How BTO's operate

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How BTO's operate

Jan 2, 2018 | 10:34 1 Name:  20180102_101813.jpg
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Bit of an insight into how one large farm operates. Reply With Quote
SASKFARMER3's Avatar Jan 2, 2018 | 10:39 2 I bet that mortgage is done up so tight that ever single thing from first born to last dead is included.

I would of guessed BMO or scotia Bank. Saskatoon.

Go Big or go home.

Follow the money Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 10:48 3 .........here we go again!

Charming enough for ya 101? Lol....Sunday evenings @ 8 RC church basement in the Slum of the Ghetto! Reply With Quote
Jan 2, 2018 | 11:04 4 I missed counting three zeros at first glance. It makes a difference.. Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 11:05 5
Quote Originally Posted by farming101 View Post
I missed counting three zeros at first glance. It makes a difference..
Just a bit. Reply With Quote
Jan 2, 2018 | 11:28 6 It's funny how if or when things blow up in cases like this it doesn't make quite as big an explosion as you would expect Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 11:32 7 Plug 126 million into your mortgage calculator. FCC 's would "only" let me input 100 million.
Last edited by farmaholic; Jan 2, 2018 at 11:36.
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Jan 2, 2018 | 11:35 8 Ouch that gota make the banker restless at night.

I've got a pretty good idea why some of my neighbors cranky. Reply With Quote
SASKFARMER3's Avatar Jan 2, 2018 | 11:43 9 It would be a general mortgage over 30 years and based on 20% down or a 10000000 mortgage.
Easy Peasy nice and easy. Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 11:48 10 The mortgage amount on the title is already 126 million, the down payment on that "all encompassing" mortgage is already made.....if payments are regularly made maybe you can just keep adding titles to the mortgage without increasing it. Leveraging equity. Reply With Quote
Jan 2, 2018 | 11:50 11 Perhaps I missed something in a previous thread, but why is this any of our business, and how does it affect the rest of us in any way? Reply With Quote
Jan 2, 2018 | 12:05 12 In part it is about the continuing concentration of wealth and the impossibility of some areas having a next generation of land owners. Also has a bit to do with succession planning and how you will fund your retirement if you have a next generation you are concerned about. Yes, land is still changing hands but many locals are not in the running. They are totally shut out Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 12:06 13 We gave up a huge opportunity by not leveraging our equity(with in reason), while land prices were considered cheap in comparison to now and very low current interest rates.

Its hard to begrudge someone's success if they had the balls to take the risk!

Edit:

hindsight-- 20/20

foresight--blind as a bat
Last edited by farmaholic; Jan 2, 2018 at 15:31.
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Jan 2, 2018 | 12:08 14
Quote Originally Posted by farming101 View Post
In part it is about the continuing concentration of wealth and the impossibility of some areas having a next generation of land owners. Also has a bit to do with succession planning and how you will fund your retirement if you have a next generation you are concerned about. Yes, land is still changing hands but many locals are not in the running. They are totally shut out
Why are they shut out? Is it because the BTO can get levels of financing that the commoner can't? Or is the BTO somehow making more profit to justify paying higher land prices/rents? Or is it that the BTO is paying unprofitable levels due to all the financing and will soon be bankrupt? Reply With Quote
SASKFARMER3's Avatar Jan 2, 2018 | 12:12 15 Or is it possible the banks bet on a flunky with good accountants etc and joe farmer with a great balance sheet is shit on and tossed out then when the shit hits th fan and Toronto realizes it can’t back a loan to one farmer for that amount the little guys pick it clean.

Ah farming Reply With Quote
SASKFARMER3's Avatar Jan 2, 2018 | 12:16 16 Seen this rodeo before more than once not jealous of borrowed money at all but really are you a BTO or a slave to the Bank. Reply With Quote
Jan 2, 2018 | 12:25 17
Quote Originally Posted by SASKFARMER3 View Post
Or is it possible the banks bet on a flunky with good accountants etc and joe farmer with a great balance sheet is shit on and tossed out then when the shit hits th fan and Toronto realizes it can’t back a loan to one farmer for that amount the little guys pick it clean.

Ah farming
So they are getting financing to pay unprofitable levels, and will not be around for long, so the commoners can pick up the pieces for pennies on the dollar when they inevitably fail, is that correct? Long term, I don't see the downside. Unless in the short term we all try to compete with them. Alternately, if their business model is so succesful that they can be profitable while paying higher prices, what are we doing wrong that we can't pencil that out? Reply With Quote
Jan 2, 2018 | 12:28 18 Actually, SF3, it appears to be the other way around. Reply With Quote
Jan 2, 2018 | 12:32 19
Quote Originally Posted by SASKFARMER3 View Post
Seen this rodeo before more than once not jealous of borrowed money at all but really are you a BTO or a slave to the Bank.
If you owe the bank a 100,000 and can't pay, you have a problem, if you owe them 100,000,000 and can't pay, they have a problem. Checking might be right, it is the other way around.

I tried, I asked our banker if we were in the second category yet. She promptly responded that it will always be our problem, so much for that idea, guess we will keep making payments... Reply With Quote
Jan 2, 2018 | 12:44 20 Bid on the total package, all or nothing is the biggest reason for being shut out

Over half of Canadian farmers are 55 or older. Long term is not an option. Competing against someone who is spreading their cost of living over 40,000 acres and mortgaged to the hilt is a non starter Reply With Quote
SASKFARMER3's Avatar Jan 2, 2018 | 12:47 21 Just saying it is a flawed model. Always history repeats. Most are more profitable per acre than the big dogs .

But again borrowed money never impressed me.

I’ll stay being the littleF$&ker on the block.

Hot and 28 today cheers Reply With Quote
Jan 2, 2018 | 12:54 22
Quote Originally Posted by farming101 View Post
Bid on the total package, all or nothing is the biggest reason for being shut out

Over half of Canadian farmers are 55 or older. Long term is not an option. Competing against someone who is spreading their cost of living over 40,000 acres and mortgaged to the hilt is a non starter
When you say the entire package, is that rent, or purchase? So who is to blame that things are offered as an entire package, the BTO bidding, or the farmer selling/renting?

But, I ask again, if the BTO can afford those rates, why can't the rest of us, regardless of the size of the package? Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 13:10 23 Equity
Financing
Investors
Not everyone is at the same place on the starting line. Some on it, some ahead of it and some behind it. I think comparing a young poorly backed start up with a well heeled generational operation isn't valid. Also, a lot of money poured into ag that never had even a root in ag. Its fucking hard to compete with cash(in some instances). Even if that cash was used as a base and then the equity in land it bought got leveraged.

But as saskwheatking likes to point out.....land owners really don't owe young farmers, or anyone for that matter, anything.

But I still don't like it. Reply With Quote
Jan 2, 2018 | 13:21 24 Blame? It is just the way things are. I'm talking purchasing. The whole package deal is a tactic used by realtors and BTO's to eliminate competing bids for a smaller chunk. It's appealing to the guy who is selling out too. One check with an amount written on it for more than he was ever imagining. No hassles.

It's bad timing. As mentioned more farmers than ever are nearing retirement.
Tell a farmer who is near retirement that he should mortgage his land so that he can buy that section next door for 2 million.
But to each their own. Maybe the guy retiring lives a simple life and is going to give it to his kid anyway.
Or he is going to help out on the farm till his health is gone. Go for it I guess Reply With Quote
Jan 2, 2018 | 13:39 25
Quote Originally Posted by farming101 View Post
Blame? It is just the way things are. I'm talking purchasing. The whole package deal is a tactic used by realtors and BTO's to eliminate competing bids for a smaller chunk. It's appealing to the guy who is selling out too.
I guess I'm coming from a different perspective. I can't see why the seller would want to eliminate competing bids and accept less for an entire package. Locally, sellers break the land into as small packages as legally possible. Subdivide out 7 acres and sell them for half of what the quarter sells for, subdivide further along any natural boundary if possible. sell that piece for 3 or 4 times the per acre price of the whole quarter.

Perhaps I'm just jealous that there is farmland for sale in your area, regardless of price or size. I'd mortgage everything to have a chance to buy a package of connected actual farmland if such a thing existed ( and came up for sale) around here. Reply With Quote
SASKFARMER3's Avatar Jan 2, 2018 | 13:44 26 I must be missing something how can you BTOs not retire and still keep your land.

Why sell, property is cheap in Florida or Cabo or Hawaii compared to Sask farm land. Go buy it.

Plus realize after 80 your not spending what you have because your age is not allowing you to do the things you use to do.

Retirement is 50 to 80 then face it as you approach 90 things change Reply With Quote
GDR
Jan 2, 2018 | 15:32 27 [QUOTE=farmaholic;366550]
But as saskwheatking likes to point out.....land owners really don't owe young farmers, or anyone for that matter, anything.


Here is my take on that statement. There aren't many retiring farmers that were not helped by their predecessors. Anyone that thinks it's hard to loan money in ag now, it was a whole lot harder in the past. Land and equipment may have been cheaper back then but no one had any cash then. Most have taken over family land or at a minimum were given stock / equipment / seed whatever. Pay it forward.

Going way back remember the land was given to the homesteaders (with conditions). The first few generations got that land for free but now our generations and the next are and will be paying the natives for that free land.

Biggest reason to give next generation a chance is because if you don't who will? If ag has been good to you, you should be good to ag not investors.

No one should be entitled to anything but everyone should be shown opportunity! Reply With Quote
Jan 2, 2018 | 16:00 28 [QUOTE=GDR;366561]
Quote Originally Posted by farmaholic View Post
But as saskwheatking likes to point out.....land owners really don't owe young farmers, or anyone for that matter, anything.


Here is my take on that statement. There aren't many retiring farmers that were not helped by their predecessors. Anyone that thinks it's hard to loan money in ag now, it was a whole lot harder in the past. Land and equipment may have been cheaper back then but no one had any cash then. Most have taken over family land or at a minimum were given stock / equipment / seed whatever. Pay it forward.

Going way back remember the land was given to the homesteaders (with conditions). The first few generations got that land for free but now our generations and the next are and will be paying the natives for that free land.

Biggest reason to give next generation a chance is because if you don't who will? If ag has been good to you, you should be good to ag not investors.

No one should be entitled to anything but everyone should be shown opportunity!
What goes around comes around, some tend to forget that it needs to work both ways. A favour provided decades ago still needs to be repaid to someone else someday in order for the concept to work.

It is easy to look back at what sound like the good old days, and pretend that if i'd been born much sooner, I would have taken full advantage of the endless opportunities. But realize that in reality, the opportunities were there because no one had any spare capital or access to cheap credit. And were already too busy working their tails off. Reply With Quote
fjlip's Avatar Jan 2, 2018 | 16:07 29 "Retirement is 50 to 80 then face it as you approach 90 things change"

Several neighbors never made 65! Retirement never happened for them. Uncles QUIT at 50 and 55, had 20 years of a NEW life off the farm. 70, 80, 90 there is NO guarantee. Most are NOT healthy enough to enjoy much at 90! If farm is not passing on, MAX cash is king for your beneficiaries Just like any auction, you HAVE to pay more than everyone else to win the prize. We always paid more for what ever was purchased. Reply With Quote
farmaholic's Avatar Jan 2, 2018 | 16:36 30 You make some good points AF5.

There was some chances missed here in the time frame from when I decided I had enough to when a fresh set of legs decided this is what they wanted to do. And since 08 prices have gone parabolic. And like I've said before, I think I can afford to be wrong(pay too much in the threat of a land price correction) if it's the right piece(s) of dirt. And before someone pipes up and says anything about me having my fill and then wanting to take more on now that there's what appears to be a commitment from a new torch bearer....look at the trend. Unless there is an end to efficiency gains..... seems there has always been the ability to farm more easier as the decades passed.

Also, there was very little land changing hands when I was young..... it was what I called a lock down. Everyone had their patch and it always kinda seemed to just stay that way. Sooner or later things broke loose, and here we are. When I got in I was able to buy a quarter beside the yard from my uncle.... no real deal at all, in fact prices fell after that(like I haven't reminded you guys enough already...lol) At the same time I bought some from my Uncle-in-law...again no real deal(at the time). Then bought the rest from my Uncle-in-law and after that picked up bits and pieces as things started to loosen up.... annexing land into the Slum of the Ghetto.

At today's values.... it sure doesn't feel like an "opportunity" to me... in fact like 101 pointed out, I am probably out of time and my whole attitude would likely be different if there wasn't someone around to pass the torch to.
Last edited by farmaholic; Jan 2, 2018 at 16:58.
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