From time to time someone asks to buy a portion of my property.
But when I price it to them they seem appalled
With farm land selling for $6500 to $8500 in this area it seems reasonable that 5 acres have a base of $35000 with a additional $10,000 to pay for legal work , survey and some profit to me. $45,000 total.
Yet after asking people look at me like I'm nuts or make rude comments when I give them a price.
And even so I feel like it might be to low since it really doesn't cover any loss in value to the remaining acreage , inconvenience and the fact they usually ask about the best place on the farm.
For example the last guy wanted 5 (330x660) or 10 (660x660) acres by the road with both high ground and waterfront.
That would have cut off my primary access to 120 acres ( I would have had two other greatly inferior routes of access) or I'd have had to put a ROW through the middle of it.
It would have been the only ten acres on the 120 with with water front , city water,high ground and road front in less than 1260 width.
I wouldn't mind selling some or all at a good profit but don't wanna get stuck with a few scattered in holdings.
Your thoughts on pricing / buying country property ?
That guy is looking for a bargain. He doesn't realize, that it is a bargain.
Its all time relative. That same person who is chastising you today, would likely be glad to buy, if he can get land, for your quoted price, come this time next year.
We purchased several plots of farm land back in the 80's for a few thousand an acre. This was land that people didn't want. My neighbor just sold a plot for several hundred thousand dollars an acre. 1/4 acre subdivision lots are selling for 210,000 after being on the market less than a month. Some of these plots were purchased for the price of the back taxes after the depression. And has been held for several generations.
They aren't making any more land. Farm land is getting harder to find. Good or marginal, either one.
Buying land is kind of like deciding the best time to plant a tree. The answer is today or ten years ago. It takes time for it to grow before it will yield fruit. A person has to decide when they will jump in.
Your ground is worth whatever somebody will pay you for it, smaller tracts do tend to fetch a premium.
Calling it "farm land" is painting with pretty broad brush strokes. Big variations in value depending upon if it is a nice flat tillable row crop field with high production soils, hilly pasture, woods with or without marketable timber, marsh land, marginal tillable ground, etc. Plenty of competent farm appraisers around that could help you put a number on it.
There sure isn't anything wrong with trying to get a premium sale price out of your ground, but it may take quite a while to sell. Land values peaked around here a couple years ago when corn was selling for $7 per bushel. With a couple years in a row of low crop prices, values have gone down a little bit around here. Also - You should be able to get legal work and surveying done to cut out 5-10 acres for a whole lot less than $10,000, more like $3 - 4,000 max.
If it was me, I wouldn't ever chop up a farm unless I was desperate. Sell it all or keep it.
One of the perks of living where I do is there is a on line appraisal service that has already appraised my property.
That said in central Illinois when you say farm land you're talking about something you can get a 32 row planter on to.
I'm not sure if it's good or bad but my proximity to St. Louis and Chicago means that what we call rough ground is worth just as much. Hillside bluff and Forest property is highly valued in this area or Deerhunters.
That $10,000 figure included some profit for selling the property. After all why bother to sell a $6500 piece of farm ground just have to buy another $6500 piece of farm ground back to replace it ?
I agree with you about chopping up the farm that's why I kind of want to do an all or nothing situation. I could wholesale the whole farm at 6500 and acre. That's why if I'm going to retail the farm in small pieces I would like to make a little more per acre.
I get people asking me about buying 20 or so acres of my place. And like you it's usually the best part or devalues the rest by limiting access, road frontage, ect.
I got the worst 20 acres of my place staked out and whenever they ask I offer them that. They always baulk at the suggest and I ask them why and it's usually because they say they don't want it as it's low quality land. I usually reply I don't want to sell the best of my place and be left with only that.
First you need to decide if you really want to sell any of it. Don't base the decision on that someone wants wants to buy it.
I too have had people wanting to buy bits of land. I'm just not interested in parceling it out and tell them so. Amazingly most can't understand why I wouldn't cut pieces out.
I bought two parcels of land. One is 45 acres the other is 105 acres. Both are 'treegrowth' woodlot. The smaller parcel has river frontage and sold for $900/acre. They both have road frontage. The larger parcel sold for $350/acre, and it has a ROW through the center to a string of parcels behind it. Those parcels have been on the market for over 10 years, off and on, they are all over 300 acres in size and asking $300/acre for them.
What county are you in?
I recently bought some rough deer hunting ground such as you describe in Jefferson County (about an hour from St Louis) for $4,000 per acre. Around there, to fetch $6500 it would definitely need to be some good wide open AG ground for row crop production.
I'm up in Shelby county. $6500 is poor ground up here.
Location location location !
But to be honest I would have thought the Saint louis kick would make anything within a hour of st. Louis worth more than you paid !
I fell into a deal where a neighbor and I got some neighboring farm land for $7000 or so an acre. Typically that ground is not sold around here if it gets a bid of $8000. Really good Ag land in a rectangle is higher here. Swamp land the govt doesn't let you do anything but hunt goes $2000 an acre, and if a little corner supports a building site then it's all back to $10,000 an acre.
A carved out 5 acres or so of good farm ground is gonna be well over $50,000 here. Lake front doubles or triples that.
To buy a $500K place, you need $100K / 20% down so your mortgage would be for $400K.
A 4% Loan x 15 years will cost you 2,959 per month = $35,508 annually
You'll probably have real estate taxes of at least $20 / acre too for another $2000 in expenses.
If you cash rented every square inch of it for $250 an acre, you only bring home $25,000, so you are $12,508 short of expenses.
Note that $250 per acre rent on $5,000 per acre ground is likely on the high side, $150-200 more likely.
No, the math doesn't work with borrowed money.
If you paid cash, you would net $23,000 after paying real estate tax, for a 4.6% annual return. Looking at it from this angle it's not too bad of a deal. Maybe not as good as you can do in the stock market, but less risky and way better than any CD is currently paying.
From time to time someone asks to buy a portion of my property.
But when I price it to them they seem appalled
With farm land selling for $6500 to $8500 in this area it seems reasonable that 5 acres have a base of $35000 with a additional $10,000 to pay for legal work , survey and some profit to me. $45,000 total.
Yet after asking people look at me like I'm nuts or make rude comments when I give them a price.
And even so I feel like it might be to low since it really doesn't cover any loss in value to the remaining acreage , inconvenience and the fact they usually ask about the best place on the farm.
For example the last guy wanted 5 (330x660) or 10 (660x660) acres by the road with both high ground and waterfront.
That would have cut off my primary access to 120 acres ( I would have had two other greatly inferior routes of access) or I'd have had to put a ROW through the middle of it.
It would have been the only ten acres on the 120 with with water front , city water,high ground and road front in less than 1260 width.
I wouldn't mind selling some or all at a good profit but don't wanna get stuck with a few scattered in holdings.
Your thoughts on pricing / buying country property ?
They are not making anymore land so ultimately it is a seller's market all the time, however looking up the address on the county tax assessment page generally list fair market value that the property tax is based on.
Of course if you want to sell and rich folk want big yars to go with their big houses they may offer you way over fair market value as they gentrify the area.
A guy I know was offered $150,000 for a fair market priced $49,000 house and road frontage 2.5 acres just so the rich folks could have the driveway entrance they wanted and water tap and about 500 feet of water line to the house they were building.
Two weeks after he took the money and moved to the mountain here, the rich folks had his old house and work shop razed and hauled off and their driveway gate with rough stone masonry columns up.
I sold our 20 acres for $30K, I priced it the Guy said it was Highway Robbery but he went ahead and bought it.
We bought 3 1/2 Acres, Large Garage with Apartment and workshop in it, 3 Sheds and 4 Bedroom House. In a Tourist area, close to town, On County Water for $40K.
I know where there is 5 acres with Well, Septic, Electric and a Shed for $25K and its been setting for years. But the guy came from out of State and put too much into it, now can't sell it for what he has in it.
For example the last guy wanted 5 (330x660) or 10 (660x660) acres by the road with both high ground and waterfront.
That would have cut off my primary access to 120 acres ( I would have had two other greatly inferior routes of access) or I'd have had to put a ROW through the middle of it.
If access is that critical to you, grant yourself (or the public) easement before you sell it. The easement will run with the land so the buyer can't revoke it.
Our original farm property was bought in 4 different lots back in the late 1800's.
Over the years, my wife's Great Grandfather sold off probably a total of 20 acres to several different people. Oh, if I could just go back in time and tell him "Don't you dare sell a foot of your ground. If you do, it will cause all kinds of headaches for your heirs."
My thought on property - and I've drilled this into my son's head as well - you buy property, but you NEVER, EVER sell property.
Every piece of land is different. I have friends in Florida that sold a lot, 50 feet by 75 feet for $250,000. I have bought farm land for $200 an acre.
Sometimes a 5 acre sells, per acre, far above a 80 acre parcel, if it is a building site and in an area of growth. In an area of big farms, a 5 acre piece won't bring much because it is un-farmable to big farmers.
I know of a 40 acre piece that was split into four 10 acre parcels. Four individuals bought those pieces. The land had been worth $20,000, but each piece sold for $10,000. No one wanted to build and the property changed hands many times. The best use now would be farming, but the amount paid is double the land's worth. Once a piece is cut up, it is hard to get it back into a useable field.
I ended up with far more land than I needed because it was a good value and I did not want my peace and quiet disturbed by some idiot with **** dogs, livestock guard dogs, unmufflered four wheelers, gun nuts, etc. Once you sell, you give up any control over it.
I bought a small house on 2 acres for $15,000, 1/4 mile from my house because I didn't want the dirtbag neighbors that house might attract. I fixed it up and rented it out. Never earned a dime on it, but I never lost sleep over it either.
The bank just had a appraisal done on this property in connection with another deal.
It appraised at just over 4000 in acre.
But the appraiser only compared it to roof flat ground bought buy the cheapest people around from sellers that were in extreme circumstances
They did not once take into consideration the mile of waterfront property the amount of view property and fine building sites in the rough ground the privacy inherent in the property the availability of water and city water and electric power
The pond prime hunting potential easy access or a number of other factors.
While the amount appraised was many times more than the amount needed it still irks me that the appraiser did what I consider to be a shabby job for my money.
In other words his comparables were not comparable.
Grrrr
I have owned four properties in different jurisdictions, before I moved here. In all five of these places the municipality has a total assessed value of all properties within that jurisdiction [city, county, whatever]. They set a mil-rate, that is the tax which applies to all properties that are assessed taxes.
When the spending budget goes up, they bump the mil-rate to cover the spending, to comply with the desire of the voters.
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