50 year farm mortgage would it be insane or logical for farm families?

[the big wheel]

What we ve been seeing happen to many farms is that the costs are so high and revenue
so inconsistent especially with failed programs such as crop insurance and agristability that many farms welcome the high land prices just so they can sell off some to keep going or attempt to get out with something or at least still not owing. Many times the sell comes with a ridiculous land rent back to keep farming. So would it not make sense for these farm families to have a better chance at keeping their land and paying payments that resemble the crazy land rents? Wouldnt that keep generations of a family more probable and also allow the farm to benefit from the increasing values? As it is its more than bullshit that investors who dont farm get more value from owning the land than the ones doing the labour and risk of the work?l Theyve just increased house mortgage length so why not farmland?

[foragefarmer]

I'm all for the family farm surviving and thriving, but the problem is that a 50 year amortization period could actually drive up farm land values.

[BTO780]

Why not simply farm your own land, improve it, instead of participating in this high rent high land price game.
I personally think it’s pointless anymore to even consider renting land. What are the odds you “may” but it someday? You’ve put huge dollars in it for someone else to say thank you. Spinning tires to say you’re farming more is ridiculous. There isn’t enough in it anymore.

Buy more, rent more, buy more machinery, I don’t know folks something doesn’t make sense anymore.

Each farm to their own!

[the big wheel]

No I dont think it would, what it would do is transfer the power back to actual farmers. your statement confirms its a market for investors more than farmers currently. theres things could be done also like limit it to a certain number of quarters etc. There is no way it wouldnt help the chances of intergenerational transfer and farm families continue. limit this to farm operations only.

[the big wheel]

Why not simply farm your own land, improve it, instead of participating in this high rent high land price game.
I personally think it’s pointless anymore to even consider renting land. What are the odds you “may” but it someday? You’ve put huge dollars in it for someone else to say thank you. Spinning tires to say you’re farming more is ridiculous. There isn’t enough in it anymore.

Buy more, rent more, buy more machinery, I don’t know folks something doesn’t make sense anymore.

Each farm to their own!

Thats what my point is why not create at least a chance for saving what you have?

[BTO780]

Thats what my point is why not create at least a chance for saving what you have?

I understand what you are saying. It’s always a guessing game as to where we can try and predict commodity prices, but we sure can predict all the costs.

Hate to say it but farms should have been paying down debt in the good yrs not adding to it.

[bucket]

Land values are bringing out the family crazies that think they are or have missed out on something. Hear it from lots of generation planners. It is not always the investors phucking things up.

[Old Cowzilla]

Aren't 50 year mortgages already happening dad pays of farm and sells to son for retirement money. Oh wait everybody thinks the son or son's where gifted the farm

[furrowtickler]

We lost 700 rented acres to Monnette this year . Absolutely never even looked to replace it let alone expand this year . Numbers simply make no sense at all to chase rented land in this area for us for a few years .
will focus on other improvements like the tile project , do more deep ripping in certain areas and work on eliminating the few salinity areas on our own dirt .
Pay attention to keeping costs down and split fert applications if needed.
Been through a few time periods like this before .
A few better marketing decisions along the way can make up for trying to farm a few more acres at break even forecasts the next few years .
There will be opportunities after a few years to pick up land probably more reasonable than now . Always has been after a run like the past few years .
there is a saying , not exactly sure how it goes but “ more farms go broke after good times than after bad “ . Some truth to it probably

[furrowtickler]

The deep ripping project two fall ago showing very good results in both hard pan headland areas and a few big shallow clay sloughs . We had a fair amount of water last week, close to normal, and a few areas that we would never seed typically till mid June or not at all will be easily seedable in May for the second time in our farm’s history. Those areas , about 80 ac total produced about 3 x our field averages . Sure helped maintain a somewhat decent crop on what otherwise would have been a poor crop in those fields .

[Marusko]

What's the point of a 50 year mortgage? make the payments more affordable right? Extending the amortization has diminishing returns the further out you go.


1 million dollar loan at 5.5% interest
for 20 years, annual payment 82,546, total interest 0.650 million
for 30 years, annual payment 68,135, total interest 1.044 million
for 40 years, annual payment 61,902, total interest 1.475 million
for 50 years, annual payment 58,781, total interest 1.939 million

So to go from 20 year to 30 year, your annual payments are 14,411 less per year
but 30 year to 40 drops the payment by only 6,233 per year
40 to 50 is only 3,121 per year

and look how the total interest balloons at each step
The effect gets worse with higher rates

For those of us who read pictures better than words, look at these interest curves






when I see these numbers, the answer to me is no, a 50 year mortgage doesn't make sense. You're farming for the bank, not yourself. You've made a huge commitment. Huge risk if rates go up when you go to renew.

Many times the sell comes with a ridiculous land rent back to keep farming. So would it not make sense for these farm families to have a better chance at keeping their land and paying payments that resemble the crazy land rents? Wouldnt that keep generations of a family more probable and also allow the farm to benefit from the increasing values?

Farming land doesn't even cover the interest if mortgaged at today's values. For cashflow, it still makes more sense to rent. But if your payments are equal to what rent is, it makes sense to own it - having the risk of still needing to make the payments through poor years (while renting you have the option to walk away).

Are you talking about these investor deals with groups like Area One and Bonnefield? I've wondered how the rent arrangement works with those. A few years ago I heard of one farmer 20 miles away having to pay something like 250-300/ac in rent to some investor company, when market rent was 100-120/ac. Though I've heard a lot of things that turned out to not be true. Never heard if that was true or not, and of course it could be some kind of rent-to-own deal which changes the perspective.

[SASKFARMER]

It would drive up land values. Its like renting till you Die. but some day you will own it.

[makar]

Longer the term the higher the payment due to interest, a 25 or 30 year mortgage payments aren't that much different.

[furrowtickler]

It would drive up land values. It’s like renting till you Die. but some day you will own it.

Don’t bet on it , there is always someone with more money around the corner . No matter how wealthy you think you are
Blackrock through certain farms would out bid any farm in n western Canada in a blink of of an eye, even the most lucky well of farm anywhere instantly

[dalek]

How do the 100 year farm mortgages in Holland work? Kinda seems to me that there isn’t much difference between that and renting from the central bank/government