Jaysis 😱
Well your first sentence backs up some of my points. You buy your machinery when you can afford to buy it. If you are building up your "warchest" (in reference to post above) and you are not quite there yet, but the place you would buy comes up for sale today, you can't postpone buying it til next year.
In some ways it's psychologically more difficult to decide whether to spend an additional amount from a "warchest" than it is to add the same amount to a loan for something.
And it's also not necessarily a good idea to take a massive gamble and stretch yourself too much. Machinery can be sold too if there is an issue. There have been plenty of receiver auctions that came to market over the past 10 years or so. You can look at the likes of Wilson's Auctions as well. There is a good chance for any of their listings that it is a receiver/bank selling that land. You tend to have an idea from the low reserves quoted.
In relation to luck and timing, I remember reading an article by your man McCullough in the farming independent a few years back. He talked about driving past an 80 acre outfarm block that his father had bought, but that had to be firesold due to banks 20 or 30 years previously. His point was that many would be bitter about the likes of that for decades, or generations but that there was no point being that way. He mentioned as well that on the other side of the coin, when his main place was bought (either the father or grandfather) decades before that it was planted in spuds and the combination of a bumper crop with high prices meant the purchase price was paid back in one year!
It's definitely psychologically easier for me to spend from the current A/c than to borrow and pay interest.
Current account is one thing.
That warchest you've been building and minding for maybe a decade, not so easy to replace it.
But you don't need a war chest. You need a good viable business that has a good casflow, and a history of capital investment from cashflow, good facilities already in place. That capital investment can be switched off going forward and put towards bank repayments.
lot easier get and repay finance on machinery etc than buy land (have deposit and met repayments )
No truer words were ever spoken
It all depends on what you want yourself and your family. Myself have six children so I won't be making big purchases. I hope to help them when they need it.
If I had extra houses, it's an option to sell and buy the land.
No guarantee that it will hold its value, but it might be another 100years before land becomes available next door.
What price will milk average the next 20 years, or what madness would a SF/social dem government dream up. It may be costly for someone to inherit it in future.
Land. Land has traditionally been a fairly acceptable form of investment. However the insane prices driven by tax avoidance schemes that benefit the wealthy has changed the perspective completely. Buying land at seriously inflated prices has to be rigorously questioned before any investment. Land should be valued at 5-7X EBIDTA, end of. Any more than that, it’s becoming expensive. Tax laws/schemes can change overnight at the whim of politicians.
The EU is getting ready for war. First estimates start at an immediate €700bln..with up to €3trillion within 3yrs. EU countries will be paying for this with a combination of troops/ordinance and money. They’re talking about issuing bonds to be repaid as 5% of GDP. Our GDP last year was €682bln. 5% of that is well north of €30bln. What’s the yearly spend on health, social welfare etc??
My point being..tax schemes could be hastily scrapped to pay for some serious commitments to Europe. Think about all scenarios before investing.
A warchest can be liquid and illiquid. It can be in the form of share, property, cash. You woukd need the stars to align with tge opportunity in that if markets are down even though the opportunity is there it may not be viable.
If you are borrowing the bank will expect you to have the stamp duty, solicitors costs etc and 20% of the value before they will lend on any substantial purchase. As well you will need funds to stock and develop it. And at that they will charge probably 6% ish at present.
And that is why most do not buy land, they spend there time borrowing money to reduce tax and to expand there business. They end up renting land owning deprecating assets.
You will never buy land at 5-7 times EBITA as its an appreating asset. For companies they are sold at 10-15 time EBIDTA. Physical asset will aways cost more. What EBITA has dairy land at present. Do you use turnover as opposed to EBIDTA and a multiple of that. At 5-7 times turnover per acre of a dairy farm it's 15-20k at present milk, cull and calf prices. Not saying that is the way to value it but it gives a different perspective.
As you said tax avoidance has driven it along with leasing tax relied and as I point out the moving of dairy farms from sole trading to limited companies.
If you are paying 6% you need to have a chat with your bank manager. There are better rates available.
Got a letter from the Department today, a neighbour had a positive BVD. They are carefull operators with a herd. Only ever buy a bull. Is it in wildlife or are there sheninagans going on to keep the gravy train rolling.
We now have an tb and bvd industry jobs for the boys is all its and we all know who foots the bill.
Closed herd here and got a positive BVD. I'm convinced the lab messed up. Guilty until proven innocent.
you obviously don’t know too many dairy farmers Bass. I could name numerous ppl who have large amounts of land rented and have /are buying land
Dealing with the banks now is not worth it anymore
That was some drop
Have you stopped bvd vaccinating
It mainly because of the price for whey. They use it in a lot of there products
Never vaccinated
look again bass. It’s share price, nothing to do with milk price
Never stopped here. Too many bad neighbours. Didn't have a positive yet. I'd be vaccinating if I were you with breeding around the corner
I would say that regardless of the exact rate you may or may not get at the minute, it probably outweighs what you will make from the land. You basically have to bite the bullet and subsidize the purchase from other income. Or try to trudge through it for a few years and hope the inflation lifts you out of that eventually.
Nothing wrong with the above when you are an investor hoping for capital appreciation, but when you want to buy it to keep it and maybe pass it on, the value of it beneath your feet is less relevant.
They are facing a 200 million increase in cost of whey
https://thecurrency.news/articles/180960/glanbias-mark-garvey-on-disposals-tariffs-and-why-the-price-of-whey-is-weighing-down-its-share-price/
Personally I wouldn'tput any proposal to a bank where at least 25 %+ and whatever fees/stamp duty is ready to go.its just for the banks and for yourself if you can't at least have gathered that previously it dosent make sense to think you are going to gather the more than that plus interest in the future.anyone looking to borrow more.than that of any proposal is how people get into trouble
Actually they have restricted my herd for a few weeks and I am getting 2 years of free vaccinations administered by my vet. Will reexamine at that stage I guess.
I think I'm paying 6.5 percent. Not bad but could be better. I'm trying to get the balance down before looking for refinancing. Rang my bank last year and said I was finding it difficult to pay. They basically told me go away you chancer and that I have a great rate. There is another bank that will do marginally better but if I had a good year I could lower the balance substantially.
buying land now at 20 k plus per acre to farm it (then stock it,put slurry storage housing etc)…..why ???..I’d prefer rent any day than be constantly chasing my arse and have pressure of huge repayments …wouldn’t be afraid of debt but I’ve 2 kids a mortgage and a mother to support before I can think of it…plus now in my mid 40s ….i would rent land buy machinery put more storage in no question …would I give 20 k per acre for land ….no chance
if the land was bounding you would you fork out??
SD is 7.5% add a 20% deposit, you have solicitors and bank solicitors to pay and you will need a certain amount to for stocking and developing the business.
After that it's a matter of the sums adding up. First farm I bought I was in for 90%. Admittedly a ot easier to get money.
It's farming LTD's that are driving the price. 20k/ acre as a LTD is about 12k so a sole trader. I am not saying it's the total reason for the increase in land prices.
