Bankruptcies of the 80s

[woodland]

Have a shot at 800-900 acres touching my home quarter. Fighting with myself whether it is a need or a want. As farma says, schtoopit price. But also right next door....

Go for it. The neighbour gave us some good advice once ...... if it don’t work out ..... sell some or all of it. Or do you have some further out land you could sell to offset some of the cost?

The only parcels we kick ourselves on passing up on is the stuff connected to existing blocks.

Good luck🍀

[DaneG]

In the last 30yrs every piece of land I’ve bought seemed overpriced at that time, but by the time it was paid for it seemed like a bargain!

[Austrian Economics]

The 1970s were a period of rising interest rates, which push up commodity prices and hence the price of the land that is used to grow ag commodities.

Interest rates rose until they hit a ceiling at which almost no business plan could be justified, followed by mass bankruptcies as business borrowing ground to a halt.

We are now in a falling interest rate climate, which is a different dynamic. As interest rates fall, more and more business plans can be justified. The drop in the rate of interest gets instantly converted into a bid on the asset, hence the startling rise in land values. At the same time, all the new players and new technologies that get access to funding result in higher crop yields and a corresponding drop in business profit margins for everyone involved.

As long as interest rates continue to fall, into negative territory if need be, the bankruptcies can be postponed. But as the economy's capital gets depleted by negative interest, zombie firms become numerous; i.e. companies whose profits can only pay off interest on their debt but not the principal.

[STR1]

Have a shot at 800-900 acres touching my home quarter. Fighting with myself whether it is a need or a want. As farma says, schtoopit price. But also right next door....

You’re in your 30s, land touching home quarter, if you can get the money and make the payments.......buy it!! Might be painful at times but............
When you’re 55 you will glad you did.

[makar]

Buy it if you can from fcc interest only principal at your discretion, better than rent.

[Oliver88]

You’re in your 30s, land touching home quarter, if you can get the money and make the payments.......buy it!! Might be painful at times but............
When you’re 55 you will glad you did.

One option out there is the transition loan, which would save 10’s of thousands in interest over the first 4 years on a large mortgage.

[Ab7]

At double the payment of rental prices seems like a good deal to me providing you can cash flow the payments, remembering that the principle portion is after tax money. Have to take some part of that payment out of the farm profitability equation and realize you are also saving for future or retirement.

If general population is expected to park 18% of their paychecks in RRSP accounts plus their home mortgage equity I justify principle payments that way in my mind and separate from the interest portion.

You can always get your principal back if you
Do a refi no biggi😂🤷*♂️

[flea beetle]

You’re in your 30s, land touching home quarter, if you can get the money and make the payments.......buy it!! Might be painful at times but............
When you’re 55 you will glad you did.

That is my thought as well, but alarm bells are ringing in my head about land prices falling off a cliff in the next 5-10 years. I suppose if it is 10 years, it will be close to half paid off.

No guts, no glory!

[flea beetle]

Buy it if you can from fcc interest only principal at your discretion, better than rent.

That is an interesting approach. Could make it a little less risky if things fall off the rails.

[flea beetle]

One option out there is the transition loan, which would save 10’s of thousands in interest over the first 4 years on a large mortgage.

Never heard of that one. Will check it out.