How To Know if You’re Ready To Buy Farmland | The farm life is a great one, especially when you are a fan of nature. Many of us dream of having a large property with lots of livestock and acres of land. In fact, the income that farmlands can generate is enough to fuel the desire to own one. But the question is, are you truly ready to own a farm? Regardless of whether it’s for business or pleasure, running a farm is no child’s play. That said, here’s a short guide on how to know if you’re ready to buy farmland.
- You have it all planned out.
This is not the time to allow a broker to pressure you into making a purchase, especially if your decision to own farmland is a business move. Having a long, hard think will let you set proper goals and of course, have realistic expectations. Also, try to have a chat with a professional or a mentor who’s in the same industry. They will give you the lowdown on the ins and outs of running a farm. They can also help you make future decisions and offer insights on cash flow projections.
- You know what type of farming you’ll be doing.
Even if you plan to farm as a hobby, you should still be aware that owning a farm comes with many responsibilities. First, it’s best to be aware of various aspects like property tax, animal welfare, utility costs, land maintenance, machinery, etc. Also, have you considered the latest energy-saving equipment? More importantly, what farming approach do you plan to use? Will you be farming organically or using harmful chemicals? If so, what will you be farming?
Also, do you plan to purchase livestock? If so, which livestock will it be and what is their purpose? For example, some people who go into livestock farming purchase sheep and use their coats to produce wool. the wool then gets processed, sold to fabric stores, or used to make innovative products like wool yarn, socks, alpaca, or reusable wool dryer balls. It’s important to plan out exactly what type of farming you’ll be involved in since you’ll likely want to bring down the operating costs.
- Your bankers are aware.
You don’t need me to tell you that farmland is a non-liquid asset. Acquiring farmland (which is usually expensive) will impact your liquidity. It’s a good idea to let your bankers in on your plan, especially if you won’t have enough cash to operate with after purchase. Your bank can probably help you out with a loan if, needed. This way, you’ll have enough capital for all the farming costs and operations.
- You’ve considered other alternatives.
Yes, it’s great to buy a farm, but just because you have access to cash doesn’t mean it makes financial sense to buy one. You’ll do well to consider the renting option. Renting may cost more in a way, but at least you’ll have enough cash at hand to manage other financial obligations.
- You have checked the soil history.
Whether you are going into crop farming or not, chances are, you’ll be doing some planting on your farm. Even if your target is livestock production, you may want to add crops in the future. Therefore, it’s best to know the history of the soil you’re purchasing as the soil’s profile will likely impact your revenue.
- You have considered all additional expenses.
Yes, buying farmland is expensive. We’re sure you already know that since you’re considering acquiring one. However, you also want to ensure, the farmland’s profile won’t cost too much money before the operation begins. For example, is the land irrigated? No doubt, you can’t farm without water. So, consider the cost of installing a proper irrigation system. What’s more, there are different laws in many states concerning water. So, it’s a good idea to familiarize yourself with your state’s water law.