Land Auction $$

Not sure what  profit after inputs per acre on corn is going to look like this year.  Some years it's $50, some years over $100.  This year?????  Pick a number.......

Let's say $75.  $75 / $12,232 per acre  =.6% return on the money, $100 is .8%.  Most brick and mortar local banks are paying about .01-.015% now?  Some of the sexy online banks are paying .4-.7%, so right in line with that.  Pick your own profit per acre if you don't like mine, it's not going to change that much.

Farm it for 20 years, and now it's worth $2.7M.  

Point is, those who pay that kind of money per acre and FARM it, not develop it into a subdivision or something, don't borrow the money to buy it, that'd be a whole lot harder to justify.  But if you have the cash to pay for it, whole different analysis.  

My point was, you won't create the money to buy it by farming, it's bought by someone with money, either from generations of farming, selling a more expensive farm elsewhere, an investor of sorts, whatever.  If you have money, buy it, charge $200 per acre rent, whatever, and your rate of return is double my first illustration.  

No shots fired!

These prices are a bubble fueled by extremely low interest rates in my opinion, and are unsustainable.  The bubble will pop someday, to some extent, I think.  

What does "The 20% over is simple." mean?

Another 37 acres is up for auction soon. Interested to see what that goes for.

OUCH !!!!

Land here doubled against our purchase price of ten years ago, taxes climbed associatively. Land in the grain belt region north of here has been bought up until pricing went nuts where is now dead in the water, sales are well beyond limited where leases have taken hold.  Around here the ‘Buyer Remorse’ of recent land grab purchasers intent of having a place to self subsist for food is not working out so well.  Need fuel to run equipment, need a truck to move equipment or materials, had to build a house then storage for the equipment, roads need rock, land needs amendments, no idea how to attend a ‘feeder’ steer or pigs or chickens and absolutely no idea how to get butchered Nd prepped to freezer store or have the area for multiple freezers and backup power to keep freezers operational.

Initial Expense is a far cry from the delusion dream have land and live off it.  Farming is a art form that takes as much practice as a Rembrandt quality artist.

Many resent Midwest farmland purchases are probably paid MOSTLY with CASH on hand?

Theoretically, a moderately sized 3000 acre Midwest CORN farm may average 220+ bu/acre sold @$5/bu grain price(2021 price?)~$3.3million in grain revenue. Computes to $1100/acre gross, then subtract $625~/acre "non-land" input costs which leaves $475~/acre profit times 3000 acre ~ $1.4million annually grain revenue. 

If you were to cash rent farmland, then the above corn input costs might be closer to $1050/acre. So purchasing farmland is like reinvesting your profits & in theory, removing the initial land expense over career of business...

But today's 2022 corn inputs have risen too ~$755/acre?  Commodity corn price has been rising too. Yesterday's corn @ $7.31/bu cash price local elevator or $7.76/bu river terminal price @ St. Louis, MO Mississippi River. Basis (logistics/demand?)determines the differences of location prices.

Many moons ago, on a different forum, I was going through the "corn numbers".  I asked what guys budgeted for profit after inputs, "Like, $400 per acre?"  Got called an idiot, told must be nice, asked if I ever grew corn before, etc.   

Anyway, I totally believe you....but on the other hand, that's 1 year.  Can you say you profit $475 per year average for 20 years?  Up here in my half of MI, a guy can make a profit on corn.  I've made $20 per acre, I've made about $420.  That $420 was a good set of circumstances with price and good yield for my area.    I've also broke even, and I've also lost money.  I was going to use $200......decided to go with a bad year to show even then you could get an ROI.   

A guy here has been selling hay by the bale just like the feed store.  Always turn a check into cash. Told me the other day been turning cash into gold. His wife inherited some money had it in the stock market. She is buying commercial real-estate , easier to kick out if they don't pay than families in a house. But office space is getting harder to rent with the work at home movement.  

OK, but what 20% rise over local,. . .Or are you just saying one feeds the other?  One of those deals where if someone is going to spend the same amount of money, they'd rather buy something than pay tax.  Or asking price to cover the tax.  Asking doesn't always mean getting.  At 20% the price of land would double every 4 years.  Don't think it's quite that bad.

If you were referring to the 20% I mentioned, that ain't what I meant.  Up here land is only about 20% the cost of land in Indiana, so the Mennonites have a LOT of money to buy bigger farms here than they had there, and they come out on top.  Folks living here don't have the cash reserve to compete for the most part.

Ok now I get it. I misunderstood you. Your ground brings 20% what Indiana gets.