230-acre Iowa century farm brings nearly $4 million at auction
- Thread starter THE_DEVIL
- Start date
Imagine selling your century farm and still not making as much as CC22 could make in Ice Cubes 10 game league.
Farming is like winning the lottery if you inherit the land.
If you totally F it up. Sell the land for $10,000-$15,000 an acre.
If you totally F it up. Sell the land for $10,000-$15,000 an acre.
I’m not a farmer, but that seems like a poor investment given the stated yields, the amount of acres and commodity prices.
$4.30/bushel x 240 bushels/acre x 230 acres = $237k gross revenue for 100% corn
$10.50/bushel x 69 bushels/acre x 230 acres = $166k gross revenue for 100% beans
So $200k GROSS revenue (I have no idea what ops cost would be) is roughly 5% of initial investment. I assume net revenue after ops is likely less than 4%, yuck.
What am I missing here?
$4.30/bushel x 240 bushels/acre x 230 acres = $237k gross revenue for 100% corn
$10.50/bushel x 69 bushels/acre x 230 acres = $166k gross revenue for 100% beans
So $200k GROSS revenue (I have no idea what ops cost would be) is roughly 5% of initial investment. I assume net revenue after ops is likely less than 4%, yuck.
What am I missing here?
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Not always the case. On my wife's side of the family, her grandma inhereted part of a farm. The person taking care of the farm .. just stopped. Also refused to let anyone take care of it. By the time the family finally got him to sell it, it had all been overgrown by volunteer trees. They got maybe 25% of what they could have. I think they sold it at $4,000/acre, when 10 years earlier it was valued around $16,000
I suppose, but seems like it wouldn’t be hard to find superior investments that crush those returns. But as they say, they can’t make more land.
it's not going to be farmed but developed I would guess. I've seen very few farms go for that price with intent to farm.
You’re not missing anything. But the land appreciation (when finally realized) probably puts the annual return up to 8-10%.
It’s can be a good hard asset for someone to have if they have other money in other traditional investment assets like stocks and bonds.
In my opinion, it’s a good asset in large, diversified portfolio, not so much if it’s close to 100% of someone’s net worth.
Emotions play such a huge role in this scenario, it’s hard to comprehend. I live in north central North Dakota, corn’s not a major crop but for reference an average corn yield is about 130 bu/acre. A parcel went for about $9000/acre last fall. Two older guys with cash to burn got into a bidding war. There’s about 500 better things they could have done with that money but that’s all they know.
there is devopment everywhere. people perpetually move outside the zone. It's been happening since the beginning of time.
North of Beaman Iowa?
Roflmao. Nope. No way in hell. Some heavy hitters in that area that acquire land every chance they get with money no object.
Get in a car and drive 20 miles on any direction and you might get to a town with a stop light.
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I’m a little surprised at historical land appreciation, it’s higher than I would have thought. I wonder how land appreciation compares to net profit trends. Feels like the land is probably overvalued given my assumption of returns, but I’m pretty ignorant when it comes to farming. Maybe this is the historical norm?
Given land appreciation, I could see it being a good alternate investment for somebody who is sitting on a lot of wealth. But somebody who needs a loan to make it work is probably about SOL.
I believe it was NW Iowa few years ago that land for for over 20K per acre.
If that was my land, I'd sell an payout McCaffrey's contract
If that was my land, I'd sell an payout McCaffrey's contract
