How Much I Paid For 50 Acres Of Iowa Farmland

this spring about 50 acres of land in Iowa with some of it needing work to be productive again so I bought a John Deere 4020 in disc to help break up the sod now it's time to plant corn so I drove my brother's tractor 100 miles to get the field ready and planted and later in this video I will break down exactly how much I paid for the farm and the price per acre as well as share the experience I had getting a beginning Farm alone [Applause] thank you all right everything's going good this is technically the second pass on the CRP area and then we're doing one pass on the soybean and it's breaking up pretty good I mean it's still clumps but that five inches of rain we got I think helped break it down once we get down here we'll finish the five acres then the 12 on the other side if you remember that was all water about five six days ago now we're on the other side of the creek just got done over there this is like 10 12-ish acres here thank you this spot here is by far the worst grass and this this had no trees this was all just crb so obviously came back a lot quicker now we're planting we're about halfway done with the 30 Acres we're jumping in and out making sure everything's uh right all the adjustments are made and seeds going where it should be so there we go up over the Waterway we're out of seed I think it was row two or three got it all filled up with seed should be good 18 Acres done 30 total so 12 ish left all right all in all planning was going smoothly but then Grant and I started to notice the planner arose we're looking quite squiggly and not straight now the guidance system we have on the 8110 is an ATU 200 so we started to make adjustments to the monitor by changing the sensitivity levels and after doing that things would straighten out but then about 10 minutes 15 minutes later things got squiggled again and we would have to make more adjustments after a while playing with it we got it to a point that was good enough or better than I could do by hand now after thinking about it for a while I assume possibly driving at 90 miles down the road and some of the road was quite bumpy could have messed up the the globe on the roof it could have messed up the steering wheel system that's mounted to the steering wheel let me know if any of you guys have ran into issues like that before and maybe how you fix them let me know in the comments so I ended up not getting that much footage of planning because this was my first time really planning by myself and it being a new field I just wanted to focus make sure everything was going right it was really cool to see after the five inches of rain just how fast the field dried once we fixed the tile and the sun came out but we did end up planning on May 20th which is no big deal it would have been nice to obviously plan a bit earlier but if we had planned it earlier before that rain a lot of spots would have flooded out so given the weather I think everything turned out totally fine and we were planning at two and a half to two and three quarters of an inch depth seed depth and then the population we planted at was 33 800 and this is a ground drive 12 row planner and the seat I planted to start out with we had a couple extra bags of wiffles 7876 that we wanted to test six rows on so we could see how it compares to Pioneer 1164s the fuel cultivator I rented was a case 4800 it had the spikes instead of the drag Harrows on the back and didn't really deal with too much of bunching up I was a bit worried we got rain for two three weeks and the grass really started to come back I was worried the field cultivator would Bunch up not do a good job but it did did really good to catch you guys up to today it's now June 24th when I'm editing this video 35 days after planning the corn emerged in seven to eight days I planted at 33 800 population in the worst spots I saw were these previous sod areas that hadn't been farmed in a few years and those were the lowest I saw were 29 000 but honestly it more so averaged around 30 31 which I was very happy with and up to this point the local co-op has already applied both pre and post spray 30 pounds of uan were in the pre-spray in 150 pounds of anhydrous with the planned top dressing of urea would put us up to 225 pounds of nitrogen for the corn and if everything's looking really good later in the summer might have them do fungicide as well we'll just see how everything plays out after planning we've gotten a total of three and a half inches of rain but it's been really dry and just today we got one and a half inches so the Corner's been stressed on some of the lighter ground in the forecast they're talking a little bit of rain maybe tonight but it's it's been fairly dry so when I get up in the Drone it's a bit concerning to see the spots that were farmed in the past there's these lighter spot strips running East and West now we planted the farm North and South through the Waterway and you can see what was not farmed in the past the section that has the Waterway going through it that doesn't seem to have the strips as bad and just trying to figure out what it is comment below what you think that could be interesting if it grows out of it and how it kind of plays out the most common weeds I've seen are milkweeds in the sod acres and recently I found a bit of rough horsetail near the Waterway but everything looks to be dying all in all planning went really good the corns growing some spots are rougher than others but we got a bunch of rain today and hopefully later tonight and hopefully we get out of this you know drier weather so now I thought it'd be cool to spend the rest of the video going over the finances behind buying 50 acres of Farmland in central Iowa a lot of people have been commenting asking and dming me I did end up financing it I didn't pay all cash and I used the beginning farmer loan so there were a lot of misconceptions I had some people would say hey it's a ton of paperwork it's going to take four months to just figure out what you want to do and my goal with this video is to try and be as transparent as possible and this no way is this bragging I always really found it interesting to learn from others through YouTube videos like maybe YouTuber would break down how much income they made at being a real estate agent or just having like YouTube channels and breaking down how much somebody made I think it's really helpful for the people who are interested in trying to start their own thing or everybody's kind of nosy and wants to know stuff but you could look at it that me sharing this information is probably you know worse off for me but I just want to be as transparent as possible and help the 50 people that are looking to buy some Farm ground uh are interested in the beginning farmer loan and just want to know more I paid 396 000 purchase price and I got a beginning Farm alone and so on on this specific loan the lowest amount of down payment you can pay is five percent and it's kind of interesting so how it worked out is I ended up having to pay 10 down payment and that's because I had a little more cash than maybe the average uh customer that is looking to get a five percent down payment so I paid around forty thousand dollars for the down payment and then it was structured at 45 percent FSA at one and a half percent interest rate for a 20-year term and then the other 45 of the loan was through Farm Credit Services and that was at seven and a half percent and then they give you one percent cash back so I just look at it the weighted average interest rate was three and a half percent I paid on this farm so to keep things super simple I wanted to quickly break down and show you the two main benefits of getting a beginning Farm alone so the loan is structured in two parts one being FSA and one Farm Credit and my down payment was ten percent of the total purchase price and then the other ninety percent is finance and so half of that ninety percent turns out to be a hundred and seventy eight thousand dollars and so I have to say it takes one half and Farm Credit takes the other so when you're getting this loan you need to be in contact and get in contact with FSA and also some sort of commercial lender it doesn't have to be from Credit Services it can be a handful of other commercial lenders and so fsa's rate is one and a half percent which is extremely low especially today it's low historically and my term is actually 20 years but to compare things apples and apples we're going to keep it 30 and then this turns out to be that payment then looking at Farm Credit we have six point four nine percent and my rate is actually seven point four nine percent but at the end of the year with Farm Credit you get one percent cash back and we're going to keep the same it's it's a 30-year payment term and so that turns out to be the payment so add these two together and you'll be able to compare that that uh if I just got a normal loan through a commercial lender at six point four nine percent that's the amount of savings I would get so my interest cost over 30 years where the FSA is 43 000 versus Farm Credit is going to be 230 000 and the reason why the difference is simply the interest rate being so much higher now you add both these up and you compare it to what a commercial lender would be at the six point four nine percent for 30 years I was gonna have to borrow 296 000 and that was roughly a hundred thousand dollar down payment and with the beginning Farm loan I only only had to do 10 or 40 000 so they are going to be saving sixty thousand dollars out of pocket day one from the down payment savings and then over 30 years comparing the beginning Farm loan to commercial lender I'll be saving roughly a hundred and nine thousand dollars in interest savings so I bought it at a public auction it would be a little under eight thousand dollars an acre per tillable acre so this Farm is 56.6 acres of land now that includes stream stitches in other parts you really can't farm and FSA has it rated at 50.9 Acres of tillable Farmland so once you break that down I paid about 7 700 per acre I think I got a pretty good deal on this now time will totally tell it's all speculation land prices are up a bunch over you know the past couple decades but I ended up paying a hundred and ten dollars per CSR 2 point and so in Iowa a good way to compare Farms is they use a csr2 metric and that stands for corn suitability rating and this is the second version that's a way to kind of rate ground in some ground that's going to produce really good corn and crops and some aren't well you just decrease and lower the rating so the highest you can go is 100 the lowest is five and this Farm averages 72 certain spots are 90 cso2 and it goes all the way down to 55 I believe so I paid 110 dollars per csr2 point so you take 72 times the 50.9 acres of tillable land and I could see the total amount of csr2 points on this farm and then uh take that by how much you paid for it so if you look at this Farm 110 for CSO two point is is very low relative to other Farms that have sold in the area looking at it that way I got a decent deal but like I said that's all speculation a lot of people might look at this and say wow you're so dumb for paying 7 700 an acre earlier I mentioned I bought this farm at auction and that's a bit of an issue because with the beginning farmer loan it can take from 45 to 60 days to close and even more in at most auctions they want to close within 30 days and so I ended up having my brother purchase the farm he held it signed a purchase agreement with him and then 60 days later I closed and technically bought the farm from my brother and so honestly that was the biggest complication in this whole process and if you were to buy farm from a relative or just the general listing it would be it would be much easier and less of a headache and so break it down how I started the process is first thing I did was contacted the FSA office they sent over the application and this application was the dreaded 100 page long a bunch of information really cumbersome that I had heard from everybody else but in my opinion it wasn't too bad it took me about a day to fill out and a lot of it I ended up just leaving blank because I didn't have livestock I didn't have buildings or other Farm assets already or liabilities and on it I had to provide my own personal balance sheet the past three years federal and state tax returns as well as you have to provide some background about yourself and kind of your farm experience one of the requirements is you do need somewhere around three years of farm experience and in my understanding going through the process it's not not everything is totally black and white like for example I mentioned I put a 10 down payment well the lowest you can go with this is five percent and in my circumstances on my balance sheet I I had quite a bit more cash maybe than the average person and I was required to put 10 down payment so not everything is is cut and dry and black and white and so once I filled out the application provided all the things they needed I also needed to provide a signed purchase agreement and once I got that submitted it did end up taking 60 days from submitting all my information to closing and so that's why it was you know that's why it's really nice if you aren't buying a farm at auction to go this route and while in my opinion there are quite a bit of positives like this first year I am Gonna Save eight thousand dollars alone on interest savings as well as a smaller down payment there are some negatives you do have to provide more information than if you were to just go the commercial lender route and also for example let's say I win the lottery tomorrow and I'm a multi-millionaire FSA is going to see that and be like hey you don't qualify anymore for the beginning Farm alone they're just trying to help people who are starting out and try and give them a little boost to get started and so with that I have to update my balance sheet submit new tax returns and stuff like that to kind of prove that hey I'm still a beginning farmer I didn't win the lottery yesterday and so my overall thoughts are the positives outweigh the negatives by quite a bit some people have other experiences but mine was mine was pretty good the process wasn't too bad and we we kind of closed in a relatively short period of time the amount of Interest savings and then having the lower down payment was huge for me to get started farming and if I just run the commercial route the the hundred thousand dollar down payment and then also the higher interest payments I would be paying every year would be quite cumbersome it would be hard to start out so hopefully this helps some of you guys that were interested in learning more about the beginning farmer alone this is just my experience I for sure missed a bunch about the application process and all that I didn't go too in depth because that's something that I recommend like I said go get the application and look through it if you guys have more questions comment below on this YouTube channel and if you have more of a personal question feel free to DM me on Instagram I I made this video to help the 50 to 100 people that are want to know this information and don't have somebody that they can talk to that has went through the process before so a bunch of also information online that's going to give you way more detailed stuff than I was able to give so make sure to check that out obviously and take my word with a grain of salt this is just my experience your experience might be different and if you're watching this video three years later I'm sure the process change interest rates changed stuff like that so like I said hopefully this helped happy to make this video and happy to answer any questions in the comments below thanks for watching [Music] thank you [Music]

Channel: Spencer Hilbert

Views: 437,945

Keywords:

Id: QdV3wmMnDUo

Length: 16min 5sec (965 seconds)

Published: Fri Jun 30 2023