Start up capital

futurefarmer

Just something I'm trying to work through,
starting out on rented land have capital of €40000 but I was planning on using this cash as leverage to get a secured CU loan at 5% and see how my enterprise stacks up with repayments and rent or is it better to get a non secure loan at a higher interest rate or should I just bite the bullet and put my money where my mouth is and just use my own money !

Don't think banks would be interested in loaning to me as I have no record and can't put land against it. Would I be wrong ?

Money is for stock and basic machinery it won't take the 40000 but better have than not

TITANIUM.

futurefarmer wrote: »

Just something I'm trying to work through,
starting out on rented land have capital of €40000 but I was planning on using this cash as leverage to get a secured CU loan at 5% and see how my enterprise stacks up with repayments and rent or is it better to get a non secure loan at a higher interest rate or should I just bite the bullet and put my money where my mouth is and just use my own money !

Don't think banks would be interested in loaning to me as I have no record and can't put land against it. Would I be wrong ?

Money is for stock and basic machinery it won't take the 40000 but better have than not

Allot of lads are reluctant to use there own capital. But if it was me I'd stear clear of loans if I could. Why pay interest when you can afford to back it yourself. Long term gain for short term pain.
Best of luck with it anyway and enjoy.

futurefarmer

Thanks for that, definitely using my own capital would reduce costs, might be the way to go

lakill Farm

as someone who tries to obtain credit from banks for farmers ongoing
you need to put a business plan together

banks will give some funds unsecured, ie stocking loan but only to a certain exposure. you would be better off staying away from credit unions. not to many CU borrowing at 5% unless for student loans, mostly 7-10% where as the banks you will get some agri loans at 5% up to 6.5% run of the mill.

unless you have projections and so other basic items going to the bank your only starring down the barrel to been told no, in a nice way, like we will look at it next year after 1 year of farming

just my experience.

futurefarmer wrote: »

Just something I'm trying to work through,
starting out on rented land have capital of €40000 but I was planning on using this cash as leverage to get a secured CU loan at 5% and see how my enterprise stacks up with repayments and rent or is it better to get a non secure loan at a higher interest rate or should I just bite the bullet and put my money where my mouth is and just use my own money !

Don't think banks would be interested in loaning to me as I have no record and can't put land against it. Would I be wrong ?

Money is for stock and basic machinery it won't take the 40000 but better have than not

futurefarmer

Thanks for that, haven't dealt with banks in terms of agri so good to know what basics they need
Will be looking at calf to weanling/finish so the projections for year 1-3 may not be what they really want to see ☺ actually year 4+ won't excite then either !
I can get a cu loan of up to 30000 secured at 5% but probably best go bank route if they would lend unsecured

Thanks again for reply

jimmy G M

futurefarmer wrote: »

I can get a cu loan of up to 30000 secured at 5% but probably best go bank route if they would lend unsecured

Thanks again for reply

Banks wont lend loan €30k unsecured to a "start-up" business in my experience.

Maybe consider using most of your own funds and borrow say €10k. You should be able to get an amount like that relatively easy, and it shows the lender that you are willing to put your own money into the venture.

Keep €10k in reserve for contingencies. The more you borrow, the more interest costs you incur and the more control you lose. You'll have to dance to the bank's tune - ie maybe sell stock at a time you might not want to, to make loan repayments.

mf240

If ya dont need to borrow dont.

Why pay interest on money when you dont have to.


What kind of farming are you doing? Are you working aswell?

futurefarmer

Starting to lean that way ref : capital

Calf to store / Finnish yet to be refined

Yes I'm working under no illusions of doing nothing but surviving

Miname

It's hard to know without knowing your situation but there are times borrowing can be a necessary evil. If you've a plan in place then fair enough, if your starting out and your going borrowing with the hope that it will pay for itself then get ready for a good few lean years. Not trying to sound rude here but 40,000 if done as an investment has a lot better potential if it's to be stuck nearly anywhere other than farming, it's not going to get you far farming for what are pretty small returns.

Dawggone

You've €40k in savings. Can you get a better return from that than the bank loan?
If yes, then bank loan.
If not, use your own funds.

Keep in mind that your euros that are in savings are devaluing at an alarming rate...

Dawggone

Miname wrote: »

It's hard to know without knowing your situation but there are times borrowing can be a necessary evil. If you've a plan in place then fair enough, if your starting out and your going borrowing with the hope that it will pay for itself then get ready for a good few lean years. Not trying to sound rude here but 40,000 if done as an investment has a lot better potential if it's to be stuck nearly anywhere other than farming, it's not going to get you far farming for what are pretty small returns.

Can't understand that sentiment "necessary evil".
Money is a utility, like water, electricity etc etc.

lakill Farm

well if your not able to start making profit and having a stronger cashflow in 3 to 4 years why would you consider it?

banks are realistic

most banks will go up to 60k unsecured

futurefarmer wrote: »

Thanks for that, haven't dealt with banks in terms of agri so good to know what basics they need
Will be looking at calf to weanling/finish so the projections for year 1-3 may not be what they really want to see ☺ actually year 4+ won't excite then either !
I can get a cu loan of up to 30000 secured at 5% but probably best go bank route if they would lend unsecured

Thanks again for reply

futurefarmer

That was meant as tongue in check comment ! Sry

frazzledhome

Dawggone wrote: »

You've €40k in savings. Can you get a better return from that than the bank loan?
If yes, then bank loan.
If not, use your own funds.

Keep in mind that your euros that are in savings are devaluing at an alarming rate...

That's a very interesting point and one that's bothering me since the last devaluation.

We have a cash reserve here and often wondered if a portion should be out elsewhere as its eroding daily? My dilemma is where to go? I'm phucked if I'm investing it in any investment product, been that soldier

Op sorry for derailing the thread. If mods want to move feel free

Timmaay

frazzledhome wrote: »

That's a very interesting point and one that's bothering me since the last devaluation.

We have a cash reserve here and often wondered if a portion should be out elsewhere as its eroding daily? My dilemma is where to go? I'm phucked if I'm investing it in any investment product, been that soldier

Op sorry for derailing the thread. If mods want to move feel free

More glanbia shares!

frazzledhome

Timmaay wrote: »

More glanbia shares!

Co op or plc?

If I were to invest it'd be in Plc, might have enough like to spread risk.

A nice handy 20 acre parcel would be nice but not liquid enough

150 maiden heifers would do the job too?

Timmaay

frazzledhome wrote: »

Co op or plc?

If I were to invest it'd be in Plc, might have enough like to spread risk.

A nice handy 20 acre parcel would be nice but not liquid enough

150 maiden heifers would do the job too?

2bed Dublin apartment for 120k, 1250 a month rent. If that holds up you'd be mad to put the money back in the farm!

joejobrien

Timmaay wrote: »

2bed Dublin apartment for 120k, 1250 a month rent. If that holds up you'd be mad to put the money back in the farm!

:eek: Where would you get a 2 bed in Dublin for that money?

kowtow

Dawggone wrote: »

Can't understand that sentiment "necessary evil".
Money is a utility, like water, electricity etc etc.

Or a commodity, in it's purest sense.

And one which has been created in such a frenzy in recent years that those who have it hold it in quantity must pay to store it somewhere safe for the night, or the week, or the month.

Of course the rest of us will have to wait for paper money to go up in value again, so that land, and the other things we need to run our businesses, cost less of it - and sensible economics might return.

Timmaay

joejobrien wrote: »

:eek: Where would you get a 2 bed in Dublin for that money?

http://touch.daft.ie/sales/19-coultry-neighbourhood-centre-santry-way-santry-dublin/1007298/

Market is going up, you'd have to do your homework to get a reasonable location for 120, obviously avoid the likes of finglas East, tallaght etc ha. The usual with property of course, can go down in value (don't buy 5 or 10 of these apartments, or mortgage your own house/farm against one ha), and risk of a sh1tty tenant.

joejobrien

Timmaay wrote: »

http://touch.daft.ie/sales/19-coultry-neighbourhood-centre-santry-way-santry-dublin/1007298/

Market is going up, you'd have to do your homework to get a reasonable location for 120, obviously avoid the likes of finglas East, tallaght etc ha. The usual with property of course, can go down in value (don't buy 5 or 10 of these apartments, or mortgage your own house/farm against one ha), and risk of a sh1tty tenant.

Exactly my sentiments.
first offers in region of 135k
MGT fees 1200/ yr
Property is not as attractive. write off reduced .
PRSI now been paid on rental incomes.
Tenants have more rights than landlords......you will incur loss of rent and damage . little recourse.
Wrong tenant can give you a MIGRAINE daily.
Many agents dont care. your problem.
Distance can be a problem. cannot service/repair/maintain your own property.
Also in respect of that property its on the market since nov....:eek: there is a reason.
"Partime " landlords will get eat alive if not up to speed!!!!

Dawggone

frazzledhome wrote: »

That's a very interesting point and one that's bothering me since the last devaluation.

We have a cash reserve here and often wondered if a portion should be out elsewhere as its eroding daily? My dilemma is where to go? I'm phucked if I'm investing it in any investment product, been that soldier

Op sorry for derailing the thread. If mods want to move feel free

6 million (or billion) dollar question!
Bothers me also.

Not being smart, but I'm finding parking spaces in certain arrondissements in Paris to outpace all other investments and tradeable with a phone call...quite lucrative and highly liquid.

Dawggone

kowtow wrote: »

Or a commodity, in it's purest sense.

And one which has been created in such a frenzy in recent years that those who have it hold it in quantity must pay to store it somewhere safe for the night, or the week, or the month.

Of course the rest of us will have to wait for paper money to go up in value again, so that land, and the other things we need to run our businesses, cost less of it - and sensible economics might return.

See, I reckon that the commodification of fiat currency was the slippery slope Kowtow.
The removal of the gold standard and the ability of central banks to debase ad finitum is now robbing those of us ( of a certain age) of our savings.

I truly can't see any recovery in 'real' value in paper currency.
Good time to borrow now though...

Mad4simmental

Dawggone wrote: »

, but I'm finding parking spaces in certain arrondissements in Paris to outpace all other investments and tradeable with a phone call...quite lucrative and highly liquid.

Your not simple. I saw the very same in all the city's in oz. I got laughed at when I told the oh. People were getting the equivalent of about €700 a month in the CBDs'. Japan is investing huge money in new technology in parking. I think it's a big one but would need big backing/investment. Paris would be a very good city for this type of investment.

joejobrien

Dawggone wrote: »

6 million (or billion) dollar question!
Bothers me also.

Not being smart, but I'm finding parking spaces in certain arrondissements in Paris to outpace all other investments and tradeable with a phone call...quite lucrative and highly liquid.

Are these opportunities with Auctioneers or advertisied on papers or are you cruising Paris:D?

Dawggone

joejobrien wrote: »

Are these opportunities with Auctioneers or advertisied on papers or are you cruising Paris:D?

They're not usually advertised.
Parking spaces are sold with the apartments but some buyers can't afford both. So I buy the parking space and rent it out.
12 to 15% ROI.
No maintenance and very easy to trade on.

joejobrien

Dawggone wrote: »

They're not usually advertised.
Parking spaces are sold with the apartments but some buyers can't afford both. So I buy the parking space and rent it out.
12 to 15% ROI.
No maintenance and very easy to trade on.

At 12 to 15% ROI is that a gross figure or net.
Either way Its a fine return and always liquid, and have option of exit without a clause. .
I suppose the Goverment has a take on purchase price?

kowtow

Dawggone wrote: »

See, I reckon that the commodification of fiat currency was the slippery slope Kowtow.
The removal of the gold standard and the ability of central banks to debase ad finitum is now robbing those of us ( of a certain age) of our savings.

I truly can't see any recovery in 'real' value in paper currency.
Good time to borrow now though...

Well of course gold was a commodity too, but a more transparent one than paper money.

Nowadays It takes a traders mentality, or at least years of conditioning, to buy a loaf of bread, a cow, a field, or a house and think instinctively of the transaction as going "short" money and "long" bread, cow, field, house etc. - but that is still the essence of the trade. Perhaps people understood this instinctively when gold coins rather than bank loans were the usual currency.

Love the car parking spaces. With the workers of Paris using them not only are you getting a juicy return, but you can be sure they'll only be occupied for an hour or two a day

Muckit

joejobrien wrote: »

Exactly my sentiments.
first offers in region of 135k
MGT fees 1200/ yr
Property is not as attractive. write off reduced .
PRSI now been paid on rental incomes.
Tenants have more rights than landlords......you will incur loss of rent and damage . little recourse.
Wrong tenant can give you a MIGRAINE daily.
Many agents dont care. your problem.
Distance can be a problem. cannot service/repair/maintain your own property.
Also in respect of that property its on the market since nov....:eek: there is a reason.
"Partime " landlords will get eat alive if not up to speed!!!!

A right management company will do just that! What would you be paying them big bucks and still have the headaches? Have a property being managed and don't even know have it. Mgt company organises any repairs. Only problem was l invested at the wrong time. I couldn't see how one could lose if invested wisely now. A property that needed a bit of work. Get a contractor in to turn it around in a few weeks. Offset expenses against tax and away you go

kowtow

The problem with rental property as an investment is that when yields are compressed (less than 5% net of mgt. costs IMO) a certain amount of capital growth is implied / expected in the purchase price of the asset. This is one of those areas where anglo-saxon countries (I include Ireland in this) seem to contain an unlimited supply of fools who believe that the "property ladder" is upward only, with no snakes slithering around below the bottom rung. Such wannabe landlords are content that the rent covers some or all of the mortgage while never wondering if there really will be a bigger fool to come and take the 'asset' off their hands at a later date.

If you are tempted to pay 20x + rent for a property I would suggest that capital loss is an equally possible outcome in the near and medium term, especially when transaction costs are considered. As and when interest rates revert to the mean these types of property quickly stop paying their financing costs and tend to depreciate quickly as many in Ireland now realise to their cost.

If you look at countries where apartment rental is the norm, and being a landlord is a good long term business, you will note that rental yields are more often 7-12% than 5% or under.