We’ve all received that call from one of our landlords: “We’re selling, would you be interested in buying us out?” For many farmers, this call can either be the biggest opportunity or the biggest “oh shoot” moment of the year.
Here are three important steps you can take to prepare yourself for the unexpected:
1. CULTIVATE YOUR RELATIONSHIPS
Information is power and relationships are key. Take the time to have an open and honest conversation with your landlords about their goals and your intention to continue farming the land. “You don’t want to hassle them or be too forward, but you want to understand your landlord’s priorities and show your commitment,” says Steve Conaway, a real estate appraiser and farmer in North Kansas.
Steve then recommends scouting land coming for sale and budgeting for down-payments, while keeping relationships warm. “Sharing information like yield maps and soil tests – or even talking about planting challenges – can go a long way to building that relationship and keeping your landlord connected to their land.”
2. DON’T BE CASH POOR
Having some liquid assets ready for a down payment can be the difference between securing ground and building equity versus losing tillable acres next year.
“It’s simple advice, but you’d be surprised how many farmers don’t have any investable capital ready come August,” says Conaway. “The worst is seeing a farmer play real-estate broker – hunting for an investor to buy the ground only to rent it back to the farmer.” Conaway recommends having extra cash inventory on hand, whether it be stored grain, an operating note, or investors on-deck who know your operation.
3. TALK TO YOUR BANKER EARLY AND OFTEN
Your banker can be a valuable ally when dealing with the unexpected, so long as you work with them before land comes for sale. Schedule a meeting with your banker and discuss your ideas or plans with clear intentions. They will appreciate your proactive approach and can help outline your financial constraints. This will give you a sense for how much land you can afford and the need for alternative sources of capital.
CONCERNED YOU’RE CASH POOR AHEAD OF THE NEXT LAND SALE?
Don’t let a down payment hold you back. Consider Fractal, a long-term investment partner that helps you access the capital locked in your land.
Note this is not investment advice. The information contained should be used for informational purposes.
Harrison Rogers is the Marketing Lead at Fractal Agriculture
Steve Conaway is a real estate appraiser and analyst, and farmer of corn, beans, wheat, and grain sorghum in north Kansas.
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