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From: Paul Hendriks


Hi All,

Here's food for thought for you out of the square thinkers & investors...

In my long term financial & family plan, my ideal property is at least 30+ acres in the Southern Highlands of NSW, with a Old time quality house on it, with lake, views, etc, etc, etc.

That's my problem! my dream property is very expensive, anything from about $750k - $1,500k & I'm trying to devise a plan to actually achieve this within 5yrs.

Sound impossible, maybe!!! but hear me out!!!if I was to make that a part of our investment portfolio, & buy it thru a company trust (of which I'm the company Trustee ) for our family trust to hold it may be possible?

If we focused on buying a prop which is income producing in some way shape or form, then couldn't the company employ managers or caretakers, ( that being myself & family ) to look after the prop & business it runs, so if fact, actually pay me & my family to work, manage & look after the prop.

Being paid to live on, enjoy, & work your own Dream home, is really stretching sideways thinking I know, it would also save me renting from that time on, whilst building my Business & Property portfolio!

Anyway, I would be VERY interested to hear some views on this or other situations similar if anyone has any views, good or bad.

Regards
Paul
 
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Reply: 1
From: Always Learning


Sounds possible.
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I suppose that having a farm and other IP's that produces lots of income, enough to pay your salary would be cool.
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Speaking from someone who's parents decided exactly that (except they had very little money)...I think to be very careful with what you wish for, you may just get it.
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Farmers generally look like poor dumb shits, but actually they are really quite good at what they do, and work very very hard 7*24 to get bugger all. The bigger the farm, the harder the work. Being a farmer IMO is the worst possible lifestyle choice. Bills to pay, cattle dying; have you every pulled out a dead calf from its mother that has been dead a few days? PEWWWWWWW, vomit!!! What about the fences to mend, the broken windmill, the wild dogs killing your sheep, the droughts with not enough water is in the dam...the list goes on and on! Don't forget the wonderful holidays you get, after working 365*24*7 you get to start another year of the same round of death, disease and hard work.
<p>
Take my advise, focus on building your investment portfolio, maybe include a weekender farm with 2 houses on it which you can rent out one (yes I know about the tax issues), try it for 6 months...if you like it great!
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Do well with your investments, then you can buy the 1500K property and pay someone else to take care of it for you! The "landed gentry" is the way to go! Paul Hendriks esquire.
 
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Reply: 2
From: The Wife


Paul,

We have done what you are thinking, it can be very worthwhile, in fact, there are a heck of a lot of perks. but......whoa, the risks, and dont even start me on the new laws for taxing rain. It requires a totally balnced outlook and balanced portfolio, assess the risk, and add another 50% to that.

Ask your accountant about being a primary producer, make sure your accountant is familiar with the topic.

by the way, not everything on the land moo's.

some things just sit still and grow slowly, this then means threat of crop disease etc etc, but I can vouch for picking season to be a hell of a fun time( ok, i dont do a lot of picking, i do more of the running the water up and down for drinks, and I have a property manager who doesnt like the way I prune, so Im not allowed to do that either...bugger, guess I will just have to be happy with the profit, and...the risk)
I thought that the 'bin price" was referring to garbage, its referring to how much my produce is worth.DOH, get someone who knows what they are doing for goodness sake, its so easy to be 'done over'.

also, the quaint rustic old fashioned homestead is tooooooo fantastic in summer, frightfull in winter, total rewire and mega heating moved in, structural overhauls, , new tractor...I dare you to look up the price of a decent tractor, where do you start to find out the price? I'm not telling ya, discovery is half the fun.

eccentric property managers.....mine believes the best poo in the world for his tree's is peacock poo...oookay, hence we have alot of peacocks running around on the property.

we are organic!! just saying that makes me feel great.

theres pluses and minus's, its terribly easy to lose a whole bunch of money, but gee its a hell of a ride!


we also dont live there all the time, so we dont do all the work, I am against buying myself a job.


TW
 
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Reply: 2.1
From: Kevin Forster



I grew up in a rural area and there is a standing joke

How do you make a small fortune from farming?

Start with a large fortune.

My parents had a hobby farm. Didn't make much money from farming but it was something they enjoyed playing around with and was a good educational experience for us kids. We found out where lamb, beef, etc comes from :)

Kevin
 
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Reply: 2.1.1
From: Paul Hendriks


Hi AL, TW, & KF (I should ad C )

Doesn't anyone watch McCleods Daughters???
they make it look very interesting...

Thanks for the replies, feedback is always good, be it good or bad. It makes you realise that each to their own.

Country Squire sounds great AL, with managers in place & income from positive cashflow investments like I/P's covering the costs etc & maybe even making a little from the property itself!

Your farm sounds like fun TW, I can just see you now running down the rows of Berries/fruit, feeding drinks to the pickers & then stacking the boxes on that bloody expensive tractor with the kids screaming past on their 4 wheelers shouting when's lunch!!!

Upbringing for kids would have to be the ultimate Kevin, especially if they have access to both city & country life...

My intentions would be not to make real money out of the farm, (if that happens great ) but lifestyle hopefully financed thru I/P's & business.

My real goal is to operate a fully set up Flyfishing School in the Southern Highlands, so close to sydney, that actually brings in some $$$ as well as myself getting lots of satisfaction from teaching many people the true art of Flyfishing.

TW, you may remember me from 6/7 mths ago on the forum, well I have now (thanks to yourself & several others )gone thru 2 & nearly the 3rd stage of my family & financial goals - I have many stages to go, but am gaining more confidence as we go...

Anyway, the idea of this post was to help get ideas & see if these things (like farms) are possible & if people like TW have actually achieved those goals.

I realise that many legal issues will have to be looked at, but hey that's like any I/P really...

Thanks again for your responses, & great to hear from you again TW!

Regards
Paul
 
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Reply: 2.1.1.1
From: The Wife


Paul,

You hit it right on the head when you said its the lifestyle for the kids. You really gotta have a life in the middle of all this investing plotting and planning.

If my orchard never made a red cent, its worth it to get my kids to get their hands dirty, watch were fruit actually comes from, to run around chasing the peacocks, they love to watch the spectle of 20 people lifting the frost nets of the baby apples. They wade in the knee deep murimbidgee river for hours on end in summer.

( Ok, so my daughter was slightly traumatised when she found one of the ducks hung up and being bled dry for the caretaker of the property, he was planning on duck for dinner, but hey, the big bowl of icecream made it a little easier for her)

I dont know if I would enjoy all this as much if it was costing me money though. Thank heavens for damn good due diligence and a little bit of lady luck on my side.

Check check and check again, a dud will always be a dud.

TW
 
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Reply: 2.1.1.2
From: Always Learning


So The Wife is the "landed gentry".
<p>
Now a Fly Fishing school, now that sounds like a worthy goal! Rising in the early morning, crisp fresh air, just you and the trout in a battle of IQ's ;-), followed by those cold nights sitting around the log fire talking about the ones that got away and eating those who didn't, drinking a few too many glasses of good red!....Always Learning wants to be your business partner ;-)
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As for being a primary producer, not me!
<p>
When you think about a farm: cows grazing, crops growing, sheep lambing, grapes ripening, the green grass growing , even the peacocks pooping, there is an assumption that this just naturally happens. It couldn't be further from the truth. The truth is generally exactly the opposite.
<ul>
<li> Cows don't want to graze, they want to die! Methods include giving birth, eating broken glass and/or barbed wire, various diseases and parasites, drowning in the dam, escaping from the fields and being hit by passing trucks. My favourite form of death by what my parents called "poverty", which basically meant that there was not enough grass to eat and my parents where too cheap to buy any hay for the poor dumb shits to eat, so they staved to death. Actually they normally don't die, they lay down and refuse to get up, then you have to call the "blood and bone" guy to come and "destroy" the retched creature.
<li> Sheep, ditto, attracted to death like Always Learning is attracted to a glass of excellent Coonawarra red, except they're even more stupid and attract a larger number of parasites, and look very tasty for wild dogs.
<li> Crops, what can I say do they want to grow and produce a harvest? na...they want to die, fungus, root rot, being eaten by all manner of pestilence, grasshoppers, rabbits, field mice...you name it
<li> Grapes, not much experience, but I assume they need to be tied up, trimmed back, protected from the wind, protected from the hail, watered at the right time, get the sun at the right time. Do nothing, and I am sure your average grape vine would become a mass of caterpillar eaten leaves and fungus infected fruit in the time it takes to watch a rerun of "Hot Property".
<li> Grass...it doesn't want to grow, it wants to withdraw and let the weeds and blackberries take over! In the summer it turns brown and lifeless, followed a few weeks latter by your cows from "poverty", in the winter its little roots are cold so it doesn't grow. Then for 3 months a year, Oct~Dec it grows like a maniac and you can then make hay. To make hay; first you cut it down and leave it to dry for three days, before bailing it up. Now should the rain come in those critical 3 days...the grass will get wet and fungus infected...100% guarantee you will have a thunderstorm on the second day!
<li> As for Peacocks pooping, I bet 100:1 they don't do it on the correct tree! 10:1 they poop on your washing!
</ul>
The natural state of anything good on a farm is to be dead or diseased. Bad stuff flourishes without any help, blackberries, grasshoppers, mice, snakes, moths, flies, beetles, fungus, mosquitos, all with a desire to concentrate around your homestead.
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Do it for your kids...no please no! Most of the landed gentry send their kids to boarding schools where you can get a good education. Being a city kid sent to a country school is asking for trouble, in my case you will be an outcast except for the times when the country kids decide to unleash some violence which is generally all the time. A farm is a nice place visit, but dead boring to live! Look at the cows, dig the garden, feed the chickens, chop the wood...
 
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Reply: 2.1.1.2.1
From: Thorpey !


To Always Learning:

A little over the top don't you think....?
I suggest you do some real learning and get your facts right about farming.
The list of negatives you listed are indeed some of the things that can go wrong, however, like property investing or trout fishing for that matter, success is all in the "management" of any particular activity.
Trout fishing negatives:

* Mosquitos biting all day and into the night when someone left the tent door open.
* Leeches sucking on your legs whilst standing in freezing cold water shivering and still waiting for that elusive "bite"
* Driving all that way out to the best spot only to find you forgot the matches to light the fire you were going to sit around and yarn.
* making an emergency dash to hospital, which is now a few hundred kilometers away, when your buddy has fallen in the river unconscious from too much red wine.
* waking up in the middle of the night in extreme agony from fire-ant stings to your butt.
* eating the fish caught in the polluted river and getting sicker than you hoped.


All very negative but possible, as are your assumptions about farming.Although I draw the line at "cows don't want to graze, they want to die"...

I happen to work in the farming sector and have never heard of any complaints resembling yours, because the risk management is there.
Farmers are the most efficient cost effective producers Australia has to offer, and live a life of simplicity and peacefulness rarely found in the city.
Also, many farmers invest off farm into... you guessed it, residential property.

Rural Australia is experiencing a surge in population movement out of cities and into major rural centres due to lower costs for relocating business and housing. Unfortunately, with that comes the psych of the city which rural centres don't need.

I don't, and neither does the ATO, consider hobby farms as primary producing unless there is a real business plan and profit forecasted in the near future. Only a very small portion of hobby farms as they are today will be considered by the ATO as primary producing.

Each to their own I s'pose...........
good luck Always Learning....I hope you continue to do so.

John Thorpe
 
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Reply: 2.1.1.2.1.1
From: Always Learning


Always Learning spent 10 long years of his childhood on parents "hobby" farm. All of the above is true, but never had a peacock (but I found a dead one once in the far paddock after it had been killed by foxes) a grape vine but it died in the first summer. The worst 10 year of my life, give me the Rat Race any day. To be honest my parents were not farmers, they just thought it was easy, they were terribly mistaken, however unlike me, they seemed to enjoy the life!
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PS. Dad died a few years ago, it's too much for Mum so she is selling up, poor mum is 71 now and is having a hard time killing snakes at the back door.
<p>
For sale, 46 Acre's and 2BR concrete block house, slow combustion stove (so you can chop that wood), machinery shed, fences, dams, windmill, moo's, insects, on 46 Acre's of drained windy swamp land, near KooWeeRup in Victoria. Unfortunately there is no forum for "extremely Caveat Emptor"
 
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Reply: 2.1.1.2.1.1.1
From: Thorpey !


Fair enough AL,
I'm sorry to hear about your Dad passing away and Mum coping with what's left. Kind regards.
At least you are honest within your self and prepared to back your own beliefs.

As I said earlier tho..... each to their own.
Good luck,
Thorpey.
 
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Reply: 2.1.1.2.1.1.1.1
From: Michele B


Paul, I don't sharefarm at all so I don't fear pestilence and drought quite as much as AL seems to :)

I just rent the land to a farmer who looks after weeds, pests and fence repairs and grows mainly barley or wheat (I sometimes ask him to grow something pretty like canola, but he just gets this grim look on his face). No sheep though because they damage the scrub. We drew up a renewable 3 year lease agreement and we each have insurance to protect the other's investment in the property.

This farm was a lifestyle decision that's given my kids some wonderful non-city experiences. They notice things like sunsets and orchids, and are totally fascinated by galaxies you can only see when far from city lights. They know individual birds by sight and handfeed baby fish when snorkelling. They've also ridden in a combine harvester and rounded up lost sheep in the dunes. Actually they're pretty tough too - able to scale tall cliffs at a single bound and entertain themselves without need of a powerpoint.

It's been a great (part-time) family adventure for 5 years now, made possible by limiting the risk and maximising the income. Not a huge money-spinner but it's a lot of fun. And kids are young for such a short time.
 
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Reply: 2.1.1.2.1.1.1.1.1
From: The Wife


AL,

you said it, "hobby farm", try and equate that to "hobby residential investing", goodness, thats not what you are doing is it???

Sorry to hear about your dad, hope your mum gets some much deserved help.

MB, you are so correct, must be us mums ( and the occasional guy) who can see what truley matters, and we can make a profit out of it to :eek:) aint we clever.

I wonder AL if you can produce a list of negatives that long for property investing?

and I dont send my kids to boarding school ( not yet, its often threatened).

I am not saying I am pro farming, I am pro investing, theres a big difference between an investment farm, and a buy yourself a job farm. and the peacocks poop wherever they damn well please, and you can guess I certainly do not pick it up and spread it about the tree's, the guy who can breed a peacock that will actually poop ON the tree's is gonna make a fortune.

If a hand is needed, and I am there, I always offer my help, it fosters good relationships with my staff, and surprise surprise, i dont mind the odd bit of good honest hard work :eek:)


AL, you sound a little coloured by your experiences, I have spoken to people who's parents "invested" in housing and got burnt and now they believe that you CANNOT make money in property.

Would I work my farm myself? not on your nelly.

Cheers TW
 
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Reply: 2.1.1.2.1.1.1.1.1.1
From: Paul Hendriks


Thanks Everyone,

Looks like I opened a can of worms...

But the concenses is definently everyone to their own thing.

You can see why AL is so pessimistic about farm life, & who can blame him from what he tells us ( sorry about your father, & mothers situation now )
BUT

I think what we are trying to do, is basically enjoy the good things about country life, & manage the not so good ( by having managers, or buying in certain areas - for Investment etc )

It's a bit like owning a business & working so hard IN your business (the farm ) that you don't work ON the business to actually improve & systemize it, so it runs without you (wether your there or not )

Anyway, that's what I'm striving for & do appreciate your feedback.

Regards
Paul
 
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Reply: 2.1.1.2.1.1.1.1.1.1.1
From: Always Learning


Dear All

Sorry to appear so negative against the country life. Honestly I can say my life has only be getting better and better since "getting out" of the country environment, in fact it has been a motivational force for me. Naturally not everyone will have the same opinions of the lifestyle.
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OK IMO their are some good things to having your children experience life on a farm:
<ol>
<li> "Resourcefulness" : I feel I am much more practical than most "city" people in regard to problem solving. On a farm you have little option but to find ways to do things with the tools and the skills you have.
<li> "Perseverance": In general country people are less prone to give up when things get a little bit tough.
<li> "Planning": A farmer must plan, he/she must make hay in the spring to feed the stock in the winter. Take it easy and not make hay is just asking for many visits by the blood-n-bone guy several months latter.
</ol>
<p>
I consider many "city" kids and adults lack these basic life skills. Just look at the number of people who make no investment due the "risk". Ask most "city" people if they would like plant some crops...they would think "that's would involve a lot of hard work and up front money now and the crops could die".
Naturally a drought could occur and your crops could fail and your cows die, but that wont stop farmers planting the crops or raising the cattle. Farmers understand that taking no action is the biggest risk, they accept the risk of failed crops etc as part of life. Same for investing, you loose up-front without a guarantee, for a future that one hopes will be better.
<p>
Again IMO, many city people have this knee jerk reaction that country life is somehow better, especially for the kids. I don't think this is generally true. Since my 2 daughters are "asian" looking I would never send my girls to a "typical" country school, this is just asking for problems (even from the moronic bottom 10%) that I would find unacceptable. Naturally such problems are not the exclusive domain of country people, admittedly it happens in the city, being different in the country seems to attract an unacceptable amount of negative attention.
<p>
I just love Paul's comment about working so hard in the business and basically forgetting to work on the business. Systemization is a key to success. Jan Somers has a system, Geoff Doidge has a system, Michael Croft has a system, I assume "The Wife" has a system, it is silly to debate which is the best system, but each has a system that works and produces results. This is a common element to successful investors and business people, building a cookie cutter.
 
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