Farming is the term used for a wide range of agricultural production and owning farmland is a dream for many people. The ultimate goal with owning a farm not only to have a beautiful piece of land but land where it's earnings are going to be worth more than the investments. While the purchasing process, including looking for farmland for sale may seem like a daunting experience to a first-time buyer, the process can be made easier when you have the correct information. If you have a plan for farming, there are several factors to consider before buying farmland.
It is important to be realistic when searching for farmland for sale. The type of property that you are considering purchasing will have an effect on the size of the down payment as well as how much you will have to subsidize. Lenders who are familiar with rural properties and the cash flow cycles for this industry, so they are aware of the fact that if the land you are considering currently offers income potential, it will require less off-farm income. What this means is the more recreational your property is, the more you will have to subsidize, which can have an effect on the outcome of loan approvals. There are agencies you can contact, such as the USDA Farm Agency (FSA) to find out what programs the farm you are considering is currently enrolled in, which will help you determine how productive the farm has been.
One of the most important questions to ask is about the soil type. You should ask for the most recent soil tests; if this isn't available, request a soil test. A soil test will provide you with a report of the nutrients that are present and/or missing from the soil. If it has been determined that you will need to add nutrients, it is important to get the information on the costs needed to add the nutrients. It is also important to do some research the land's drainage. Both the soil and drainage can have dramatic impacts on the amount of revenue the farm can generate.
One of the most important factors of buying farmland is knowing what's included in the sale. Everyone involved in the transaction, including the realtor, seller and buyer understand what is being sold as part of or included with the transaction. Make sure you have a detailed list of anything you feel needs to be a part of the contract. Your list may include:
- Fence posts
- Livestock panels
- Removal of or extension of any existing farm or hunting leases
- Portable sheds and other items that can be moved
- Miscellaneous equipment
Take notes on the history of the farmland you are considering. Ask the realtor and/or the seller what the property has been used for throughout its history. Knowing if there were different uses than what the farmland is being used for now, may open up more options to your use of the land.