equipment as an investment

[cottonpicken]

I don't think about this stuff much,but like furrows last post and all things tax wise an such,new equipment values,etc,etc.just wondering on your guys thoughts.

[wakopa]

If u buy right u can break even or make money , sold 50 ft heavy harrows for 14500 and bought them about 10 years ago for 13000. Am I on the right conservation , still celebrating PCs victory

[hobbyfrmr]

I dont understand too much of the math. My end game is to own one set of reliable machinery built in this century.
I have the decent (to me) machinery but the newest piece is 22 years old. I do begrudgingly pay income tax . It seems like if I was to borrow against equity (land) I could really be sailing but it doesnt make sense to me. Risking an appreciating asset to buy a depreciating asset. When we get crops its cash flows great, when we dont get crops, that is not a pleasant situation. I remember talking to a guy in 2004 he said he was driving a $180,000 combine but could not pay for his kids' swimming lessons! I am definitely missing some pieces of the puzzle.

[farmaholic]

New equipment isn't an investment to me, more like a cost of doing business. Sometimes your lucky and buy a new piece of equipment and get what you paid for it a decade or two later because of the insane cost of new equipment. Combines aren't one of those pieces.

Holy crap hobby, turn of the current century equipment is already 16 years old. It's not how much you make and spend....its how much you save.

[Koldkanuck]

Equipment as an investment???? Just drive by any old pasture or yard site, and see all the old rusted equipment sitting along the fence line, waiting for the scrap dealer. It was new and shinny at one time. Equipment is just a tool, unless your an equipment jockey or a dealer.

[furrowtickler]

Cotton , buying a good low hour tractor with a pto , about 5-8 years old keep er for 5-6 years . May make a bit of money

[cottonpicken]

Maybe I'm wrong. The new stuff is so out of this world for a reason. It's their margins and costs I think about applied to used equipment. No doubt junk equipment is junk equipment.

[Richard5]

Equipment never will make you money, its only a tool to get the process done. Its finding the right balance of tools is the question

Regardless, the dealers job is to say and do whatever it takes to sell you. Its always such a good deal to them and you will never get this opportunity again and the old classic "there's only 2 left and if you don't take it, its gone"

[cottonpicken]

I know non of it makes sense.

I'm applying the exponential function to the theory.

I'm guessing at the math,some others here that follow the numbers more closely could help out more.

So if the cost to build say a tractor is 8% growth that means a doubling time to build that tractor is less then ten years,so in ten years what is a new tractor worth and more importantly whats the old tractor worth?

Just throwing it out there.

[hobbyfrmr]

Farmaholic,

Anytime I get "cashed up" I start pining for newer equipment. Usually I walk into the shed, look at the machines and think about how they sit idle collecting dust 9-11 months of the year.
I have been leasing updated tillage implements, hopper bins and aeration.
I am renting some beach sand. The conventional neighbor is 78 yrs old. They are wealthy and modest. They went zero till early and pull a flexi coil 5000 with an 800 Versatile. They pull a Bourgault sprayer with a 700 Versatile, it still has the cab cooling system where you fill it with water on top of cab. They are very smart practical old guys.

[farmaholic]

Yes Sir. What ever floats their boat. Probably die wealthy people....kids will spend it.

I wouldn't be investing a pile in machinery at that age either.

Maybe they don't want to fall into the technology trap.

At least they can't be accused of working for the machinery companies!

[hobbyfrmr]

Agreed on all points. There are some farmers that age who chose to fix everything they could themselves. In contrast I have another 80 year old neighbor on very good quality land who has brand new everything. His hired man (78) calibrates The drill and sprayer. Dealership warranty covers the complicated repairs. He says once the hired man quits he will have to shut down!

[LEP]

I have gradually updated my equipment. Since 2008 if I don't have the cash I don't buy it.

I have been fortunate to have very few big depreciation events. My combines are bought and then sold at auction. Keep the costs around $7 to $9 per acre per year plus parts of $1 to $2. This is probably my biggest equipment expense on my farm.

Was told once I was born a hutterite and raised by jews.

[pourfarmer]

Hobby farmer, what kind of tillage tool are you using?

[hobbyfrmr]

Its a pretty basic set of shrapnel. Bourgault 8800 cultivator, Leon Rodweeder. Flexi Coil harrow packers, Bourgault tine harrows, rite way heavy harrows. I just traded a kello bilt disk that I purchased new in 2009 for a Lemken Rubin.
That Kello disk was a real monster in any conditions, I never put a wrench on that disk in all the time I owned it. i am hoping for similar success with 2 passes of the Lemkin. I have been watching the Lemkens for about 4 years and finally I found one that I could afford. I dont like the idea that I am leaving oil bath bearings for non oil bath.