Buying land and starting a farm

[FoxGardener92]

I intend to acquire land and start my own small farm as soon as I can get things rolling. The problem I'm running into is that Farm Credit (and the real estate agent I talked to) told me I need to put 25% down which is impossible for me anytime in the foreseeable future. I am a young, healthy man. In the not too distant future I'll be marrying, and my wife and I will work the land together to produce enough to make a living in combination with my Farriery business. We do not lack the capacity or the skills to make this dream a reality. The sole issue here is getting startup money, which is proving to be rather difficult.
My question is this: How does anyone begin a farm in this type of situation? It's not feasible to try to save up $50,000 for a down payment but I don't see any reasonable alternatives so far. Any help?

[MDfamilyman]

First off the best thing you can do, if you aren't, is become debt free. Once your money is working for you, rather than you working for it, it will come much quicker and you will appreciate it more. I recommend www.daveramsey.com to any and all, it financially saved my life.

Second, take up additional work. 2nd job, free-lance, seasonal work etc and put it all away (after debt has been paid off).

Other option, which I would prefer in conjuction with the debt free peice, is to start smaller with a smaller parcel of land and less equipment. Develop a sustainable, modest, farm and grow it as your profits increase. You could find a niche, such as organic or a specific crop/livestock that is high demand or very popular and add on to it as you become more successful.

No point in rushing out to take on a huge bank loan, starting a huge farm operation and killing yourself to make it a success, it just won't be too much fun...Probably very stressful, especially when you are tied to a huge loan. Anyways, just my 2 cents.

Goodluck and happy farming!

[ebook]

Rent ... I purchased 40 acres a little more than five years ago (we were young, but we had been saving for the opportunity) and if I was going to start over now I would rent to begin with ... learn what I enjoy, what the market needs, what I'm not good at, and save money! You would be amazed at how much you could do on a 5-7 acre homestead. I would say instead of trying to think outside of box on coming up with money think outside of the box when it comes to doing a lot with a little bit. It can be done!

It may not specifically talk about the things that you want to do, but I would suggest reading Greg Judy's books ... they really got me excited about the possibility of renting.

And ... if I can be completely self-promotional ... I just released a podcast episode where I shared the 6 Steps I would take in my first year (including renting instead of buying). I didn't go into super detail, but did share some basic thoughts

[d'vash]

How about a rent-to-own option? Rent the land from the owner for x-amount of years, with x-amount of the rent to be put towards the down payment when purchasing the property. It's a win/win situation. Just make sure you have your own lawyer [do to conflict of interests] and get everything in writing.

[Cyngbaeld]

Look for foreclosures that are Fannie Mae Homepath. They can frequently be had for 3% down. Usually will be 10 acres or less, but you can do a lot with 10 acres. Fix the house and land up then sell at a nice profit to buy what you really want.

[rambler]

What type of farm are you looking at, crops, livestock, produce, trees, what size operation. I don't need specifics, but just what are the goals, really? There are so many different types of farming...

It is about impossible to buy a whole farm from scratch and then make it pay its way and make you living off it from the get go.

You need 2 incomes, start small, learn what type of farming works for you, and expand over the years.

Farming takes heaps of money The first 5 years, not much income in cash the first 10, you just keep plowing income back into the business, gaining assets, but not any income.

So, if you can't put down 25% of what you plan to lay out, then it will be very very hard to find an investor.... Smart investors know you need that stake in the game to make a go of it.....

Start small, save save save, and you will get there. It's tough when you are young, and there are 100 established farmers in the neighborhood that can do it cheaper than you, it takes time until you become one of them, takes patience and time. And lots of saving and money too.

Paul

[nostawmama]

Also think about how you would pay such a hefty mortgage if you have only one income- if you were hurt on a job or your future wife takes time away from work to raise a youngin. Starting small, getting established in your market, and getting ahead on the learning curves would be all be wise choices.

[highlands]

Originally Posted by FoxGardener92

My question is this: How does anyone begin a farm in this type of situation? It's not feasible to try to save up $50,000 for a down payment but I don't see any reasonable alternatives so far. Any help?

The $50K for the down payment is just the down payment on the property. You will have a lot of other costs, possibly 10x that or more to start up a farm. Much like with any business. There is a large capital outlay to get started.

You may need to work at something else for a decade or two before you have the resources to get started in your venture.

Alternatively, start very small on cheap land and gradually build up for a decade or two so you have the resources to start your planned bigger venture.

Have you worked up a business plan? How will your farm pay for your capital, interest, expenses, living costs and more?

[goatlady]

One does NOT start out on the property of their dreams, the final product. One buys small, learns what works and what does not, then sells the small, and uses that $$ to step up to a bit larger and so on until you finally reach your end goal results. It's called equity buildup. Takes years.

[FarmboyBill]

I found Farm credit, and Farm Services, and I don't know which one wants what, BUT you have to have either 40 for one, and 360 acres for the other..

I have a bank that will loan, nothing down, BUT only up to what my credit rateing will allow, which is $66.000. problem is, Theres darn few places that sell for that that have 10 acres thereabouts.

[nathan104]

We had to put 30% down when buying our farm. Regular bank loans are designed to be based on the house and not the land value. When the land value accounts for a majority of the loan value it makes it much harder to get a loan. Which really makes no sense as a hour can be torn up and lose tons of value but the land is always there.

Aftering paying your large down payment and actually getting your farm is when the expenses really begin.

[FoxGardener92]

Thank you all for your prompt and thoughtful replies. There is a lot of wisdom in many of your words, and I will take that to heart. I think the idea of starting out with a small amount of land and a house, working, and then selling and moving up to larger and better property is a very good one. That may well be what we do.

[Lizza]

You really only have a few options when you can't pay cash.

Buy bare land and do owner financing, then slowly build as you can.

Buy a regular stick built house with a few acres for 3-5 percent down and favorable interest rates, then like others mentioned trade up.

Both take years, I suppose you just have decide which one is better for your personality and situation.

If you truly want to farm for a living, like someone else mentioned, I would try and rent or work on other farms while you deal with the learning curve.

[Pheasant283]

I know what you are going through I have been their. You want to start now, but like others are saying it takes time and $ to get to what you want. Over the past 6 yrs I have bought a house in the small town I live in fixed it up sold it bought another one fixed it up sold it moved up to another one bought it fixed it up and now this one is on the market. The $ from this house I am going to use as a down payment on my "homestead". I also work a full time job and a seasonal part time job and save and scrape every bit of $ together I can. However since I live in a small town, I am still able to practice the "homestead" life style. I raise some meat rabbits, chickens for eggs, and raise a pretty good sized garden.

[RomeGrower]

All of this is a good example of how hard it will be for Americans to migrate back to an agrarian lifestyle should our current circumstances change drastically in the next few years. Best to start working on it now, even if in small steps. Apparently some of the 50 acre +/- lots around here are bought up by investors looking to flip for possible subdivisions. It's pretty hard to compete against that.

[Awnry Abe]

50K is more than possible, it is very doable. It sounds to me like you have your head screwed on straight. This is the time in your life that if you sacrifice now, you can reap reward later. If you make owning a farm goal #1, you can then define "sacrifice" as putting off any thing that gets in the way of that goal. Pay attention to where your money and time is spent. If it is on "self", getting to that goal will take a long time. Eat in. Don't buy a boat. Don't buy a TV because you shouldn't waste time watching it anyway. Etc. all of that stuff adds up and erodes your ability to reach your goal. I would expect to be able to come up with an extra 50k in about 2 years with a second income. All of the self stuff can happen later.

[Taylor R.]

For the love of all things good and right, get saving before you have kids! We didn't realize our dream until we had three kids. We sold our house, moved into a tiny rental, and are working our tails off trying to save enough still. It's a lot easier to do without with no kids. We had no problem saving for our first house with no children, but you wouldn't believe the bills that come along with them.

Just some friendly advice based on our experiences!

[RomeGrower]

I understand where you're coming from, but we were able to buy 2 acres of land in Maine from family and move a mobile home onto it and learn a lot about homesteading while having 5 of our 6 kids. The 6th was born here in Georgia when we relocated for my job. Sacrifice is the main thing. We drove older vehicles (just one) and had no motorized toys, no cable and learned to live cheap. Now in my late 40's I'm so glad we had kids and I'm still young enough to help them with their dreams and enjoy it with them. You're right about the bills with kids though. Thankfully, income usually rises as you grow older. That may change, but it has been true for us.

While in Maine our kids learned about growing apples, picking up the drops, weeding the two large gardens we had, building treehouses, digging ponds, building rock walls, building and maintaining raised flower beds, raising day old chicks to bearing age chickens, building a chicken coop, killing and eating chicken, cleaning eggs, working with wood, building trails and a campsite, making apple sauce, cutting rhubarb, shucking corn, snapping beans, shelling peas, snowshoeing, watching moose in the yard, seeing bear scat 50 ft. from our house...

Starting over in Georgia, in town, has changed all that and we want to get back to it as much as possible. Through it all I am so glad for my family and my faith and I wouldn't change it. The journey has so much value in making us who we are.

[ET1 SS]

Originally Posted by FoxGardener92

... How does anyone begin a farm in this type of situation? It's not feasible to try to save up $50,000 for a down payment but I don't see any reasonable alternatives so far. Any help?

In my area there is a popular trend of 'apprenticing'.

Many small-scale organic market farms accept apprentices. Room and board plus a stipend [maybe $50/week]. You do everything on the farm, planting, weeding and baby-sitting parking lots [market]. Some of these farms are family owned, some are communes, some are partnerships. Most are CSAs.

It is mostly college students who apprentice.

Our regional Organic Certifying agency is MOFGA. They have an online forum and they offer the service of connecting farms to apprentices for a $25 fee. This year they had over 100 farms looking for apprentices.

Some apprentices stay with it and work through the winter.

If you complete two years of apprenticing, preferably on different farms. Then you may apply to be a 'Journeyman'. This is where they will place you into a 'Farm Manager' position.

After completing a year as a Journeyman, then MOFGA has a program where they will try to get you onto your own farm. Sometimes there may be an elderly farm couple who wish to will their farm to young farmers. Sometimes they work it out via grants, etc.



I also know beginning farmers who started by share-cropping. Find land that is fallow, talk to the owner, as you begin to harvest, you need to keep his larder filled. The bulk you take to market.

[bruce2288]

These farm apprentices are basically slave labour. $50/wk, a bed in a bunk house and eats? Slave labour! planting, weeding watching parking lots are sure very complicated skills that a young person should give 40 hrs a week in labor to learn. It is a great deal for the owner. Heck maybe it is actually more benefit than the college education they are going in debt for. I personally would be ashamed to offer those wages to an employee that I had expectations of. such as so many hours a day and so many days a week. Whether I called them an apprentice or not. Yea I am grumpy today.