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I WANT to buy Farmland!

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  • Avatar Veritas 
    Participant
    Status: Physician
    Posts: 14
    Joined: 06/27/2019

    I’m in my mid 30s working hard in private practice.  I grew up on a farm and now live 7 hrs from my folks.  I miss the driving out in a truck and checking crops and seeing deer and wildlife – it makes me happy-.  I have maxed all retirement accounts since I have started working 2 yrs ago.  I would like to purchase some farmland 80 acres or so with a goal of 4% return (cash rent, CRP etc).  I realize other investments could return higher but I already am a good indexer and I don’t want to family home rentals.  Any ideas on asset protection, liability protection, and tax reduction on buying farmland?  I thought of forming a S Corp and having a small salary taken with most of it going to expand within the S Corp over years.  If I do this can I infuse more money from my day job into it over the years to buy more land? Any ideas would be greatly appreciated!

    #229356 Reply
    Liked by seattlee
    Avatar benign_user 
    Participant
    Status: Physician
    Posts: 177
    Joined: 01/14/2016

    I’m in my mid 30s working hard in private practice.  I grew up on a farm and now live 7 hrs from my folks.  I miss the driving out in a truck and checking crops and seeing deer and wildlife – it makes me happy-.  I have maxed all retirement accounts since I have started working 2 yrs ago.  I would like to purchase some farmland 80 acres or so with a goal of 4% return (cash rent, CRP etc).  I realize other investments could return higher but I already am a good indexer and I don’t want to family home rentals.  Any ideas on asset protection, liability protection, and tax reduction on buying farmland?  I thought of forming a S Corp and having a small salary taken with most of it going to expand within the S Corp over years.  If I do this can I infuse more money from my day job into it over the years to buy more land? Any ideas would be greatly appreciated!

    Click to expand…

    Farming has pretty much been taken over by megacorp. Small time farmers are losing money on their farms and are cash-flow negative.

    #229359 Reply
    Liked by Fullhouse11
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1871
    Joined: 02/11/2019

    I grew up country as well so I get ya.  However I have a feeling that this would be a liability rather then a investment.  Kind of like the farm version of getting a lack house you rent out a few weeks of the year.  The money helps but in the end it is a drain.

    But if it makes you happy and you are meeting your other financial goals who cares.  There is a lot of worse things to spend money on.

    “Never let your sense of morals prevent you from doing what is right.”

    #229362 Reply
    Liked by seattlee, jz
    Avatar Veritas 
    Participant
    Status: Physician
    Posts: 14
    Joined: 06/27/2019

    It is important to remember in farming that the “cash rent” return is not the sum of the investment return.  Farmland has tended to increase substantially in value per acre and this needs to be factored in as well as cash rent return. I am not making the argument that farm investing is the best ROI but some things in life don’t need to be all about money.  Having a place to teach my son how to shoot a BB gun and ride a 4 wheeler and make a modest return sounds like an okay thing to want.

    #229363 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2382
    Joined: 03/01/2018
    I would like to purchase some farmland 80 acres or so with a goal of 4% return

    Click to expand…

    have you looked at land and prices in your local area, do you have the cash or would you take a loan with the thought of 4% net return after interest, taxes, etc, have you done any research on local rental rates?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #229364 Reply
    childay childay 
    Participant
    Status: Physician
    Posts: 1013
    Joined: 01/09/2016

    What kind of farmland are we talking?  Cattle?

    #229366 Reply
    Avatar Veritas 
    Participant
    Status: Physician
    Posts: 14
    Joined: 06/27/2019

    Yes, cash rent approx $150-180 per acre, I have gone to land sells I know a 4% return is realistic if i am patient.  No cattle mainly tillable crops with maybe some water ways and timber.  I would buy cash probably 300-600K.

    #229369 Reply
    Avatar ticker 
    Participant
    Status: Physician
    Posts: 165
    Joined: 08/14/2016

    I get you.  A few docs I work with have 50-300 acres and raise livestock, have periodic timber sales, etc.  Like you, I don’t think they do it for the investment value alone, but between land appreciation, the tax advantages of being able to make “farm” improvements, some state tax incentives for farms, having a way of employing their kids legitimately, having a place to hunt, the therapeutic value of “tractorin” (here I thought it was only a noun), it doesn’t seem like the worst way to use money.

    Sorry, but I’m afraid I don’t know enough to contribute to any of your questions.

    #229371 Reply
    Liked by octopus85, Veritas
    childay childay 
    Participant
    Status: Physician
    Posts: 1013
    Joined: 01/09/2016

    I do kindof want a tractor

    #229373 Reply
    Avatar burritos 
    Participant
    Status: Physician
    Posts: 498
    Joined: 04/23/2018

    Do it. Let us know how it goes investment wise. I’d like to know.

    #229378 Reply
    legobikes legobikes 
    Participant
    Status: Physician
    Posts: 293
    Joined: 05/25/2017

    I do kindof want a tractor

    Click to expand…

    to tractor

     

    I also really want farmland, or rather, I want a large tract of land (40+ acres) that is wild and can remain wild, with a small area around the tiny house I would build on it cleared of brush.

    #229399 Reply
    Liked by Kamban
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3482
    Joined: 01/21/2016

    I bought some LAND, literally. It’s a REIT (Gladstone) that specializes in specialty farmland (like strawberries, not corn/soy/wheat). I have about $50 worth in my Roth IRA. Check it out (the REIT won’t wake you up in the middle of the night when the fox is in the henhouse or whatever…).

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #229411 Reply
    Liked by ENT Doc
    Avatar FamilyFirst 
    Participant
    Status: Student
    Posts: 21
    Joined: 05/19/2017

    Do solar farms make any respectable ROI? Probably not the same appeal as seeing a whole load of fruitful crops. I’m more just curious.

    #229416 Reply
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2629
    Joined: 05/07/2017

    It’s fine!  Walking the soy line this year.

    gmo.   It’s the best.

    weather has been kind of a challenge this year.

     

    #229422 Reply
    Avatar artemis 
    Participant
    Status: Physician
    Posts: 593
    Joined: 12/02/2016

    I’m in my mid 30s working hard in private practice.  I grew up on a farm and now live 7 hrs from my folks.  I miss the driving out in a truck and checking crops and seeing deer and wildlife – it makes me happy-.

    Click to expand…

    It doesn’t sound to me like you want to just buy farmland.  It sounds to me like you’d like to own (and ideally, live on) an actual farm, with a farmhuose and outbuildings and orchards and pastures and cropland.  So why not do that, if it will make you happy?  Start looking to see if there are rural properties a reasonable distance from where you practice to make at least visiting on a regular schedule feasible, and then go for it.  Just be prepared for the place to be a liability rather than an asset in terms of cash flow (the Old MacDonald version of a vacation house) – but as long as you’re meeting your overall investment goals, it’s OK to splurge on something you know you will really like.  In your case, that’s a farm.

    #229433 Reply

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