jflournoy
Active Member
Getting more and more difficult to determine what is a "reasonable price".
Land prices / insane!!!
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Getting more and more difficult to determine what is a "reasonable price".
Thinkin Rut
PMA Member
I'd guess if disease and laws don't kill the demand, you'll be spot on. Of course, then you have the economics that will come into play. The national debt scares the bejesus out of me...124% of the GDP. Definitely won't get there in a straight line...or will it?
Wi transplant
PMA Member
I think you can factor in the " wolf" effect in the coming yrs also. The states of mi, wi, mn, wy, mt, and others are having there deer and elk population decimated in certain areas . Some of those sportsman are going to be looking for there own pc of ground for decent hunting for themselves and families futures. And the land in southern iowa is priced comparable to lots of other states in midwest ! Might create a large buyer pool to keep prices climbing! As we all know people will spend money on there hobbies !!!!!!
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cash rent for good farmground here is 3-400/acre.... I know guys paying $100/acre to lease (dont get me started)... A 27 acre piece of literally a waterway, sold for 310,000 to a NonRes... I kept telling the wife I wanted to buy, but we cant pencil it out to make sense with 2 little kids- so more than likely we are done buying but sitting on some gold mines with what we do own.
northcedar
Well-Known Member
That's an interesting point, but my first thought was, who will buy their up north farms void of nearly all wildlife other than wolves? Most people would have to sell in order to relocate.
sep0667
Land of the Whitetail
hesseu
Well-Known Member
"Once in a Lifetime"....oh my...
I don't really consider Earlham southern Iowa. Different ball game that close to 80 or Des Moines
Side note: when I bought land…. Corn was $1.50. I had no one that wanted farm my land. I put 35% down & interest was like 7.5%-ish. I bought it when guys said “2-3 years ago - your farm would have been Half the price u paid!!” No income really. It was negative income cause I spent $ fixing it up. & I had to infuse all of the payments from my income. It was TIGHT!!!! I’d say it was tough for 2-3 years. I made property worth way more with work & investment into it. Market went up some…. It went from a “good farm” to “great farm” & a dude paid me “great farm price”. That was the start 23 years ago. Glad I did it. Sucked from $ standpoint the first year or 2. No brainer - id do it again a million times over. Even in today’s market.
I ran a 2020 to 2023 comparison of CRP rental rates and the county average for five southern tier Iowa counties in 2020 was $170.80 same counties in Iowa 2023 $182 = 6.56% change in income.
So average for the same 5 counties land values of $6410 assuming 70% CRP acres and 20% down payment leaves $410,240 loan at 7% 20 years for annual payment of $38,723.75 minus income of $10,192 (56 acres @ $182 crp) plus taxes leaves a deficit to pay from disposable income of $30,131.75…. that is $30,131.75 PER YEAR for 20 years. And doesn’t include any land improvement costs or deer hunting expenses…
So average for the same 5 counties land values of $6410 assuming 70% CRP acres and 20% down payment leaves $410,240 loan at 7% 20 years for annual payment of $38,723.75 minus income of $10,192 (56 acres @ $182 crp) plus taxes leaves a deficit to pay from disposable income of $30,131.75…. that is $30,131.75 PER YEAR for 20 years. And doesn’t include any land improvement costs or deer hunting expenses…
jflournoy
Active Member
You took the words right out of my mouth. That land is priced that way for a home building site close to Des Moines. Not for hunting or row crop.
jflournoy
Active Member
Not sure your source for the $6,410 average value, think that is probably high for majority crp land in southern tier Iowa counties if we're talking about actual recent sales vs. list prices. That said, it's still way high in reality and there's a reason it's tough to find pretty much anything with better than 2.5% roi in southern Iowa these days. And a lot more places are more likely between 1-2% roi. Still some better roi places to be found across the line in northern Missouri, but still not great by any means.
Ahhh the good old days of 4% ROI on combo farms. #makerecfarmbuyinggreatagain
jflournoy
Active Member
Indeed. I remember a listing in early 2021 that was around 4% if you did a hunting lease too. It was unusual then, but seems like ancient history now. And besides, most people aren't buying a hunting/combo farm to lease the hunting out to *someone else*!
Daver
PMA Member
FWIW...the Brighton area farm that Mike Reed of Midwest Whitetail fame hunts these days was purchased by the previous landowner once upon a time and the CRP payment was enough to make the land payment! THOSE were the good old days fellas.
Agree. We also have to add PERSPECTIVE to this….
Is buying stocks (DOW) 38,000 reasonable? Is paying $65k for a new truck reasonable? 30-50% more for a house @ 6-7% interest. Gold at $2k an ounce. Groceries at 30% more than a few years ago. A trip/vacation to XYZ. I would argue all those things are over priced OR over valued. Fill in the blanks with any others…. 75% of those “things” we don’t “need”. But - most WILL spend their $ on. No one needs a $500k house…. Many will and the taxes, heat/cooling, electric, remodel, repair, etc will be a HUGE cost burden. Negative ROI big league. Same with a vehicle. Almost everything is insane right now.
This was my personal thoughts 23 years ago and same today… Cut all that garbage out to the bone. No new vehicles - drive reliable junker. Live in cheap rental or lower price point house. Don’t buy toys. Don’t go on trips. All that stuff. For like 2-3 years. Buy SOME land. (If land is right for you). Pull the trigger on whatever is a “good buy” for that market. Cut costs elsewhere. Buy a farm that needs work. This really isn’t much difference than a house. & a house eats $!!! If ground is going for $6500 & that’s “too high”… try to find a deal at $5500 that’s good but needs some work. Do the work & sell it for $6500. Repeat. This is just one perspective & LAND isn’t for everyone. Just like stocks aren’t my thing. Or fixing a house up (be a disaster). If u r the dude dead set on buying land … find a “attractively priced farm” that can have some work done to appreciate it. A farm that has a nice aerial & some attractive features… GO!
Examples: $500k house… payment: $3k. Taxes: $500. Heat/electric & repairs: $500. That’s $4k a month…. Most of which is GONE.
Vehicle: $65k… payment: $1k? Gas, insurance & maintenance: $700?? Depreciation: $500. $2200 a month - gone. Please don’t get a vehicle on payments if u wanna buy land
.U all get the idea. I agree - prices are nuts. Insane. But…. Always a way.
Heck- I still do this!! This is my ride. FREE. 4 minor accidents (none my fault!
) & either not fixed or fixed with self tapering screws & a saw zaw to cut off hanging parts. 195k miles. 40 mpg. Maybe could sell it for $500. It’s insanely cheap A to Z & I “just don’t care”.
Daver
PMA Member
Agree Skip! ^^ FWIW, every now and then someone will wistfully tell me that, "It must be nice to own a farm...". I will be the first to agree that it is more challenging nowadays to buy larger pieces of land, BUT...it wasn't easy when I first did it. But for years leading up to that initial purchase, we lived in a modest house, but it was paid for, I never drove a new truck until I was 45 years old. We never took expensive vacations, but rather chose less expensive options. I worked a regular job, but also did plenty of moonlighting doing construction, farm and maintenance work, etc, etc.
I am reminded of the old Nike commercial, where a grizzled coach is addressing the team in a motivational pep talk of sorts and says, "One man says he can, one man says he can't. Both men are right. Which one are you? Which one are you?".
Not every one will own land...but...you could. In order for that to happen, you may very well have to make some choices, choices that a lot of people don't want to make.
I am reminded of the old Nike commercial, where a grizzled coach is addressing the team in a motivational pep talk of sorts and says, "One man says he can, one man says he can't. Both men are right. Which one are you? Which one are you?".
Not every one will own land...but...you could. In order for that to happen, you may very well have to make some choices, choices that a lot of people don't want to make.
jflournoy
Active Member
I agree, there are a lot of people who complain about land prices and drive a fancy truck, eat out all the time, spend who knows how much on chewing tobacco/alcohol/cigs, always have to buy a new bow every year or two, and walk around the woods decked out in $1k worth of camo. Some disconnect there for sure. The newest vehicle I've ever bought was 10+ years old, I ain't buying stocks at DOW 38,000 or any of that other stuff except for groceries, which are kind of a necessity. I've got a large family so the groceries are a bit of an "ouch" expense the last year or so (more than usual), we're eating more beans and rice.
You make a great point about buying a place a little cheaper that needs some work, then turn around and sell at a better price. A lot easier to find something like that across the border in northern Missouri right now than in southern Iowa, though. With the volume of land for sale in northern Missouri right now, I have a feeling that market is headed towards being a buyers market soon, but in southern Iowa there is still so little inventory I think it will remain a sellers market for the near future at least.
jflournoy
Active Member
Heck- I still do this!! This is my ride. FREE. 4 minor accidents (none my fault!
View attachment 127051
Love it!
My wife and I have always agreed that a vehicle is a mode of transportation to get us from point "a" to point "b" safely and in one piece. We've never looked at vehicles as some sort of financial status symbol. My work truck is a 15 year old Tundra I bought 3 years ago with low miles and still in great condition. My "beat around" truck is a 21 year old Tacoma with 302k miles that I've had since it had 114k. It don't look like much these days, and it's got a lot more creaks and groans than it used to, but the engine still fires up perfectly every time I turn the key and I'm planning to drive it till the wheels fall off.
Hardwood11
It is going to be a good fall!
The very first 80 I bought in Minnesota was $23,000 and it had 2780 in CRP . I thought it was a typo…. I then sold that at a nice profit and bought 228 acres for $125,000 and that had 8500 in income & really good hunting, river going through it . Dang I miss those days.
NW Minnesota, 4 hour drive but it got me in the game & I’ve been active ever since .
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I also had my father in law look at 640 acres, 440 tillable, balance was wooded and some swamp for $200,000. He passed ! That farm would be worth close to 2 million now. Plus about 65k annual in rent!
I want to call Marty McFly & Doc & head back to the future !!
NW Minnesota, 4 hour drive but it got me in the game & I’ve been active ever since .
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I also had my father in law look at 640 acres, 440 tillable, balance was wooded and some swamp for $200,000. He passed ! That farm would be worth close to 2 million now. Plus about 65k annual in rent!I want to call Marty McFly & Doc & head back to the future !!
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