Becoming a landowner is a dreamed shared by many. While the purchasing process may seem intimidating to the first time buyer, it can be made easier with the right information. Read on for our expert advice on how to buy farmland, and make your dream a reality.
Location, location, location. This is one of the most important considerations when buying farmland and one that can make or break your success in generating an income. Some things to take into account when choosing your location are:
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The proximity to any off-farm employment.
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The distance to market for what your farm will produce.
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The distance to support for equipment, as well as supplies such as feed.
Have a plan. Knowing ahead of time what you’ll be using the land for and having a clear marketing plan, will help you determine what type of land you will need to purchase. Consider the following criteria if the land will be used to grow crops:
Soil type – Identify which of the three main soil types are on your prospective property:
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Clay – Soil with a medium to high concentration of clay is rock-like and holds on to water, making it undesirable in most circumstances.
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Loam – The ideal soil for crops such as corn is loam. This perfect balance of all soil types is able to hold water while providing the necessary drainage. Menfro soil is one such type of multi-layered loam which is found on prime farmland in both eastern and central Missouri, and has earned the honor of being the state soil.
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Sandy – This type of soil is unsuitable for growing crops, and while uncommon in the state of Missouri, erosion or flooding may cause sand from other sources to wash into areas of farmland, particularly those along the Missouri River.
Drainage – Natural or tile drainage is required to prevent flooding on your land. Acreage with a proper irrigation system already in place is a definite plus.
History – Take note of the past history of the land. Was it used for your intended purpose, and if so, was it successful? What types of herbicides or pesticides have been used in the past?
Using the land solely for livestock, or in conjunction with crops will require you to look at two unique factors: fencing and shelter. If neither is available, be sure to factor in the cost before purchasing.
Be prepared to ask questions. Knowing how to buy farmland means not making any assumptions about your investment. Ask questions of both the seller and the realtor, addressing such issues as:
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Water quality. Determine the quality, reliability and quantity of the supply to the property. If in doubt, obtain a sample for testing.
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Soil testing. It’s important to note whether the soil is suitable for farming as is, or if it will require alterations to make it more productive.
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Buildings on the property. A thorough inspection should be performed on all buildings prior to purchase, to assess issues such as structure, wiring and plumbing.
Secure financing. Know your budget ahead of time, and determine what you qualify for in terms of a mortgage. Other factors to consider are a line of credit, as well as loans for livestock or equipment.
Knowledge is power when it comes to learning how to buy farmland. Put pen to paper and formulate a solid plan with clear expectations and goals. Now that we've provided an outline for buying a farm, download our ebook 10 Points to Consider Before Buying Rural Property for more information.
For those of you who have purchased farmland, is there anything you wish you would have known before or during the buying process? Leave us a comment with your thoughts.
