# Real Estate riskier.......even on the farm.



## sags (May 15, 2010)

It appears the risk of real estate, has extended itself out the rural farm land sector.

After years of explosive rise in prices, farmers are taking a more cautious view of land purchases.......due to the declining price of grain.

A year ago, part of my wife's family farm was sold, without going on to the open market. Land was selling briskly and the price was rising.

This year, we have some more of the farm land for sale, and according to our agent...........things have slowed considerably.

No more bidding wars, fewer buyers and nervous farmers.............have stopped the upward price movement.

It appears the momentum for real estate in different areas has finally hit the wall.............at least temporarily.


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## Zeeshanbmerchant (Jan 4, 2014)

its only temporary. 

it will boom again, such is the nature of land, its a limited resource


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## Rusty O'Toole (Feb 1, 2012)

Real estate agents always tell you properties are hard to sell and prices are falling. Unless you want to buy, then properties are hard to get and prices are rising.


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## Chris L (Nov 16, 2011)

Many farmers operate at net losses betting on the price of land. Ideally they aim to sell to developers, but realistically only fractions will get sold this way. You simply can not buy land and farm it for a profit anymore. It's a bubble in Southern Ontario, for sure.


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## Rusty O'Toole (Feb 1, 2012)

Farming is the only business where you can start with nothing, lose money every year, and die a millionaire.

Don't forget if you are a farmer you are exempt from most taxes, and everything on your property and everything you buy is deductible. if by some fluke you manage to show a profit after writing off everything, your accountant will tell you to buy a new tractor, truck, snowmobile, car or something new to write off.

Then you get to go "gee I didn't make any money last year" meanwhile you are living as well as your city friends who make $100,000 a year and pay full taxes.

This is why most small town lawyers own farms. They call it being a gentleman farmer but it is just a tax dodge.

This is why many farm boys who have good jobs, buy farms and never pay taxes again. Then pretend that the only way they can keep farming is by supplementing their income by working for wages.


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## andrewf (Mar 1, 2010)

The big thing are the huge subsidies farmers receive. Direct cash transfers from the government. If the average voter knew what was going on, there would be protests in the street.


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## Chris L (Nov 16, 2011)

andrewf said:


> The big thing are the huge subsidies farmers receive. Direct cash transfers from the government. If the average voter knew what was going on, there would be protests in the street.


This is how the smart people do it. But the real farmers are factually "dirt poor." I've seen how they live and yeah, you can write the snot out of everything, but they're only "plowing" their money back into their land. If the land loses it's value, they'll die poor with no cash in the bank.

You can only fool yourself by finding the greater fool to pawn the land off. Family run properties, intergenerational, are doing okay. But tell me how a guy buying an 800k chunk of land makes money pasturing cows. I am the man on the street with man farmers and they work hand to mouth - banking only on the value of their land.

If economics worked properly, the cost of the land will be linked directly to it's productivity. Greed for land is going to kill farming - and the cost of land.


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## Rusty O'Toole (Feb 1, 2012)

I know a local farmer who farms 600 acres of land, all rented. I don't know how much he makes but he campaigns a car at the drag races that must cost him $100,000 a year. If you didn't know him you would think he was in the last stages of poverty, until you saw his house and his race car, tow vehicle and trailer.

He rented land from my mother. Every year he cried poor mouth and tried to get her to reduce the rent he paid on her land. He usually succeeded. The rent he paid was less than what my mother paid in taxes.


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## Rusty O'Toole (Feb 1, 2012)

My brother works for Curtis Chicks and knows all the chicken farmers in south central Ontario. Chicken quotas sell for over $100,000 per bird. No new chicken quotas have been issued since 1963. Some of his customers knock off work in August and let their barns sit empty for the rest of the year to avoid paying taxes. Meanwhile we import millions of dollars worth of chicken from the US every year.


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## Chris L (Nov 16, 2011)

You are catching on. To lease land is about the same cost as that of taxes. This is universal. So now, tell me, if you don't already own land and a quota, milk or livestock, how do you make enough to cover the cost of taxes, principle, and operating costs?

You don't. They are investing in the quota and land, banking on it going up in price. Without it, a person can not get into farming profitably.

A guy might ***** and moan because he's cheap, but that's expensive and no something RICH people REALLY do. Looks to me like he really is poor, and is boring money to pay for his lifestyle. These people are obvious because they always cheap out on the things like paying the ones they know. Pay strangers, but then cheap out with their friends and family. These people usually are really poor.

A tried to buy a chunk of land from a farmer, he wanted 800k for a teardown shell of an old farmhouse on 80 acres (I think). He puts corn, soybean, wheat, on rotation. It costs him about $300-$500 worth of inputs (seed, fertilizer, gas, machinery, etc.) and if the market is good and he gets a good crop will get $800-$1000/acre.

Now tell me how the math works?


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## sags (May 15, 2010)

Wish our land was in Ontario for $10,000 an acre.

We are asking $72,000 for 160 acres of native pasture land in Saskatchewan. (could be cultivated if desired)

That is less than $500 an acre.


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