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Hello,
We've recently purchased a tract of land and are planning to build a house and shop in the next few months.
My question is: [img]/forums/images/icons/confused.gif[/img] are than any special finance institutions, or programs that help out people building farms? We are zoned agricultural, and are also in a conservation program.
Someone told me farm credit has plans designed for farmers at a reduced rate. Any help would be appreciated. [img]/forums/images/icons/smile.gif[/img]
You do not give a lot of information, other than you plan on building a house and a shop, the land is zoned for agriculture and you have a conservation easement.
Based upon this information, nothing was mentioned about farming, unless you plan to farm, you would not qualify for any farm programs. Living on farmland does not a farmer make.
Sorry, I didn't specify. I have about 17-18 acres which is corn, and winter wheat. I am leasing it to one of the local farmers who needs the work.
That's only 17 to 18 not 17,000-18,000 like up in North Dakota.. [img]/forums/images/icons/smile.gif[/img]
I am not an expert or know a lot about farm programs, but based on the information that you have provided, most of these programs are based upon farming the land yourself. Buying the land and leasing it out makes you an investor. Just my humble opinion.
The farm that I grew up on was only 320 acres. Just acquired 46 acres which we will be farming, farmers market, which entails a lot of hand labor, do not know if that qualifies as a farmer or not. [img]/forums/images/icons/smile.gif[/img]
I did a little checking and found that Farm Credit will do my loan. They also said as long as it's an active crop producing farm I'm good for the loan regardless of who's doing the work.
I appreciate the info, may be when I retire I'll farm it myself, but I'm not used to working as hard as the farmers do.
I have the utmost admiration, and respect to all that do that HARD work!!! [img]/forums/images/icons/smile.gif[/img]
I guess that I would still check around, do not know what interest rate they charge, but all rates are low right now.
Farm loan institutions love guys like you jaegar. Your interest is going to be more because it's a farm than a conventional mortgage. You also are a good risk if you have good credit and a regular job. Bad news on your part though as farm loans are typically alot higher interest rate than conventional mortgages.
Although I am not seeking a loan for our farm, I am writing a business plan in order to analyze the level of profitability.
I would look at the cash flow for your "farm" before going for a loan. If you take the average crop yield in your area for your crops times the acreage times the crop price, you should have a rough estimate of income. This should be true whether you are doing the farming or a leasee. I've looked at a number of possible crops and ruled many of them out. Personally, I can't see a lot of income coming from 17 acres of corn and wheat.
I would like to eventually make our farm my full-time job. But that would require certain levels of income and profitability. I'd want to clearly understand what those are before taking out a loan that might prevent me from achieving my objective.