land pricing

[Gerald_sk]

Wonder if anyone has heard what land is trading for this fall.
Is it still in the bubble up, as it was this spring, leveled off
or any drop. Wasn't planning any more land, but part of a quarter
has come up for sale in an estate. I have farmed it for three
years after taking it out of 8 year? alfalfa rotation.
Not the best land as cut by old railway and creek, but it is close.
Just found out today that they are dividing the yard, which
most likely has as much valve as the balance of the land.

[agstar77]

A large operator I know of went to his bank to borrow money, he was told not to pay on the basis of investment but on balance sheet. So at 8 $ canola and 1400 NH3 what would you pay? Somehow I don't think the bank will give him the money.

[bucket]

I agree agstar he probably won't get the loan. But if the Assinbioa partnership,agcapita or some other investment fund comes in they will overpay and rent to someone and there is still money in having the land. Interestingly that the bank doesn't think operators should own it - just the funds the banks invest in. I think land much like the stock market maybe bottoming and there could be a tremendous gain made on it. The investment funds are counting on the capital gain not the yearly rental rate to make the real money.

[AdamSmith]

guys, farmland is only as valuable as it's ability to generate revenue over a long period of time (10 yrs plus).

that is the base value.

then there is the emotional value.

the amount someone will pay over base value to keep it out of someone elses hands, or the value of (being just across the road)

I've seen land sell for almost double base value because it became an emotional buy.

good land will always sell for more than base value, but there is a point when aggressiveness is surpassed by foolish emotion

because even the very best land seldom pays for the stupid emotional rationalizations some people have to justify paying an extreme exorbinant price.

I guess all I'm saying is buying land is usually a wise decision, but keep it real, because if buying the land becomes a drag on the business, it's clearly NOT a wise decision.

I know I made an offer to buy a quarter last spring but the owner for various reason chose not to sell at the end of the day, but if he chooses to sell this year there is no way I will offer what I offered last year, and if someone else does, they will get it and I'm quite fine with that.