With farmland sales season now in full swing, being prepared for land purchase is very important with several factors to consider. Below are 3 of many questions to ask yourself:
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- What quality of land should be considered? In many cases, top-quality farmland is still bringing top prices. Some buyers may believe they can buy a lower quality piece of land and make improvements to increase the land’s productivity. Acknowledging it may take a lot of time and money on various improvements such as adding tile drainage, adding irrigation, building terraces and waterways to reduce erosion, additional fertilizing requirements (to name a few) in order to potentially increase the productivity. Be sure to include these potential improvement expenses into what you may want to pay if considering lower quality farmland.
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- Making arrangements with your lender. You do not want your lender to be the last one to know you have signed papers to purchase some land (this does occasionally happen). Meet with your lender so you are prepared to buy. Your lender will want various financial information that shows how you plan to pay for that piece of land. After that, it could take several weeks to process loan applications….PLAN AHEAD.
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- Is the purchase worth it? It’s human nature to want to expand your investment and/or farming business. However, you don’t want to be “that buyer” that paid too much or bought the land that didn’t quite fit his or her requirements. It’s OK to pass on an opportunity if making a purchase takes you out of your comfort zone. Always ask yourself if the purchase is a good economical decision?
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