How to value farmland plot for purchase

[eb]

This is probably going to be a very difficult question to answer with any accuracy, but I'll ask it anyway.

How much should farmland cost? (I know, it depends....), but a guy I know is thinking about selling some fertile farmland, about 15 acres. It can never be anything but farmland, as it floods every year, but is very fertile because of that.

So, given that a house could never be built on it, and no other buildings could be put there, what is it worth? I have never priced any land that was anything but mixed use (i.e. suitable for farming or building).

Thanks.

[charles]

Originally Posted by eb

This is probably going to be a very difficult question to answer with any accuracy, but I'll ask it anyway.

How much should farmland cost? (I know, it depends....), but a guy I know is thinking about selling some fertile farmland, about 15 acres. It can never be anything but farmland, as it floods every year, but is very fertile because of that.

So, given that a house could never be built on it, and no other buildings could be put there, what is it worth? I have never priced any land that was anything but mixed use (i.e. suitable for farming or building).

Thanks.

One way to look at it is purely as an investment. If it can only be used as farmland, how much money would it yield each year for farming purposes? MOST farming operations can't be done economically on a small acerage. Homesteading yes, farming no. I'm not saying you can't some income from it, but you probably can't get enough to justify anything but a small purcase price. To justify any expenditure, you have to get a return large enough to cover inflation and taxes just to break even. This does not include the value of your time.

The value of the cropland can only be determined after a lot of questions are answered.

Where is the land located? The length of the growing season will partially determine the value.

What crops can be timely planted after the flooding? Time enough for a corn crop, watermelons, etc.?

Can any crops withstand the actual flooding, and does the flood water stand for days or weeks? Maybe a rice farmer would be interested.

Does it flood only once per year? Can the crop residue be grazed after the crop is harvested?

I looked at a farm a few years ago that lost one crop out of seven on the average. The years that produced crops made up for the lost ones with much higher yields.

[bumpus]

If it floods every year you will lose your farm equipment left on property, or crops that you might grow.

Any fence you run around the property or buildings will be knocked down all the time. And trash limbs and logs left on property after flood.

Any livestock put on this land many have to have life jackets put on them so they won't drown. You don't want to loose the heard.

You may or may not be able to cut hay of off the property.
Depends on how often it floods.

Could not be worth very much because you can not do much with it.
Talk to someone who knows the value on this property in your area.

[Michael W. Smith]

Well here in North-West PA most ground starts out at $1000.00 / acre. Of course if you can't use it for anything other than crops . . . . I don't know. How bad is the flooding? Does it happen every year? Is the whole land flooded or just a portion? If it doesn't flood every year or very deep, is it possible to put a house on stilts up? You may want to talk to other people in your area for prices. Does the farmer farm this property? Can you do the same thing?

[Mike in Ohio]

Is it possible to improve the drainage or create a retention pond to mitigate the flooding? This won't help make it buildable (perk test, etc) but it might increase the potential to grow crops.

Mike