5 Considerations When Buying A Farm
America was built on farmland. Apple orchards in New England, corn fields in the Midwest, and longhorn ranches in Texas are just a few examples of the agrarian way of life that helped pioneer this country. As a result, it can be tempting to purchase a farm and try your hand at capturing your own piece of Americana. Before you do, thoroughly examine the following five considerations to help make your dreams of becoming a farmer come true.
While budget is a consideration when making any kind of purchase, land buyers that are looking to set up farming operations must make sure that their pockets are deep enough to make a farm a reality. The land for base operations is just one expense--and that is hefty. Estimates have calculated that the cost of 500 acres of quality farmland--the average lot size of most commercial farms--to be about $3.75 million dollars.
In addition to the land itself, the ancillary expenses for a farmer can add up quickly. For example, a tractor used for plowing and planting will cost about $125,000. Then there are the costs of spraying and fertilizing crops (about $140 per acre for beans and $290 an acre for corn) and taxes paid on the property. When all is said and done, the total cost to start a commercial farm is likely to exceed $5 million. While it is possible to buy ready-made farms or smaller recreational farms for a lower figure (the USDA estimates the average cost of Western farms, all sizes included, to be roughly $512,000), the bottom line is that the costs associated with purchasing a farm are higher than for standard pieces of real estate.
When deciding on a farm type, instinct may tell you to choose the farm that allows you to grow what you want to grow. While there is nothing wrong with following your passion, you must make sure that the crop(s) you choose is feasible on your property. Factors such as climate, soil, and growing season must be taken into consideration when deciding what type of farm to set up.
It is also advisable to purchase a property that allows you to grow multiple crops, perhaps even providing the flexibility to raise some livestock. Although this will increase expenses, the diversity adds a layer of financial protection in the event that your primary crop has a down year. As an additional stream of income, look at properties that have potential as pumpkin patches or any other kind of tourist draw.
Size and Available Amenities
It has been stated that 500 acres is an average size for many commercial farms. However, you may need more or less depending on your goals. For farms in the Central Plains of Oklahoma, it is estimated that an acre of land can yield 130 bushels of corn. When raising livestock, budget one acre per head of cow, one-half acre per goat, and one acre for every 20 pigs.
On top of the farm size, amenities are important to calculate as part of the farm's potential. Are there sheds to store machinery and barns for the livestock? Is a modern sprinkler system in place for watering crops? Are there any ponds, hills, trees, or any other landforms that may present challenges or opportunities?
Location, location, location. It is the age-old real estate mantra and is particularly relevant to farming. While factors such as climate, soil, and growing season have already been mentioned as location-based variables that should play a role in helping decide which type of farm to pursue, there are myriad other considerations that should be assessed when looking at a farm’s location. A few of these factors include:
Proximity to markets. Is there strong local demand for your crops, or will shipping costs and logistics become an issue when trying to get your crops in the hands of buyers?
Availability of workers. In the event that you need to hire seasonal help at harvest time, it is important to be in a location where labor is readily available.
Access to services. Are there veterinarians in the area to look at sick livestock? Will it be convenient to get machinery serviced and repaired?
The quality of the water supply will make or break a farm’s potential. In fact, the USDA estimates that irrigated farms are worth roughly four times as much as dryland farms. As a result, a piece of land’s access to water should be a primary consideration when assessing its value as farmland.
A good farm should be able to pump water at a rate of 60 gallons per minute, contain hydrants and spigots at convenient locations, and have pipes well below the frost line. Properties with an established sprinkler or gated pipe infrastructure should be placed at a premium over those with less efficient irrigation methods.
Farming is rooted in the American way of life. However, the decision to purchase a farm is not as straightforward as purchasing a standard piece of real estate. By considering the aforementioned points, you can be well-versed in the factors that can influence the success of your farming endeavors.
Andrea Erickson is a contributor to Innovative Building Materials. She is a blogger and content writer for the real estate industry. Andrea is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that increase property value, maximize energy savings, and turn houses into homes.