Borrowing money to buy a farm

Muckit

Not buying land with your own money.

Not farming land that you inherit.

Buying land with borrowed money.

Is it a good idea? Is it acheiveable while still remaining solvent and sane?

I'd be interested to hear people's views.

lakill Farm

Muckit wrote: »

Not buying land with your own money.

Not farming land that you inherit.

Buying land with borrowed money.

Is it a good idea? Is it acheiveable while still remaining solvent and sane?

I'd be interested to hear people's views.

Probably not achieveable, unless you go into it in a big way and go into liquid milk production and or the price of the land is below €4k acre

locky76

Muckit wrote: »

Not buying land with your own money.

Not farming land that you inherit.

Buying land with borrowed money.

Is it a good idea? Is it acheiveable while still remaining solvent and sane?

I'd be interested to hear people's views.

A mate was looking at buying land for some part time beef farming and he worked out the payback period at 87 years :rolleyes:, not really doable in Ireland for beef.
Land purchase is fairly darwinian as in the strong get stronger, mainly established big dairy men buying land around these parts.

bbam

lakill Farm wrote: »

Probably not achieveable, unless you go into it in a big way and go into liquid milk production and or the price of the land is below €4k acre

Milk production and 4k an acre don't really happen 
Land will always be priced on a sentimental value rather than based on it's production potentials. The island is just too small.

pakalasa

I think there will be a lot of interest on Agri Land in the near future as a hedge against inflation and the possible break up of the Euro. Such people won't really care about a % return per annum, or even the price of cattle.

Juniorhurler

locky76 wrote: »

A mate was looking at buying land for some part time beef farming and he worked out the payback period at 87 years :rolleyes:, not really doable in Ireland for beef.
Land purchase is fairly darwinian as in the strong get stronger, mainly established big dairy men buying land around these parts.

TBH he is the exact profile of the man that drives the price of land up. He has an off farm income so if he makes nothing only the repayments out of it he is happy as he is left with an asset at the end of the cycle.

BTW I am not criticising him for this as I have bought land on a couple of occasions and this is the logic that I have used to justify it to myself and often had to put my hand into my off farm income to help meet repayments. But sure I'm happy, or at least I tell myself that:rolleyes:.

JohnBoy

it's no different to the established farmer who uses the income from the rest of his land to fund the purchase of more land. the purchased land on it's own would most likely never pay for itself.

PMU

locky76 wrote: »

A mate was looking at buying land for some part time beef farming and he worked out the payback period at 87 years :rolleyes:, not really doable in Ireland for beef.
Land purchase is fairly darwinian as in the strong get stronger, mainly established big dairy men buying land around these parts.

depends where you are,around here its people with motorway money

johngalway

What kind of farming?

Grecco

Get a good off farm job first, then that`ll make the mortgage repayments

Juniorhurler

Grecco wrote: »

Get a good off farm job first, then that`ll make the mortgage repayments

Exactly what I was trying to say at post #6

milkprofit

Is there a tax efficent way to make capital repayments

keep going

the most tax efficent way is through a farming company,all payments are tax deductable but it will be only your neighbours think you own it.the thing is i havent met many fellas that have regreted buying land

Dickie10

sorry to bump an old thread but just had a question on this myself,is it a good tax effiecent way for your money to work?worst case you can sell it if it start stressing you.

Sacrolyte

Sh1t that is an old thread

duffysfarm

is what a good tax efficient way for your money to work?

i think some people are buying land now a they are nervous about leaving money in banks.

if you were to by land at an all in price of €10,000 per acres. Lease this land for €300 an acre. if this lease were a qualifying lease and no tax was payable on the rental income then this could be considered a very good return in comparison to whats out there on offer at the moment

Dickie10 wrote: »

sorry to bump an old thread but just had a question on this myself,is it a good tax effiecent way for your money to work?worst case you can sell it if it start stressing you.

Mad_maxx

duffysfarm wrote: »

is what a good tax efficient way for your money to work?

i think some people are buying land now a they are nervous about leaving money in banks.

if you were to by land at an all in price of €10,000 per acres. Lease this land for €300 an acre. if this lease were a qualifying lease and no tax was payable on the rental income then this could be considered a very good return in comparison to whats out there on offer at the moment

Is farmland renting for 300 per acre?

duffysfarm

???????????. i am not a grammar nazi but i do not understand that comment whatsoever

Mad_maxx wrote: »

Is farmland renting for 300 per acre?

Dinzee Conlee

duffysfarm wrote: »

???????????. i am not a grammar nazi but i do not understand that comment whatsoever

Are lads paying 300euro/acre on long term leases?

And, in areas where they are - is land available to buy at 10k/acre?

Grueller

Dinzee Conlee wrote: »

Are lads paying 300euro/acre on long term leases?

And, in areas where they are - is land available to buy at 10k/acre?

Around here yes to €300 leases but land is €15-20k per acre

duffysfarm

whatever about paying €10k per acre and that been viable or not, i think 15-20k per acre is madness and must have some sort of development potential down the line (i dont doubt that land is making that kind of money in certain areas)

i think that good land is making €10k in certain areas, its just that the auctioneers are not advertising these type of land sales or reporting them in the farmers journal

Grueller wrote: »

Around here yes to €300 leases but land is €15-20k per acre

Grueller

duffysfarm wrote: »

whatever about paying €10k per acre and that been viable or not, i think 15-20k per acre is madness and must have some sort of development potential down the line (i dont doubt that land is making that kind of money in certain areas)

i think that good land is making €10k in certain areas, its just that the auctioneers are not advertising these type of land sales or reporting them in the farmers journal

Unfortunately here in North Wexford good quality land doesn't sell under €15k

Mooooo

The amount of leases making 300 or over are minimal, and they would be in the higher land price areas in general. Avg value in the country is around the 10k mark, avg lease is still down at 200 I think

cute geoge

Any new land for lease bounding any intensive dairy farmer would be E300 here in n.kerry and some of this might not even be tillage type land and good land not bounding a dairy man lucky to see E250

K.G.

I m dont know anybody paying 300 an acre and i am renting land off 7 people.

Grueller

K.G. wrote: »

I m dont know anybody paying 300 an acre and i am renting land off 7 people.

3 leases within a mile of me for €300 up to a top of €320.
All leases from 40 to 80 acres.

Panch18

I dropped out of bidding war at 285 a few weeks ago for 25 acres - it finished at 320 i believe

J.O. Farmer

duffysfarm wrote: »

i think that good land is making €10k in certain areas, its just that the auctioneers are not advertising these type of land sales or reporting them in the farmers journal

Good land in say the west of Ireland is very different to good land in the golden vale so there's what's the definition of good land. Bad land in tillage country could be great land in leitrim.

I doubt there's many places where auctioneers are claiming good land is making on average €15k but there's a lot of similar land only making €10k.

It can happen anywhere that a particular field or farm makes an exceptional price but most people selling will have a fair idea of the general run of it in their area and are unlikely to take much less so if €15k is the price in certain areas you're unlikely to get good land much less.

You may get poorer land which relatively speaking compared to he rest of the country is good land less but unlikely to get the same land less.

PoorFarmer

cute geoge wrote: »

Any new land for lease bounding any intensive dairy farmer would be E300 here in n.kerry and some of this might not even be tillage type land and good land not bounding a dairy man lucky to see E250

Would co-op shares be driving the price though? There are guys travelling 40k from there into West Limerick for a single cut of silage off poor ground and paying well for the privilege.

K.G.

PoorFarmer wrote: »

Would co-op shares be driving the price though? There are guys travelling 40k from there into West Limerick for a single cut of silage off poor ground and paying well for the privilege.

Their cows must be better than mine so

Waffletraktor

K.G. wrote: »

Their cows must be better than mine so

Probably put themselves in a postion of need rather than want.

GrasstoMilk

K.G. wrote: »

I m dont know anybody paying 300 an acre and i am renting land off 7 people.

Tillage guys driving it over 300 around here
Wouldnt be quiet north wexford but near enough
Plus give back entitlements at that
I know because i dropped out of a farm at 280 an acre and it kept going between 2 others

Best of land not far from Ferns last year went for 10k an acre

Say my name

GrasstoMilk wrote: »

Tillage guys driving it over 300 around here
Wouldnt be quiet north wexford but near enough
Plus give back entitlements at that
I know because i dropped out of a farm at 280 an acre and it kept going between 2 others

Best of land not far from Ferns last year went for 10k an acre

The same people I believe are taking land for tillage near me too.
Bales of straw left out in the rain and just not able to get the work done on time with the amount of land farmed.

There must be something else going on.
Are they one of these ones with permission for a solar farm and just looking to keep the number of acres up under them at any price?

Google where they're from and solar farm.

wrangler

Panch18 wrote: »

I dropped out of bidding war at 285 a few weeks ago for 25 acres - it finished at 320 i believe

Tbf the gross output of cows is €2000+/cow and rented land is facilitating that......
but I don't know how tillage famers are doing it or even why!!!!

Grueller

33 good acres today a few miles from here was auctioned. House on it that is liveable for the minute but would ultimately need the price of a house spent on it in time. Yard would be 30 years outdated with an obsolete parlour and housing for 50ish cattle. Slatted unit but again near obsolete.
Brought €670,000.
€20,300 per acre.

Dinzee Conlee

Grueller wrote: »

33 good acres today a few miles from here was auctioned. House on it that is liveable for the minute but would ultimately need the price of a house spent on it in time. Yard would be 30 years outdated with an obsolete parlour and housing for 50ish cattle. Slatted unit but again near obsolete.
Brought €670,000.
€20,300 per acre.

Best of luck with it Grueller!

Grueller

Dinzee Conlee wrote: »

Best of luck with it Grueller!

Haha. I haven't 670 shackles let alone thousand.

Mooooo

Smaller parcels also have more buyers, those that wish to take up hobby farming, possibly more neighbours with which it would be within means of buying, those looking for other assets for cash, people thinking why pay 600k for a house on it's own when you could get one with a block of land etc...

kk.man

wrangler wrote: »

Tbf the gross output of cows is €2000+/cow and rented land is facilitating that......
but I don't know how tillage famers are doing it or even why!!!!

Tillage farming is not just about spring barley anymore. They are beans, maize etc as break crops and cover crops too. They know their stuff with huge acres. They are tied in with millers. The storage facilties are also on scale of a millers yard. They are a few around here with maybe 3k acres. They would have a good stretch owned too. They don't seem to be able to buy ground though.

Large bottle small glass

I have it from two accountants that have a lot of farm inheritance clients, lot of wealthy folk are using agricultural land as a means of avoiding inheritance tax when transferring wealth to their children.

A person with 4 children can transfer over €13M tax free to his/her offspring. Widespread with a certain horsey set in my neck of the woods.

That and being able to get a tax free 3 or 4% return is beating a lot of competition in the current market.

Hard to make a living competing with lads playing around with free money

EvanFahy

duffysfarm wrote: »

if you were to buy land at an all-in price of €10,000 per acres. Lease this land for €300 an acre. if this lease were a qualifying lease and no tax was payable on the rental income then this could be considered a very good return in comparison to whats out there on offer at the moment

At the figures stated above that investment would have a 3% cap rate, a cap rate is your return if you paid cash.

*This calculation is presuming no expenses, 100% occupancy, and no missed leased payments

If you decide to take on debt this may increase your return on investment (ROI) if the interest rate on the debt is lower than your cap rate which is 3%

It's not the place id be putting money at the minute.

Thanks,
Evan

wrangler

EvanFahy wrote: »

At the figures stated above that investment would have a 3% cap rate, a cap rate is your return if you paid cash.

*This calculation is presuming no expenses, 100% occupancy, and no missed leased payments

If you decide to take on debt this may increase your return on investment (ROI) if the interest rate on the debt is lower than your cap rate which is 3%

It's not the place id be putting money at the minute.

Thanks,
Evan

Where can you put it to get more than three percent tax free, probably equivalent to five percent in real terms.
I'd rather be dealing with farmers than most of the house tenants out there

Mooooo

The stock market can average out at 6% but taxation isn't great on it in Ireland unless its thru pensions. If you had money self administered pensions can allow you to invest in housing property and get the rental income tax free I think

wrangler

Mooooo wrote: »

The stock market can average out at 6% but taxation isn't great on it in Ireland unless its thru pensions. If you had money self administered pensions can allow you to invest in housing property and get the rental income tax free I think

Experienced investors might be getting 6% , I'm investing in lowrisk funds and they're certainly not yielding even three percent. As for money I invested before the crash, there's one struggling to get back to precrash levels....... every one was investing high risk then. Pension is doing very well though

Mooooo

wrangler wrote: »

Experienced investors might be getting 6% , I'm investing in lowrisk funds and they're certainly not yielding even three percent. As for money I invested before the crash, there's one struggling to get back to precrash levels....... every one was investing high risk then. Pension is doing very well though

Funds that track the stock market have been growing at 7% I think for the last 20 years, including the crash, those that went in directly after the crash had 20% lift I think. In Ireland tho investing in those you get 41% exit tax and I believe even if you don't exit every 8 years the government take 41% even tho its potential not realised profits

jfh

wrangler wrote: »

Experienced investors might be getting 6% , I'm investing in lowrisk funds and they're certainly not yielding even three percent. As for money I invested before the crash, there's one struggling to get back to precrash levels....... every one was investing high risk then. Pension is doing very well though

About to start a pension myself, mind me asking where you took it out?

Pkiernan

wrangler wrote: »

Where can you put it to get more than three percent tax free, probably equivalent to five percent in real terms.
I'd rather be dealing with farmers than most of the house tenants out there

The US markets have been returning double digits annually since 2009.