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Land prices / insane!!!

I think it's going to take a bit more than a year before the really sweet deals come along. You're going to have to wait until these interest hikes are a reality for newer owners. Once their term rate comes up for renewal either the payments will have to increase beyond the breaking point where the "investor " types decide that interest is quickly going to eat up any increase in land value they've incurred over the past ten yrs. Also once the "recreation " types that borrowed to buy will have to decide if the enjoyment of the land is worth the cost of interest, (the serious will stick it out but the weekenders will bail).
 
If you finance a big chunk pre pay the next months principal to avoid the interest hit on that payment. You can’t be charged interest on pre paid principal.

Print an amortization schedule that shows each months principal and interest amount. Pay the normal payment amount for that month. Look ahead to the following months breakdown and include a second check for the principal amount and include it with the payment. The principal will be less especially early in the loan life.

You just paid 2 months at once minus the second months interest.

Takes discipline but cuts the mortgage in half
 
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JNRBRONC said:
I think most fail to recognize what rec ground out east has been selling for, as I thought I heard PA ground has been over $10K/acre for at least a decade. Seems that $10/K for Iowa ground, with the deer here, is a steal for some people. We are in a global economy, China is buying ground here. :(


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China is not buying ground Iowa. Iowa law forbids international owners
 
Buckscrape said:
once the "recreation " types that borrowed to buy will have to decide if the enjoyment of the land is worth the cost of interest, (the serious will stick it out but the weekenders will bail).
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Spot on!!! Rec ground has huge turnover. Look at rec sale areas vs ag areas (like, “we’ve raised on family on this farmland for 50 years”). I’ve seen good rec farms resell 5, maybe even 10 times. Many that are or could be amazing.

Here’s what happens IMO….


ever been the gym after January 1? For the guys that have religiously gone? It’s annoying!! Gym fills up with excited new folks that wanna get in shape after New Year’s resolution…. They last 30 days and bale. Same thing happens with land. Sounds & looks amazing. Expectations are high. “I’m gonna buy this & shoot giants”. Then it’s quickly realized that’s way harder than imagined. Then the work comes in- all the responsibility. Then the bills don’t stop. The owner doesn’t know how to solve the XYZ problems the farm has. Or after 3 years the dude isn’t smoking booner after booner like planned &…. Ground goes back for sale!! Cycle repeats over & over. Happens with huge farms & small farms …. Expectations to reality being vastly different. Or guys get bored. Or $ gets tight & the hunting land is first on list to go. Long list of reasons but this rec turn over will always be high. Always has been, always will. I love land but it’s not for everyone & the market shows us this continuously.
 
Good quality farmland 85CSR+ doesn't come up for sale a lot here. The good stuff is in pretty strong hands.(and they won't sell, their lifers)
The rec ground here gets sold to people from the city. For 4-5k/acre. I'm not in one of the primo NE Iowa counties, But still have some pretty good deer here.

The high turnover ground here is the really marginal farmland that should be in CRP. That turns over about every 4-5 years.
 
I’ve answered a couple of questions on the pre paid principal practice to shorten loan life. There’s an old, but good, book called Wealth without Risk by Charles Givens that explains this and other strategies. Not a bad read for new investors.
 
Slick said:
Seeing more and more articles like this.....my guess is 2024 for good deals.

www.marketwatch.com

This stock-market strategist says the coming recession could be the biggest ever: 'I recommend prayer'

'I’m about as bearish as I’ve been since 2008,' says Hedgeye's Keith McCullough. He's steering investors to cash, gold and other defensive plays.
www.marketwatch.com www.marketwatch.com
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Across the entirety of May, the fall delivery price for corn at Chicago board of trade averaged $7.31.
Current price for Oct/Nov delivery of that same crop is $6.80 and next fall crop is $6.14. Factoring in grain elevator basis and next fall is currently a $5.72 contract.

Similarly, beans are also off by about 15%.

Every time interest rates rise, the strength of the dollar does too which creates downward pressure on commodity prices. Falling crop prices will certainly contribute to falling land values
 
In regards to commodity prices, traders tried to lower prices just ahead of harvest but now we're seeing upward movement in the midst of harvest. Call me bullish but I think next May's fall corn futures prices will be closer to $8 than $6.
 
Buckscrape said:
In regards to commodity prices, traders tried to lower prices just ahead of harvest but now we're seeing upward movement in the midst of harvest. Call me bullish but I think next May's fall corn futures prices will be closer to $8 than $6.
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Yes, I'm familiar. My family runs grain elevators and I market crops. I should have been more clear on the accelerated drop.

When interest rates rise, the value of the dollar rises with it, which drives down commodity prices on the international exchange. You are seeing more negative pricing pressure than the usual fall harvest as a result of rising rates. That pattern doesn't sound to be slowing either.
 
It will depend on how long interest rates are high? As an outsider looking in, the government cannot afford the astronomical debt ($31 trillion) that we have at a high rate! They will have to lower rates as soon as possible. Will the high rates last?

It would not surprise me if they are looking at reducing rates as early as next year!
 
Hardwood11 said:
It will depend on how long interest rates are high? As an outsider looking in, the government cannot afford the astronomical debt ($31 trillion) that we have at a high rate! They will have to lower rates as soon as possible. Will the high rates last?

It would not surprise me if they are looking at reducing rates as early as next year!
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I was reading stuff yesterday about fed doing a 180 on rate hikes.
 
8bitnes said:
Yes, I'm familiar. My family runs grain elevators and I market crops. I should have been more clear on the accelerated drop.

When interest rates rise, the value of the dollar rises with it, which drives down commodity prices on the international exchange. You are seeing more negative pricing pressure than the usual fall harvest as a result of rising rates. That pattern doesn't sound to be slowing either.
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When speculating grain prices for next year, yes there's so much this that and the other that goes into it. It's far more than I'll EVER understand. No, I have never sold a bushel of corn in my life. Is that obvious yet? :)

So everyone talks about dollar value, interest rates, crop size, exports, and these drive markets higher and lower. I basically get it on a VERY elementary level.

However, I do pay attention to what's going on in the world, and here are the things I do NOT hear anyone talking about.

1) EU fertilizer regulations. Will this cause food shortages and drive demand and higher prices?

2) Fertilizer shortages next year. Where are we on this? Did I hear somewhere in Africa was going to get a plant online to supply the world?

3) Central Banks. The U.N. has now called on Biden and central banks to reverse interest rate hikes and fight inflation with price controls of energy producing companies. Wow, that doesn't sound spooky at all. Will Biden bow down to the U.N.? How does this effect diesel prices and grain markets?

4) ESG scores. If you don't know what ESG scores are, look it up. More spooky stuff. Will ESG scores start effecting farm loans? Have they already? How so and what does that do to grain prices.

5) Climate change. If democrats somehow hold the house and senate, it will be pedal to the metal on destroying the hydro carbon industry. That will necessarily drive fuel prices through the roof. Given OPEC's obvious disrespect and distaste for Biden, they will continue to jack with oil prices, only guaranteeing a crippling fuel shortage in the States of America. What will THAT do to grain prices?

I don't believe all this can happen in a year, but any one of these things swinging the wrong way could easily cause higher grain prices (but below input cost). Consider the trillions of dollars created to thin air recently and we know the inflation problem isn't going away anytime soon. If I was a grain speculator, me thinks I'd bet my money with Buckscrape and his $8 corn prediction. Just my 2 cents.

OK, go ahead and blow me up now. :)
 
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Biggest variable right now is the war in Ukraine. Who knows what will happen there. It ends, prices come down greatly. It keeps going, prices stay high.

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