Land value Today

JohnBoy

I saw it explained recently how farmers justify the cost of buying land in a business plan.

(no interest for round figures)

Johnnie owns 100 acres, all paid for. Therefore his business has no land costs.

If johnnie buys 40 acres at 10 grand an acre over ten years that's 400k, or 40k a year or 1k per acre, per year.

So he'll never be able to pay that off from the 40 acres.

But he has 140 acres, which reduces his per acre per annum figure to €286 per acre, per year.

Which is much more manageable.


In ten years time he buys another 40 acres, for 10 grand an acre over ten years, should cost him 1k per acre per year but can also be viewed as €222 per acre per year.



Those are figures that can be made work in a business plan.

telly_lover

axel7 wrote: »

..... and that is why I said land is not good value at the moment. Wait until it levels off.


You seem to have a serious gripe with farmers. Why ?

ive already said fair play to those who can afford land at 10 k per acre , im asking questions , that doesnt mean i have a gripe , not at all

telly_lover

bbam wrote: »

Many farmers may be asset rich but have little cash to hand. To be honest your starting to sound more like a troll and less like someone whos looking for Information or willing to listen to the facts rather than your ill conceived beliefs.

if farmers are cash poor , how can they afford to pay 10 k per acre for land

Bogger77

telly_lover wrote: »

if farmers are cash poor , how can they afford to pay 10 k per acre for land

it's obvious in the post you're referring to that it's borrowing the money, over 10yrs.

Troll fail

Tipp Man

From a banks point of view I can't think of any asset that they would lend money for which is more secure than Irish land. There is very little of it for sale and there are always people interested in buying it. It must be the ultimate collateral as it holds its value and it can be very liquid if the bank needs to sell.

It's a no brainer for banks really. Especially as nowadays you'd need what 25-30% deposit. That will more than cover any potential drop in land.

From a farmers point of view the justificiation is you spread the cost over the entire farm - no only over the piece you buy.

I think that land will maintain its value around the 10k mark - certainly for small pieces

telly_lover

Tipp Man wrote: »

From a banks point of view I can't think of any asset that they would lend money for which is more secure than Irish land. There is very little of it for sale and there are always people interested in buying it. It must be the ultimate collateral as it holds its value and it can be very liquid if the bank needs to sell.

It's a no brainer for banks really. Especially as nowadays you'd need what 25-30% deposit. That will more than cover any potential drop in land.

From a farmers point of view the justificiation is you spread the cost over the entire farm - no only over the piece you buy.

I think that land will maintain its value around the 10k mark - certainly for small pieces

was any more land sold in 2002 when land was nowhere close to 10 k per acre ? , the irish economy is in much worse shape than it was back then

bbam

telly_lover wrote: »

if farmers are cash poor , how can they afford to pay 10 k per acre for land

Oh god this is unbelievable. Are you ten years of age of something?
They are often asset rich which acts as collateral for borrowing the money. They then make the payments on the profit of ther whole farming enterprise. It doesn't mean they have a stash of cash to buy the land. It's not a difficult theory, really it's not.

reilig

telly_lover wrote: »

land went up by 15% in value last year which is quite something when you consider the state of the property market in general

Land fell by 35% between 2008 and 2010

telly_lover

bbam wrote: »

Oh god this is unbelievable. Are you ten years of age of something?
They are often asset rich which acts as collateral for borrowing the money. They then make the payments on the profit of ther whole farming enterprise. It doesn't mean they have a stash of cash to buy the land. It's not a difficult theory, really it's not.

i understand all that but farm incomes have not doubled in real terms since 2002 yet land is much more expensive

banks dont lend to non viable business,s no matter how much collatoral they have , they want to see reasonabley impressive earnings potential

telly_lover

reilig wrote: »

Land fell by 35% between 2008 and 2010

from 20 k per acre

Tipp Man

telly_lover wrote: »

was any more land sold in 2002 when land was nowhere close to 10 k per acre ? , the irish economy is in much worse shape than it was back then

Whats the point your trying to make??

you have made several posts which don't seem to have a point to them only that land is dear in ireland - the dogs in the street know this

Assets go up and down in value all the time - quite often the earning potential of an asset is not the reason for the level of price or the change in price - prime topical example is facebook shares valued at over $30 - pure nuts but there was a market for them

telly_lover

Tipp Man wrote: »

Whats the point your trying to make??

you have made several posts which don't seem to have a point to them only that land is dear in ireland - the dogs in the street know this

Assets go up and down in value all the time - quite often the earning potential of an asset is not the reason for the level of price or the change in price - prime topical example is facebook shares valued at over $30 - pure nuts but there was a market for them

my point is not that land is dear , my point is that farmers have a lot more money than they let on , ive no problem with farmers having money or anyone else for that matter , its just funny how most farmers go on about having none , when ryanair is doing well , michael o leary shouts it from the rooftops

land is dear now in historical terms but cheap compared to what it was my making in 2007 but heres the difference

in 2007 , builders were still in the game and banks were a whole lot less prudent when it comes to lending , builders are now completley out of the picture so speculation is no longer a factor and banks are tight with lending to the point of being neurotic yet farmland prices still appears to be on the rise and has not fallen anything like the rest of the property market , this strongly suggests to me that farmers are at least putting down large deposits when spending 250 k on 25 acres , something likes 80% of loan applicants are being turned away right now in the housing market and if commonly held beliefs are true , most of them earn more than farmers , regardless of the increase in the price of beef and milk this past two years , the line about farmers using existing collatoral is a bit spurious as the average farm in ireland is quite small and most people dont like using their house or homestead as security , banks are reluctant to use it either

bbam

I don't think there is any point to all this other than mouthing on about land values and farm incomes but no real point to make.
Well there was some point made about farmers being great about talking about being poor.
Usual farmer bashing nonsense.

telly_lover

bbam wrote: »

I don't think there is any point to all this other than mouthing on about land values and farm incomes but no real point to make.
Well there was some point made about farmers being great about talking about being poor.
Usual farmer bashing nonsense.

thats not farmer bashing , thats a mere observation , farmers tend to potray themselves as poor

Muckit

telly_lover wrote: »

farmers tend to potray themselves as poor

It's all a smoke screen. Minted the lot of them. Where ther's muck theres luck. Mattresses near the ceiling. That woman that had the money in the lining of her curtains was a farmer i bet

bbam

Muckit wrote: »

It's all a smoke screen. Minted the lot of them. Where ther's muck theres luck. Mattresses near the ceiling. That woman that had the money in the lining of her curtains was a farmer i bet

Look. I find if you get large denominations and spread them out well they hardly put a lump under the mattress. We tend to stuff them into the pillows on the spare room too.
OP is right, I thought we could keep it under wraps but the pressure of hiding so much cash is tough.

Farmer Pudsey

Most of the sepulation in land at the moment is by farmers with big farm payments. As the next SP will be acerage based they are willing to buy land for to secure there present level of payment rightly or wrongly. Most of the land sold in this area in the last 2 years has benn bought by a couple of farmers with large SP.

You got to remember about land, they are not making any more of it, you do not have to paint it, most land only only comes for sale once in 3 lifttimes (200 years) and it is only dear the day you buy it.

The price of land is base on milk returns not on beef returns. An efficient dairy farmer could have a margin of 700 euro+/acre this changes the maths completely. However at present it is beef farmers are buying. Also the more land you own the better your ability to generate money to buy more. If you look at it from an accounts view it makes no sence.

Going back to the couple farmers buying neither of them will be selling bubble no bubble.

On one last note how many posting about the price of land being too expensive have ever bought land or there parents????

telly_lover

Farmer Pudsey wrote: »

Most of the sepulation in land at the moment is by farmers with big farm payments. As the next SP will be acerage based they are willing to buy land for to secure there present level of payment rightly or wrongly. Most of the land sold in this area in the last 2 years has benn bought by a couple of farmers with large SP.

You got to remember about land, they are not making any more of it, you do not have to paint it, most land only only comes for sale once in 3 lifttimes (200 years) and it is only dear the day you buy it.

The price of land is base on milk returns not on beef returns. An efficient dairy farmer could have a margin of 700 euro+/acre this changes the maths completely. However at present it is beef farmers are buying. Also the more land you own the better your ability to generate money to buy more. If you look at it from an accounts view it makes no sence.

Going back to the couple farmers buying neither of them will be selling bubble no bubble.

On one last note how many posting about the price of land being too expensive have ever bought land or there parents????

they werent making anymore land twenty years ago either yet it wasnt making 10 k per acre , thats a cliche

tommylimerick

it s only small lots of land making 10k a acre
theres a farm for sale in cork for the last 9 months
with 115 acres with a top bid of 600k at the moment
also a 70 acre farm near me went for 450k
a couple of weeks ago

telly_lover

tommylimerick wrote: »

it s only small lots of land making 10k a acre
theres a farm for sale in cork for the last 9 months
with 115 acres with a top bid of 600k at the moment
also a 70 acre farm near me went for 450k
a couple of weeks ago

was that the one near charleville ?

tommylimerick

dromin in co limerick
would be pretty good land
maybe you are thinking of the place in dromina
charleville co cork that sold recently
mayeb about 5 or 6 miles from charleville
think it had a house on it as well 90 acres
there s plenty of places going about that range

telly_lover

tommylimerick wrote: »

dromin in co limerick
would be pretty good land
maybe you are thinking of the place in dromina
charleville co cork that sold recently
mayeb about 5 or 6 miles from charleville
think it had a house on it as well 90 acres
there s plenty of places going about that range

the place in dromina was a horrible farm considering the region its in

you would see better land in cavan

tommylimerick

ya i was thinking that alright the land in dromina is not up to much
but still i reckon 10k a acre is dear land
i know what you read in the papers is always the dear land
but some of the private treaties seem to go a bit cheaper

i think people can get a bit carried away at auction

telly_lover

tommylimerick wrote: »

ya i was thinking that alright the land in dromina is not up to much
but still i reckon 10k a acre is dear land
i know what you read in the papers is always the dear land
but some of the private treaties seem to go a bit cheaper

i think people can get a bit carried away at auction

7000 an acre is reasonable for average land IMO and most land is by definition average , obviously a dairy farm with facilitys ready to go is worth considerabley more , as is top quality tillage land like you get in louth or meath

bob charles

telly_lover wrote: »

7000 an acre is reasonable for average land IMO and most land is by definition average , obviously a dairy farm with facilitys ready to go is worth considerabley more , as is top quality tillage land like you get in louth or meath

plenty of ****e land in Louth and Meath aswell:D

red bull

The bank sold my land €8.5k an acre did not solve my problem with them, they have deeds to another 20 acres, its criminal what they can do

maxxuumman

Three separate blocks of land have been sold in my area over the last 6 months.
Size of blocks ranged from 31 to 54 acres.
Prices ranged from 13 to 15,000:eek:

bbam

red bull wrote: »

The bank sold my land €8.5k an acre did not solve my problem with them, they have deeds to another 20 acres, its criminal what they can do

There you go.
If you had bought the equivalent value of houses in an estate to rent out they wouldn't consider foreclosing on the at the moment as there is no market, you'd be left with them to work them.
They know they'll always be able to sell your land if the going gets tough so are more than happy to throw out mony against the deeds. The AIB employees still have "sales targets" on loans similar to during the boom times, now they are targeting farmers rather than anyone else.

Sorry to hear your having trouble with the bank, stressful times indeed.

whelan1

bob charles wrote: »

plenty of ****e land in Louth and Meath aswell:D

why do you think we are in the disadvantaged area scheme:)

bob charles

red bull wrote: »

The bank sold my land €8.5k an acre did not solve my problem with them, they have deeds to another 20 acres, its criminal what they can do

Sorry to hear about your case, but why do you say its criminal. Isn't this what you signed up to when you borrowed the money. I know its what I sign up to each and every time I sign the dotted line. If I can't, don't, won't make my repayments you can sell my land. banks aren't not in the business of having to sell land as it gives them unneeded publicity and also they will never make a penny out of you again