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Things that make me go Hmmmmm....Land Prices

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Trapshooter1

Well-Known Member
I try to keep in touch with land prices in my general area, I'd say within 1 County in any direction of where I live and some of the land prices I see are just puzzling.

Example there's a tract that's square 1 county over and there is no cleared area just all river bottom. And people are asking 6-10k/acre for tracts like that. It's not just a couple there's quite a few, people think river bottoms are worth that kind of money. (There are definitely more tracts sitting on the market for extended periods of time, and some are still moving)

You'd swear interest rates aren't 7-8% with what people are asking. The all tillable tracts have probably come down I'd say 10% depending on the tract and tract size. But recently still had a neighboring farm bring 191/CSR2 point. For a 77CSR2 farm. That's way way over priced for what it is.

What is everyone else seeing in their areas? Stuff still moving? Prices retreating? I honestly am a little surprised things haven't retreated more with the cost of money. But maybe the slide down is still coming.
 
SC Iowa within last 6 months bought 20 acres for $5500 an acre. (Mostly pasture but joins currently owned acreage)

Up in NW Iowa, bought a 70 acre farm split. Pasture ground --5950, row crop (75csr2) 9500 an acre. Pasture ground, tore fence out, tile was added. (Which cost me about 3k more an acre based on what was needed)..cash rent also doubled on the pasture piece from cattle graze to row crop cash rent price. Short term taking it in the shorts for hopefully long term gains.

Seems land prices are on the up tick up in NW Iowa

SC Iowa seems to be "steady" unless a broker gets a hold of it. Piece next to me sold at auction for 4500 and 2 months later broker listed for 9000. Dropped to around 8k and I assume it sold. Crap ground 20-30 CSR2 and 1 good Creek running through the 20ish acres.
 
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It’s for sure an “odd market” that no one seems to be able to predict or pin down. I was really thinking ag was gonna SLOW big time but it was rescued by a bit of a spike back in commodity prices. Had we headed & stayed at $3.50 corn & $8-9 beans- we’d for sure see it way slower.
The interest rate part is odd. I still think it’s due to so much cash in market yet & still riding that tide & also benefitting from inflation. People got more confidence in general after the election as well.

So- what will change this??? Possible nothing. If confidence stays high or interest rates drop we could see things do just fine or rise a touch. But if stuff like: big drops in commodities or a big economic event - game changing. IF it happens.

The folks asking crazy prices…. I see that too. Usually they just don’t sell or take way less. On rare occasion u find someone willing to spend frivolously but it’s super rare.

I’ve got a couple things done…. 55 csr dirt with some hunting - far more tillable…. Low 6’s. That was sc iowa. Nw of Des Moines- nice mixed chunk for $6’s. I’m not in a big hurry to buy anymore. I don’t personally think most the market is out of control but I also dont think a guy is gonna find “big Bargains” right now either. In very simple terms…. On a scale of 1-10….. I’d give it a 6 of 10 to sellers market or 4 out of 10 for buyers. Fairly steady but edge goes to sellers. Due to: commodities back up a touch, trump in office (which could rattle commodities at some point), confident buyers & a low amount of inventory. I think there’s a trace of thought that interest rates may come down but that’s a tiny detail IMO. Until we have a “big event” - good or bad…. Not really gonna see a big shift in market.

First time farm buyers….. disregard all of this…. Buy if u have the means & find a “good farm” or “good buy” for the times. Don’t be the dude that sits on sidelines for 5 or 10 more years!!!!!
 
Will add a 300 acre pasture piece sold for a little over 1 million. SC Iowa. Which is cheapest per acre I've seen in a looong time. But going to take a bit on return as well.
 
How much are people making these days? Seems salaries are way high. I don't get out much, but the people I know with bachelors degrees make 100+ easy. Throw in 2 salaries and not many kids and its a recipe for strong rec land sales. Some windfall money from the boomer parents passing makes a good down payment.
 
Skip buying a couple pieces in the 6s in the current market I don't see much wrong with that. If it's 60/40 or 75/25 Tillable/Rec. There a return there. Even better if there's Timber value.

It's the 6-10k for just trees. That just leaves me scratching my head. For that kind of money it better be stacked full of Big Mature Black Walnuts to be worth close to that kind of money.
I think I might have to look somewhere else to invest for awhile.

Tesla Stock anyone?
 
A 360 acre parcel with a wildlife easement (pasture only.. limited food plots)was on auction today in Minnesota.

Nice property, solid duck/goose, good whitetail farm . Mostly pasture with brush and cattail slough, some woods, rolling terrain .

$1750 was the highest bid… no sale, reserve not met !
 
$1750…. The wildlife easement scared folks. If it’s anything like wrp restrictions.

Touch over $1m for 300 acres of pasture down here!!!….. that’s a good buy!!!!!!!!!! Slam dunk.

6’s with “good income”. For ease let’s just say it’s 100 acres at $6k, $600k. On 55 csr ground. Let’s say it’s 65% tillable & 35% timber. 65 acres at say “$200/acre”…. $13k. $13k is a 2.1% gross roi. Less after taxes & improvements.
But…. 1) one can depreciate tile, terrace, fence & anything else out there. I’d guess I’d average $50k on that. 2) u might start at $200 cash rent on 55 csr. Could probably get that higher but the other way of getting higher is maybe adding a bit more tile (more $!) & improving the lands fertility/production or putting out for bid & watching the care of the land very carefully (p&k, lime, erosion, etc).
$600k might be able to be bumped to a 2.5-3% roi with a bit of work or diligence. Great roi? Not great. But…. “Fix it up” with all sorts of things. & maybe it could fetch $680k. Probably realistic. Maybe more depending on how good a guy is at improving things. & that can be done in 6 months to a year if done right. So that puts roi at 15%. Doesn’t factor ups or downs in market or other costs that may or may not be there (realtor, interest, etc). Or other incomes like gov funded stuff. Not a bad roi. IF one can do it & knows how & wants to do the work. Actually a fairly reasonable example. 95% of folks do NOT look at a buy like this in those terms though & look at it for a longer term hold. Me included. U start holding for 3-5 years & very likely the market will bring you up with it and some projects thay take time really start to fill out & shine… making the values a good bit higher. Pretty good long term investments IMO.
 
Trapshooter1 said:
Skip buying a couple pieces in the 6s in the current market I don't see much wrong with that. If it's 60/40 or 75/25 Tillable/Rec. There a return there. Even better if there's Timber value.

It's the 6-10k for just trees. That just leaves me scratching my head. For that kind of money it better be stacked full of Big Mature Black Walnuts to be worth close to that kind of money.
I think I might have to look somewhere else to invest for awhile.

Tesla Stock anyone?
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$6-10k for bucks & brush doesn’t make a ton of sense to me. I won’t do it. But - if I was starting out… i probably would. I’d just buy it as “fun $” - let’s say I could somehow spend $100k on that stuff…. I’d do that vs buying a new truck or every other stupid thing many spend money on. It’s kinda what I did 25 years ago. It sounds like I killed it but I paid $115k for 80 acres. Had 0 income. Locals laughed at me for buying it & all my buddies were like “no way I could do that!” Or “doesn’t make financial sense!!!!” But I lived like a homeless person to do it (not much has changed since then).
If I had to think back…. If my SELF in 2000 was the same person around today…. Actually… I don’t think I’d do the $6-10k stuff though…. I think I’d drive further to try to find the $5-6k with a bit of income.

TESLA STOCK !!!!….. it went up like 10% yesterday so I hope you got it last week. :). When I was a poor broke kid with lawn jobs/ biz from 10-14 years old…. I brought my $ to Edward d jones offices to either buy single stocks or mutual funds. I can still tell u to this day what stocks at what prices I bought 30 years ago!!! I did keep doing this til I cashed out of all of them at 21. When I picked single stocks- I usually lost $. Mutual funds did terrible. Now- this was the 90’s so a lot of issues. Not a problem with EDJ or stocks- just the timing of when I played with that. At 21, I cashed out - made about NOTHING .. put in land & made way way way way more $. Stocks are fine for some - just not me, PTSD from young age. Land for sure isn’t for everyone though too!!! If you are an obsessed hunter that has ambition & even one drop of business sense, long term- you can’t go wrong with land IMO
 
JNRBRONC said:
What's a wildlife easement?
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In this case I think it is a USFW easement. You cannot plant any crop, minimal food plots, can’t build on it …

Pasture only , maybe some cutting of hay after August 1.

The land sold after the auction… guessing around $2000/acre .
 
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