are u saving ??

Better to borrow than to save !

A kid with zero savings paid 525,000 / quarter this past spring !

He says he has nothing to loose !

For:

The right stuff
The right place
The right time

Otherwise. I don't care.

The next land I buy might only be a burial plot and then maybe not.

On a per acre basis burial plots are very very expensive....lol.

Take care wiseguy.

[Horse]

Why are you saving.. Because there comes a time you cant do or dont want all that work,then you become that hated species,,,,the LANDLORD.
Nice to finaly have a bit of a bankroll in your pocket,instead of a mortage that needs paid.

[Richard5]

$1285 per acre debt and $1666 per acre debt seems like a banker might be asleep at the wheel?

In your opinion what is an acceptable debt/acre or debt/equity ratio?

This is what is on my corporate financial statement package.

Working capital ratio - At least 50%.

Target goal of debt to equity would be less than 40%

% owners equity - greater than 70%

I think all of these measurements depend somewhat on ones age and level of comfort. My accountant tells me that he has a number of clients that farm 1500-3500 acres that consistently put up accrued net income earnings of $125-175 per acre and 8000-10000 acre farms that can't get close to that. That being said, accountant also claims they work with large farms that manage the business very well and profit margins are consistent or even better proving the economies of scale debate.

Size doesn't always matter, its all management which is a broad term. Imo, its a slippery slope with every increasing technology and sales pitch to drive the latest and the best. Many farms don't have enough annual earnings to support the spending. Its only a matter of time before more and more fall.

[burnt]

For:

The right stuff
The right place
The right time

Otherwise. I don't care.

The next land I buy might only be a burial plot and then maybe not.

On a per acre basis burial plots are very very expensive....lol.

Take care wiseguy.

Very, very expensive, but you have to acknowledge that it is, relatively speaking, a lasting investment...

And one that you will never see depreciate.

And that's a fact.