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| hinfarm not picking on you just the latest post that kind of lacks a little history reality
In the 60's and 70's the land owner would get 1/3 of the crop, 1/2 if they paid half the expenses. Nobody I know of at that time was a pure cash renter, some may have been but I never knew them. What changed you might ask we in the late 70's the price of grain changed that. The reason cash rent took over for sharecrop was because no land owner would rent to another farmer because that farmer would give him 35% of the crop instead of 33% of the crop. but he could ad $5.00 and acre to the price per acre and just keep adding at $5.00 increments until he got the ground.
I bought My first 1/4 section in 1971 paid a little over 50K for the qtr. second one for little over 65K in winter of 74-75 paid that for an 80 in 77 was fortunate enough that those two buys stressed my cash flow to a uncomfortable limit land jumped to about a grand acre in 79, and to 1600 + by 81-82, that is when a neighbor of mine paid that for a half section and made the statement that it really does not matter how many zeros come after the 1 you simply need to own the land, he lost those two qtrs and two more that he owned and went to town and got a job as a parts man in local dealership. in 1986 I bought my next half section for 110,000K and thought I would have no problem selling one of the qtrs for 65K never found anybody else that was interested, ended up with some real restless nights ( I was lucky to have a outside income stream ) bought a couple more qtrs in the late 90's and then in 2004 bought 2 qts and a 80 for 375K it needed work tree clearing building teardowns and pulled 15 miles of fence but it was good land. So from 1971 to 2004 land went from 335 and acre to about 940 per acre but from 1979 to 2004 (25 years) it went down about $50 per acre and from the 1986 to 2006 ( 20 years ) it lost 600 per acre. The lesson in this is that land does not only not always rise at a $200 dollar a year pace sometimes it actually falls over 20 year periods.
what i have learned in my life ( mostly by luck ) is that land is always hard to buy and you always think it is to much, you simply hope you are not overpaying for it at the cycle highs because mistakes like that will sink you faster that anything you can imagine.
lastly i will tell anybody that is interested tha farmers will always pay to much to rent land because they believe until the money man tells them NO that if I can just spread by cost across a 100 or 1000 more acres i will then get my cost per acre under control. never have really seen it work that way but I'm sure its different this time. | |
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Cash rent vs commercial properties
