Iowa land sale

[buckdeer1]

This really a great deal for the future.I'm glad they were able to do it.Looks like some great land

Over 1,900 acres of Garst farms sell for over $19 million

The eight tracts of Garst family farm land sold to five local farmers in a very active day of bidding.

www.agriculture.com

 

[SwampCat]

Does farming in that country have a return on investment that would ever cover the cost of that land?

 

[buckdeer1]

They have 200 bushel corn where dryland in lower midwest is closer to half

 

[Howboutthemdawgs]

Sad to see all the big tracts broken up

 

[Mortenson]

At least it was bought by 5 locals. Better than Gates or a land investment fund!

 

[SwampCat]

They have 200 bushel corn where dryland in lower midwest is closer to half

So what is the profit margin after all expenses on 200 bushels of corn?

 

[buckdeer1]

Depends on several things but the price of land usually correlates with the depth of topsoil and I think Iowa is around 20ft or something crazy and Kansas average around 3ft for comparison. Could even depend on a bug showing up and requiring and high priced spray per acre.Corn is around 5.57 a bushel today and on average a farmer will get 2/3 of the harvest to pay bills and make a profit and landowner gets 1/3.But like I mentioned they will usually yield twice what dryland would do in Kansas.I don't think they broke it up as it was spread over 5 countie or something

 

[bwoods11]

That is expensive, but seems to be the going rate for good crop land. I know there is a lot of money out there looking to be spent on land!

 

[hesseu]

Depends on several things but the price of land usually correlates with the depth of topsoil and I think Iowa is around 20ft or something crazy and Kansas average around 3ft for comparison. Could even depend on a bug showing up and requiring and high priced spray per acre.Corn is around 5.57 a bushel today and on average a farmer will get 2/3 of the harvest to pay bills and make a profit and landowner gets 1/3.But like I mentioned they will usually yield twice what dryland would do in Kansas.I don't think they broke it up as it was spread over 5 countie or something

Ok...so 5.57 x 200 = $1,114.00. Without any labor or material (i.e. any overhead) cost factored in, you're looking at around 10 years to pay off each acre. Not counting taking any $ for yourself. So, the bet is that farm ground will continue to rise, because if it goes down 10% or more it will devastate someone.

Also, with the increasing usage of no-till drills, is depth of topsoil becoming less of a factor?

 

[Telemark]

Ok...so 5.57 x 200 = $1,114.00. Without any labor or material (i.e. any overhead) cost factored in, you're looking at around 10 years to pay off each acre. Not counting taking any $ for yourself. So, the bet is that farm ground will continue to rise, because if it goes down 10% or more it will devastate someone.

Also, with the increasing usage of no-till drills, is depth of topsoil becoming less of a factor?

Prices for corn and land will likely go up. Also, investing your money at 10% is a very good investment.

 

[roymunson]

Prices for corn and land will likely go up. Also, investing your money at 10% is a very good investment.

either way, you're banking on a lot of "what ifs" and banking on that puts a lot of things out of your control. Not a lot of margin left there.

 

[hillrunner]

That's not even the expensive side of Iowa...

 

[g squared 23]

either way, you're banking on a lot of "what ifs" and banking on that puts a lot of things out of your control. Not a lot of margin left there.

10% ROI on the high side, assuming you have all the tractors, implements, semis, etc. For someone to buy tillable as an investment who is only cash renting, the ROI is pretty minimal. Until you sell, but that money is locked up for some time.


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[rocksnstumps]

S&P 500 is up almost 375% in last 10 yrs. Bigger multiplier than any land increases in most areas. Saw the same thing back in the late 90s when stocks were on fire that decade. Land made big jumps in price on the tail end of that great stock market too. If I wanted to diversify outta stocks right now iowa farm land might be a better bet right now than bonds with very low interest return and headwinds with inflation likely rising

As an interesting comparison, couple farm fields just a few miles from my home in NE WI were listed for 10k per acre and recently sold. Dunno actual sale price but easily over 7 or 8 grand. And not near as nice as iowa but there are some mega farms not too far from here within 30 mins.

 

[S.T.Fanatic]

12-14K per acre isn’t that un usual around us. It’s high but not that unusual.


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[Mortenson]

$13,900 took the Class A farm in our hood yesterday. I saw the taxes on it were $54/ac, always going up. I think NE and MN taxes are higher, but IL will catch them someday when they get their act together.

 

[buckdeer1]

I was still glad it was a well managed conservation easement instead of a housing addition

 

[entropyfx]

I got a hell of a buy last summer here in NW Iowa, wish I would have been in a position to buy all 159 acres, just bought 40 instead.

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[bwoods11]

Started looking in 2000, first farm I purchased was $1100 acre. Same area is now $4000/acre or more.

Be patient, this market could change. Too much $$$ out there now, inflation, high crop prices. Not many good buys right now .

 

[Mortenson]

I have absolutely no clue where land prices are headed! The farm we got last year for 11,500 just got a free "appraisal" this week of 13,900. But it's a forever farm (hopefully) and I'd kinda prefer lower prices. High priced land doesn't do us many favors.