Time to sell my farm land?

I still own land in Iowa (140 acres) and with the lunacy of the market this year I am honestly thinking about selling it. I don't live on the land and don't even really farm it. I rent to another farmer in the area. Land less than 20 miles from mine recently sold for $13,950 an acre !!!

Yeah, maybe its time to cash out...

Re: Time to sell my farm land?

Bubba1235 said:

I still own land in Iowa (140 acres) and with the lunacy of the market this year I am honestly thinking about selling it. I don't live on the land and don't even really farm it. I rent to another farmer in the area. Land less than 20 miles from mine recently sold for $13,950 an acre !!!

Yeah, maybe its time to cash out...

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If you are leasing it out Bubba and it's paying for itself, I would leave it alone for now. Whatever market is out there right now will get better, it is a matter of time and rebalanced economics and at that point, the patient and the smart will prosper.
People 'selling' anything right now are losing....just about everywhere it seems.
Regardless, good luck all around.
BP

Re: Time to sell my farm land?

Heres a short story, I bought $6.000 in Brunswick stock at $1.20 +/- . And sold at $18.00.

Don't be a fool & get greedy !! take the money and run.

Re: Time to sell my farm land?

Your savings account will love you for it for now.

But, Look at the money you could pi$$ away on your boat if you sold the land. .

Re: Time to sell my farm land?

Bubba, I ain't gonna give you advice on what to do, but I have been thinking about the future and some thoughts may apply. Or I just got too much time on my hands.....

Here goes: Looking back at the recent (last 300 years) history of the US, we were mostly a farming nation and not a real player in industry until after WW2. After that, using our ample natural resources and cheap labor and non-destroyed infrastructure, we became a great manufacturing country. Once our labor got expensive and our resources became scarcer, we went to more of a service based economy where we provide more knowledge based work and capital than anything else. Problems happened when it became apparent that our services aren't really needed anymore since the manufacturing countries now have the capital and knowledge to do everything that we formerly did.
The one thing that we still have is good agricultural land. Lots of it in fact. And everyone in the world need to eat. The bad thing is we are so darn efficient at food production, and we could not possibly go back to having a country with 75 percent of people living on farms.
So in my (possibly very wrong) thinking, the real wealth will revert to those who own something tangible and in demand, which would be the land used for food production, our last remaining export. Now this may not happen in our lifetimes, but I think it will happen.

Re: Time to sell my farm land?

One thing to look at, what are the capital gains taxes impact for you, I am no tax person by any stretch of the imagination. It was just a thought that popped in my mind...

Re: Time to sell my farm land?

Bubba1235 said:

Land less than 20 miles from mine recently sold for $13,950 an acre !!!

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What size are the plots that sold at that price?

Re: Time to sell my farm land?

Don't sell when prices are low unless you need the money or your too old to wait for the recovery. There were a lot of suckers who cashed in their 401's last year and on my last statement mine made a 109% recovery. Land values will do the same in time

Re: Time to sell my farm land?

If you sold all of that land at that price, that's close to $2,000,000. Pay your 20% capital gains and walk away with more than 1.5 Million. Pretty much secures your retirement, huh? Pay off your current mortgage, car payments, excess bills, etc. Give yourself an income of $500-1000 per week (after all, everything's paid for) and only go to work part time...if you want to...

Good for you.

Re: Time to sell my farm land?

Bubba1235 said:

I hear ya but when I bought the land I never had the intention of holding it forever. I actually bought it to help a family (in-law) member out from under too heavy a debt load. From the day I bought it my plan was to wait until the value hit a peak and cash out. The only question in my mind is are we at that peak or not? My "gut feeling" is that ethanol subsidies are going to get yanked and corn prices will fall and take land values down with it.

You know what? I need a better crystal ball, the view in this one is all fuzzy.

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In 2010, 30% of the U.S. corn crop is going to ethanol, some of it being EXPORTED.

Subsidies or not, ethanol is not going to go away, as long as there are internal combutions engines in use. Grain exports will continue to surge.

They will never admit it, but farmers are becoming the Rockefeller's and Carnegie's of the new millenium. It's very big money and politcal power.

They just will be driving around in pickup trucks, instead of riding in limos.

I'd hold the land if I did not need the money. You will probably have a pretty hefty tax bill, if you sell.

Cash rents are going way up too.

Re: Time to sell my farm land?

Summer Fun said:

Heres a short story, I bought $6.000 in Brunswick stock at $1.20 +/- . And sold at $18.00.

Don't be a fool & get greedy !! take the money and run.

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I'd never compare owning farm land to owning stocks.

Stocks are only perceptions of value. Farm land is real and like they say, they're not making more of it.

At one time, CA land was given away. Now it's sold by the sq. ft.

Re: Time to sell my farm land?

If you think $13G an acre is low for Iowa farmland, I think I can broker a heckuva deal for you.

Re: Time to sell my farm land?

20 miles can make big difference in prices. The other section could have prime location for development. You could start by calling real estate broker and seeing what your land is valued at.

Re: Time to sell my farm land?

Someone once asked Warren Buffett how he became so wealthy.

His reply, "I sold too soon."

Re: Time to sell my farm land?

I'd hold the land if I did not need the money. You will probably have a pretty hefty tax bill, if you sell.

Cash rents are going way up too.

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Ayuh,... How old are ya Bubba,..??

If you can't sell it by the end of This month,... I'd sit on it...
Taxes are a changin' on Jan.1, 'n Not for the Better....

Re: Time to sell my farm land?

Your profile tells us nothing about you Bubba, so a bit of a difficult Q to deal with.

So maybe one of the points below may be relevant.

1. The best investments are actually income generating commercial-industrial-rural land.
2. Is the farm negatively or positively geared.
3. Are you running the farm as a rental business and are you gaining tax advantages.
4. If you introduce $1.75m cash to your bank account, do you have capital taxes to pay, and will the annual interest revenue be added to your current taxable annual income.
5. Do you actually need the proceeds from the sale.(if you want something, like a new truck, would it be possible for the farm to buy it? Does that thinking make sense).
6. Now for the big one...are you a young bloke or an older model, and what are your plans for the future. If you are a city dude, maybe you would like to retire to the country one day.

I would suggest you go to one of those specialized calculators that you can put in todays 'value' and ask for historical figures, eg what it was worth every 5 years back to maybe 1940. Then go to one that projects land values forward.

Personally, I think you have to think real hard before you sell income producing assets of this nature.
Good luck.

Cheers
Phillip

Re: Time to sell my farm land?

I disagree with nearly everyone here on this bubba but then I am kind of a radical too. I do own some farm land and it sits alone waiting for that rainy day, If prices increase there's always someone interested in leasing it. So I think you need to ask yourself a few questions, How do you feel about this economy? Do you feel that the economy is close to collapse? Do you realize that that land could be the single most valuable asset you own should the economy collapse? I'm not saying the economy is going to collapse but ask me that same question 6 months ago and I would give you a very different answer. Do you need the money?

Yeah I may be a 1/2 bubble off plum but then again If it does happen who is off plum then? And more importantly who is better prepared because of it? If you don't need the money then what does it hurt to keep it? Maybe reevaluate in a year or two? I have had this same argument with my family from once I bought it until the market nearly collapsed, not a word since.

Re: Time to sell my farm land?

I hate to think what your tax bill for profit on the sale is going to be. Why not break up the sale over several years so the big profit wont be hit by taxes as bad.

Re: Time to sell my farm land?

Look at this way....are you willing to trade a tangible asset that historically appreciates in value for the US dollar that historically de-appreciates in value? If the economy collapses which of the two would you rather own.

Re: Time to sell my farm land?

13k and acre? Wow.
2000-3000 here for good farm land.
Might fetch a bit more if connected to a modern working dairy operation.

The only thing I would change in your plan is that stand alone hydrogen separators and storage pigs should replace the batteries.