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n. Illinois | your asking a simple question that does not have a simple answer.
The answer depends on your specific situation. In the end you have to look at your overall land payments (cash rents and farm payments) / total acres. This is the number you need to keep in mind as to how much it is relative to your net cash return after you pay all of your operating costs except for land costs. IE if your Netting out $400/ac after direct operating costs and your land payments are $425/ac your in trouble. If your land payments are $200/ac leaving you $225/ac to live on and reinvest into the business your most likely doing okay.
Almost all farms need to be subsidize in some way to afford them. The subsidy may be the size of the down payment, The subsidy may be the excess cash flow already in the operation your willing to use to make the deal work. The subsidy maybe off farm income. But there is almost always a subsidy. The only time I remember seeing farms being bought at a price that they could pay for themselves was in the late 1980's at the bottom of the farm land value crash and even then those were rare. | |
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Land payments
