Farm Land to Buy or Not
- Thread starter sivakumar_sr
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Siva
As an owner of a rural property along with resi properties, I would like to put another spin on your question.
Have you thought how many resi properties you could purchase with your 40% you are prepared to put to this rural property?
$160,000 which is 40% of $400,000 that is a lot of deposits for a lot of resi properties. Then consider what the value of those resi properties will be compared to your $400,000 rural property.
The rural property gives a great lifestyle. But in terms of making money from it when just starting out - well that is another matter.
We on the other hand have already converted one rural property to a few resi properties and intend on doing this again in a few years with the other.
Owning any property resi or rural is better than owning none.
Kinga
As an owner of a rural property along with resi properties, I would like to put another spin on your question.
Have you thought how many resi properties you could purchase with your 40% you are prepared to put to this rural property?
$160,000 which is 40% of $400,000 that is a lot of deposits for a lot of resi properties. Then consider what the value of those resi properties will be compared to your $400,000 rural property.
The rural property gives a great lifestyle. But in terms of making money from it when just starting out - well that is another matter.
We on the other hand have already converted one rural property to a few resi properties and intend on doing this again in a few years with the other.
Owning any property resi or rural is better than owning none.
Kinga
Thanks for your replies guys. I had spotted three properties within by budget closer to Karoonda area. Quite suprise that I am seeing properties with more than 1500 Acre land and used for cropping/grazing. I don't know whether these properties are worth looking. I did called the realestate agent to confirm that the listed prices are correct. They confirmed that it is the right price.
Any ideas why these properties are listed for this price. Are they any good to consider buying. But 1000+ acres says me to go and see in person to find out about these properties. One of the property has 4 bedroom house in it. I hope this could even give an income if leased for rent.
Pursefattener to answer your question of what we can buy for 400K I did found three properties listed below
http://www.realestate.com.au/property-other-sa-marama-7328076
Listed for 395K 1700 acre with house
http://www.realestate.com.au/property-livestock-sa-karoonda-7324092
Listed for 330K 1951 acre without house
http://www.realestate.com.au/property-residential+land-sa-karoonda-2741056
Listed for 330K 1800 acre without house
Guys please guide me with your feedback for these property. I might plan a trip next week to see these three property in person.
Regards
Siva
Any ideas why these properties are listed for this price. Are they any good to consider buying. But 1000+ acres says me to go and see in person to find out about these properties. One of the property has 4 bedroom house in it. I hope this could even give an income if leased for rent.
Pursefattener to answer your question of what we can buy for 400K I did found three properties listed below
http://www.realestate.com.au/property-other-sa-marama-7328076
Listed for 395K 1700 acre with house
http://www.realestate.com.au/property-livestock-sa-karoonda-7324092
Listed for 330K 1951 acre without house
http://www.realestate.com.au/property-residential+land-sa-karoonda-2741056
Listed for 330K 1800 acre without house
Guys please guide me with your feedback for these property. I might plan a trip next week to see these three property in person.
Regards
Siva
http://agents.realestate.com.au/cgi...8205557&time=1315096320&f=18&p=6&tot=31&t=rur
Siva , I checked out the above links and I can see why you are interested . You get a lot of land for not a lot of money .
Personally I don't see much upside . Where is the cashflow going to come from ? Do you know how much money there is in sheep? 5/8 of bugger all really . I'm not familiar with these areas but they are likely to be very marginal for cropping . I am sure TC will know .
As I'm in the dairy business I post a link of a small place I know of for sale which I know performs well in the key benchmark ratios EBIT , ROA , ROE , Change in nett worth etc .
If you bought this and were sucessful with finding a sharefarmer of good repute you would have cashflow in the 600-700k per year or thereabouts . Of course it aint cheap though...
I admitt I don't know an awful lot about cropping . I like the cashflow that dairy has, despite it all .
Siva , I checked out the above links and I can see why you are interested . You get a lot of land for not a lot of money .
Personally I don't see much upside . Where is the cashflow going to come from ? Do you know how much money there is in sheep? 5/8 of bugger all really . I'm not familiar with these areas but they are likely to be very marginal for cropping . I am sure TC will know .
As I'm in the dairy business I post a link of a small place I know of for sale which I know performs well in the key benchmark ratios EBIT , ROA , ROE , Change in nett worth etc .
If you bought this and were sucessful with finding a sharefarmer of good repute you would have cashflow in the 600-700k per year or thereabouts . Of course it aint cheap though...
I admitt I don't know an awful lot about cropping . I like the cashflow that dairy has, despite it all .
That looks like hard desperate cropping land to me. Looking at it on google maps, You can see a lot has been cropped. I'd say it's the sort of country you might make a profit on every five years or so, but I'm only guessing.
That first farm? It has some infrastructure on it including an old stone house and some sheds? So the land is even cheaper than it looks. I used a street view to look at a bit of land nearby,...
http://maps.google.com.au/?ll=-35.1...d=pLddFEPq5aJSgJGKl0M5KQ&cbp=12,179.25,,1,1.8
Gee's. That's some harsh looking dirt. I really know nothing about cropping land as harsh as that.
See ya's.
Hi Siva
Compared to other areas in Australia, this is a harsh area, but it’s a risk/ reward. Rain fall varies from 220mm north of Loxton to 400mm south of Lameroo. The better country is in the southern mallee, Lameroo, Jabuk etc.
This area is traditionally a mixed farming area with sheep and winter cereals. Recently there has been a lot of investment in irrigated horticulture, namely potatoes and onions. Note that the mallee is a prescribed irrigation area.
Yields vary greatly. In the northern mallee six plus bags of wheat and acre would be considered an average crop. Last year was the best year in the mallee for cropping. Price varies from sub $200 a acre to $500 an acre.
I would recommend doing a lot of DD prior to buying.
Cheers
Pat
Compared to other areas in Australia, this is a harsh area, but it’s a risk/ reward. Rain fall varies from 220mm north of Loxton to 400mm south of Lameroo. The better country is in the southern mallee, Lameroo, Jabuk etc.
This area is traditionally a mixed farming area with sheep and winter cereals. Recently there has been a lot of investment in irrigated horticulture, namely potatoes and onions. Note that the mallee is a prescribed irrigation area.
Yields vary greatly. In the northern mallee six plus bags of wheat and acre would be considered an average crop. Last year was the best year in the mallee for cropping. Price varies from sub $200 a acre to $500 an acre.
I would recommend doing a lot of DD prior to buying.
Cheers
Pat
Just to bring up an old thread.....I was having a quick look places forsale around the lameroo area where the OP was talking about, and saw this: http://www.realestate.com.au/property-mixed+farming-sa-lameroo-7347961
For the OP's purposes this would'nt be to bad, as it has a 6% lease back option, how ever consideration would have to be given long term as how to generate revenue as this place is too small to be a stand alone farming operation.
For the OP's purposes this would'nt be to bad, as it has a 6% lease back option, how ever consideration would have to be given long term as how to generate revenue as this place is too small to be a stand alone farming operation.
Hi Pats
Thanks for your find. This one looks good and value for money as well. Are you saying 1140 Acre is not sufficient for farm operation by its own?
I personally went down to Karoonda and visited few farm properties there. The area is fully of broadace farming mostly wheat and sheep grazing. I found one property in Karoonda which is 1500 Acres with three bedroom house in it. This is a private sale and the property is currently leased on 6% and it is growing wheat now. I had negotiated this property for 350K and put an offer subject to finance. I saw the council valuation for this property as 395K in the latest rates notice and my offer is below this. I will lease out the farm and use the house as my hobby farm for weekend. I liked it very much. I had be honest and say that I am happy in purchasing this property compared to my other residential property which I bought in last few years.
I am currently talking to different banks to get my finance and looks not many are there willing to finance for farm properties. Rabo bank will do max 50% likewise Bendigo bank. I haven't started talking to CBA yet but hope someone will lend more than 50%. I hope I will get my finance to purchase this property.
Regards
Siva
Thanks for your find. This one looks good and value for money as well. Are you saying 1140 Acre is not sufficient for farm operation by its own?
I personally went down to Karoonda and visited few farm properties there. The area is fully of broadace farming mostly wheat and sheep grazing. I found one property in Karoonda which is 1500 Acres with three bedroom house in it. This is a private sale and the property is currently leased on 6% and it is growing wheat now. I had negotiated this property for 350K and put an offer subject to finance. I saw the council valuation for this property as 395K in the latest rates notice and my offer is below this. I will lease out the farm and use the house as my hobby farm for weekend. I liked it very much. I had be honest and say that I am happy in purchasing this property compared to my other residential property which I bought in last few years.
I am currently talking to different banks to get my finance and looks not many are there willing to finance for farm properties. Rabo bank will do max 50% likewise Bendigo bank. I haven't started talking to CBA yet but hope someone will lend more than 50%. I hope I will get my finance to purchase this property.
Regards
Siva
Hi Siva and all,
My thinking with these types of investments is that in the long term, if there is already a house producing income and you can lease the average to local farmers, this land could be used to eventually build residential houses on.
And then you have a gold mine worth potentially billions many, many years down the track. Am I correct in this assumption; that eventually it will be zoned for residential (even if it is for my grandchildren?)
Are there many potential risks with these strategy (aside from the large deposit and potentially negatively geared property?)
Thanks,
James
My thinking with these types of investments is that in the long term, if there is already a house producing income and you can lease the average to local farmers, this land could be used to eventually build residential houses on.
And then you have a gold mine worth potentially billions many, many years down the track. Am I correct in this assumption; that eventually it will be zoned for residential (even if it is for my grandchildren?)
Are there many potential risks with these strategy (aside from the large deposit and potentially negatively geared property?)
Thanks,
James
Siva
I would be interested to hear more about the property you have purchased if you are willing to share.
Regarding the size of a viable farm, in recent years there has been alot of consolidation of farms and the average size in this area at a guess would be 3000 to 5000 acres.
The biggest thing cost wise to consider is the amount of capital required, in terms of low lvrs on lending and also the cost of machinery, seeding and livestock. A farm of 1500 acres could be viable you would struggle two use modern machinery and farming techniques that are capital intensive, but efficient interms of labour units required and also profitable.
Investment wise, I would be conscious, that you do not limit your only income option to leasing or share farming. Basically are you going to have the skills and knowledge to farm this yourself.
In terms of capital growth, I believe agricultural land to be positive in the loan term as the world requires more food. The area you have chosen I believ will to especially well in the long term, as modern farming techniques are increasing yields greatly I n marginal areas.
James
In terms of potential subdivision, I am not sure of the specifics where the OP has bought, but there is very little chance (basically none) in these areas given the location.
I would be interested to hear more about the property you have purchased if you are willing to share.
Regarding the size of a viable farm, in recent years there has been alot of consolidation of farms and the average size in this area at a guess would be 3000 to 5000 acres.
The biggest thing cost wise to consider is the amount of capital required, in terms of low lvrs on lending and also the cost of machinery, seeding and livestock. A farm of 1500 acres could be viable you would struggle two use modern machinery and farming techniques that are capital intensive, but efficient interms of labour units required and also profitable.
Investment wise, I would be conscious, that you do not limit your only income option to leasing or share farming. Basically are you going to have the skills and knowledge to farm this yourself.
In terms of capital growth, I believe agricultural land to be positive in the loan term as the world requires more food. The area you have chosen I believ will to especially well in the long term, as modern farming techniques are increasing yields greatly I n marginal areas.
James
In terms of potential subdivision, I am not sure of the specifics where the OP has bought, but there is very little chance (basically none) in these areas given the location.
Hi Pats
Looks like you are quite familiar with the area. I am happy to share the details of the property
The property is situated 8Kms South East of Karoonda in Loller Road, Karoonda.
It has 3 Bedroom Stone house, Renovated new bathroom, Power/Telephone connected, bore water through windmill, 2 split aircon fitted in the house. Large water tank storage is kept in few places to catch rain water. Has 4-5 separated well consutructed sheds. The total size of the property is 1600 Acres and it is fully fenced and the fence quality is good. It is divided into 8 paddocks and has water connectvity for all the paddocks through the bore water for livestocks. It is sandy loam soil type and has few shelter belts. Out of 1600 acres 100 acre close to the house is not arable rest is used to grow wheat maily and Rye is some part of the property. There is 6 silos. The property has 2Kms road frontage on one side and 1 km on other side of the road being corner block. The house is constructed well inside the property with proper driveway about 1Km from the main road. Currently it is leased to local farmer and I met this guy and spoke to him for sometime. He is leasing it out for last 8 years and happy to continue for long term. He also expressed that if we can come up with 5 years lease agreement he can do some imporovement to the farm land to get better yield.
The council valuation is 395K in the last rates notice with council rates $1507.38, + state levy $28.95.
If you need more information send to my email id [email protected] I can send you some photos
Regards
Siva
Looks like you are quite familiar with the area. I am happy to share the details of the property
The property is situated 8Kms South East of Karoonda in Loller Road, Karoonda.
It has 3 Bedroom Stone house, Renovated new bathroom, Power/Telephone connected, bore water through windmill, 2 split aircon fitted in the house. Large water tank storage is kept in few places to catch rain water. Has 4-5 separated well consutructed sheds. The total size of the property is 1600 Acres and it is fully fenced and the fence quality is good. It is divided into 8 paddocks and has water connectvity for all the paddocks through the bore water for livestocks. It is sandy loam soil type and has few shelter belts. Out of 1600 acres 100 acre close to the house is not arable rest is used to grow wheat maily and Rye is some part of the property. There is 6 silos. The property has 2Kms road frontage on one side and 1 km on other side of the road being corner block. The house is constructed well inside the property with proper driveway about 1Km from the main road. Currently it is leased to local farmer and I met this guy and spoke to him for sometime. He is leasing it out for last 8 years and happy to continue for long term. He also expressed that if we can come up with 5 years lease agreement he can do some imporovement to the farm land to get better yield.
The council valuation is 395K in the last rates notice with council rates $1507.38, + state levy $28.95.
If you need more information send to my email id [email protected] I can send you some photos
Regards
Siva
Sounds like a decent deal, a 5 year lease in return for him improving yields, and ergo value. Also gives you a fixed income, which if you're happy with means certainty as I can't imagine the lease would increase dramatically in that time, as someone seemed to indicate earlier (I have no experience in this area) generally farmland is CG.
That's the only good things to buy in Australia right now. And we've certainly loaded up plenty that are now operational.
But the best buy you could do is out of this country in booming economies pegged to the US$ and borrow at 2% fixed rate interests and get 5% yields, AND buy in at a 96c A$.
Wouldn't touch most other things in Aust right now.
But the best buy you could do is out of this country in booming economies pegged to the US$ and borrow at 2% fixed rate interests and get 5% yields, AND buy in at a 96c A$.
Wouldn't touch most other things in Aust right now.
damn wish i had a property in singapore. could refinance it at 1.99% and then buy something here.
I had found from different bank on how much they lend for farm properties. I haven't gone to all of them obliviously.
Here is the list
Suncorp 70%
CBA 60%
ANZ 60%
Bendigo 50%
Rabobank 50%
Looks like Suncorp is the one which I know provides more lending for rural properties. Is the anyone who can beat Suncorp 70%?
Regards
Siva
Here is the list
Suncorp 70%
CBA 60%
ANZ 60%
Bendigo 50%
Rabobank 50%
Looks like Suncorp is the one which I know provides more lending for rural properties. Is the anyone who can beat Suncorp 70%?
Regards
Siva
