We’re currently working to sell a nice starter farm not far from Conception Junction, MO. Its got 157 total acres, including approx. 85 acres of row crop, and 25 acres of really nice pasture, half of which could be easily put into production of row crop. Its priced to sell, under the market for a farm of this quality. I’ve got a couple of nice young men who are looking at it with the idea of renting it if it doesn’t sell by spring. I spent some time on the phone with one of them today and encouraged him to just buy the farm. , He said he’d love to buy it but he just didn’t have the money (I’ve heard this a few times before) and that brought something to my mind. Here it is:
I gave that young farmer a different way of thinking about farm ownership. This different way of thinking might be beneficial to other farmers who would like to own land, but don’t know how to come up with all the money it takes to buy a farm AND put in the crop.
FARMERS!!!!!!! HERE’S AN IDEA FOR YOU!
IF YOU WANT TO BUY A NEW FARM, BUT YOU’RE A LITTLE SHORT OF CASH, STOP THINKING LIKE A FARMER AND START THINKING LIKE AN INVESTOR!
Here’s how it works for an investor (BUYER):
BUYER finds a farm and negotiates the best deal possible.
Closing is set up for on or about the first of March. That’s when BUYER has to come up with the money.
Once the farm is under contract BUYER finds a CASH RENTER for the farm. This CASH RENTER agrees to pay the first year’s rent payment IN ADVANCE, on or before the day the new farm purchase is scheduled to close. The initial contract is set up so that the first year’s cash rent is paid directly into the closing proceeds of the farm sale. BUYER uses this rent as part of the downpayment, thus reducing BUYER”S initial out of pocket cash and the purchase price of the farm by the amount of the first year’s cash rent.
Buyer gets the farm bought, and he doesn’t have to come up with any money to put a crop in. BUYER gets a full year to gather up enough money or financing to cover the farm payment and put the new crop in. If the year turns out to a good one, no problem, if its a short year, BUYER just rents the farm again, collecting the cash rent payment before the first farm payment is due. Eventually BUYER will get to farm the new farm.
It works, and works well. Trust me!