You are here

To buy or not to buy?

There are many ways to access farmland, each with pros and cons.  Start with the information below, and then access our resource page or contact us for more detailed support.  

FARM PURCHASE OPTIONS to explore and evaluate:

Consider these ways you might OWN farmland, along with the main pros/cons.  Discuss with your family, business partner, and/or financial advisor.

  • Through inheriting, or as a gift during the owner’s lifetime
  • Through purchase—
    • outright, if you have a nest egg
    • through regular bank financing to obtain a mortgage
    • via a loan from family/friends, with or without equity position
    • through USDA FSA, Farm Credit, or other loan arrangement
    • fee title purchase with seller financing (contract for deed) -- a situation where the new owner takes possession of the land and makes payments directly to the previous owner
    • fee title purchase with an agricultural easement that reduces the price of the land because it restrict the use to agriculture only.
  • Through a shared equity model, which allows for a gradual transfer of your money and the owner’s farmland, with small, regular cash outlays for the renter, and gradual capital gains for the owner.  As the new farm gets more profitable, you can buy more land.
  • Through owning a house, and only a small amount of land around the house, then leasing other land, buildings, livestock, etc from the land owner

PROS of Owning

  • psychological benefits
  • build collateral
  • maximum security and control
  • legacy (“they ain’t making any more of it”)
  • Other _____________

CONS of Owning:

  • ties up capital you might need for farming
  • huge commitment
  • other _______________________

FARM LEASE OPTIONS to explore and evaluate:

There are many kinds of leases, but all good leases have equitable and clear division of rights and responsibilities between owner and farmer, plus a trigger for lease review, and exit provisions.  The main farm lease types include:   [could link to good example of each]

  • Cash lease, flexible cash lease (fixed baseline rent and % of returns), or crop share lease
  • Lease with option to purchase, or very long term (99 year) lease (great security)
  • Ground lease – tenant leases the land only, and owns the improvements (e.g. house, barn, fencing, etc) When lease terminated, improvements sold to next tenant or back to landowner. Examples: Indian Line Farm, Caretaker Farm
  • Sustainable lease
  • Rolling lease
  • Transfer of farming rights (you rent the right to farm a property)

Pros - gives you a lot of flexibility and options, especially in terms of putting more money into the farming operations, and also to try out a location, an enterprise, a market situation

Cons – may not have adequate security, don’t have collateral, can’t build equity, don’t feel ownership, doesn’t fit image of “farmer”

 “If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.” – Henry David Thoreau