My Second Saskatchewan Farm

In 2012 I found a farm I liked on the MLS website, and bought it for $150,000 🙂 I was so happy with my purchase I decided to buy another farm in 2013 for $172,500 at an auction. This one is a 150 acre, class F, grain farm. It’s located adjacent to my first farm, and both properties are rented to the same farmer 🙂

But you know what? My second Saskatchewan farm is even more cash flow negative than my first. I’m currently losing money on both properties. But it’s no big deal. I don’t mind because YOLO 😀

I’ve already broken down the numbers of my first farm in a previous post. So today I will share the financial details of my latest purchase.

Breakdown of purchase price.

  • $10,000 Personal savings
  • $10,000 Proceeds from selling stocks
  • $17,500 TD Line of Credit
  • $5,000 CIBC Line of Credit
  • $20,000 HELOC
  • $5,000 Margin account
  • $5,000 Credit Card
  • $100,000 Long term farm loan, amortized over 25 years

Total amount = $172,500

To be honest it was a bit challenging to procure all the financing I needed, but luckily everything worked out. Just like the first farm, I raised $20,000 in cash from savings and selling stocks. The remaining balance of the purchase ($152,500)  was all thanks to using other people’s money as listed in detail above 🙂

13-11-farmb second Saskatchewan farm


Next, let’s compare the income vs cost of owning this farm.


  • Rent = $40 x 120 acres = $4800
  • Total Revenues = $4800 / yr


  • TD LOC: $17,500 at 5.25% interest rate = $919
  • CIBC LOC: $5,000 at 5.75% = $288
  • HELOC: $20,000 at 3.5% = $700
  • Margin Account: $5,000 at 4.25% = $213
  • Credit Card: $5,000 at 1.9% = $95
  • Long Term Farm Loan: $100,000 at 3.89% = $3890
  • Property Tax = $600
  • Total Expenses = $6,705 / yr

Net Income/Loss:

  • Net Loss = $1,905

Oh well 😐 This is what I get for only putting up a 11.5% down payment 😕 ($20,000/$172,500)

In order for this investment to be cash flow positive I would need to have saved a larger deposit. However, if the value of the farm continues to grow then I would always be playing catch up trying to save more and more. That’s why I feel it’s better to make the purchase as early as possible, and benefit from any future appreciations 🙂 Between the 2 farms I have I’ve borrowed over 1/4 million dollars, but I believe my strategy will pay off in the long run.


Chronological Order of Events: click on any documents below to enlargify 🙂

April 16th, 2013: Purchased the farm


April 17th, 2013: Borrowed $17,000 from my Line of Credit to help with the 10% deposit because I didn’t have enough cash.


Sept/13: Amendment to push the closing date to November to give the seller more time to subdivide his yardsite


Nov/13r: Everything is complete 🙂 The farm appraisal results turned out better than I expected. Set up pre-authorized payment with TD for the $100K farm loan.


Jan/14: Official government document showing title details and the bank’s interest.












Many people would advise against buying a rental property that loses money in the beginning because what if the property doesn’t appreciate over time? But for me life is too short to worry about what if scenarios 😉 I believe that despite losing money at the moment, my farms are still great long term investments (^_^)


[Edit, May 2014]

The FCC reported Saskatchewan farmland prices increased 28.5% in 2013. I may be sacrificing $1,905 of losses each year on income, but I just made $49,163 in capital appreciation on my farm that I purchased for $172,500. I think that’s a pretty good trade off because it means I’m still $47K richer overall 😉 With investments it’s better to buy and wait instead of wait to buy.  [/Edit]

[Edit, July 2016]

Farmland prices rose 14% in 2014.

Farmland prices rose 10% in 2015.

Wow, my farms have appreciated more than 50% since my purchase! [/Edit]

Related post: April 2014 net worth update. Biggest gain ever!

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04/16/2014 3:07 pm

7 happy + 2 content vs. 2 indifferent faces… I consider the (^_^) to be a content face… I’d say you are pretty happy with your farm purchases. It sucks that is costing you, but at least you are smart enough to know that it is… At least that POT investment is back above water =P ~$38.60/share today?, and as I have pointed out in the past, your networth is on any exponential curve trajectory… Always nice when invested money can make more money… I guess when the farm turns positive you can always state you know how to ‘grow’ investments… (^U^) – Cheers.

04/16/2014 3:14 pm
Reply to  Phil

I said the POT thing wrong… at least the follow-up POT purchase is a above water… ;).
A note on gold… we are entering a golden moment month, May. Given the state of world economics, and debt levels, I’m on the edge of my seat as to which direction it will take. Something tells me China is about to make a move… exciting times I think. – Cheers.

Clarisse @ Make Money Your Way
04/16/2014 9:10 pm

My mom has a farm that she inherited from her parents. It’s just a small farm, but it brings her a passive income.

04/16/2014 9:31 pm

You strike me as possibly not having heard Warren Buffett’s line … “Only when the tide goes out do you discover who’s been swimming naked.”

You exemplify it and should really take steps to deleverage yourself.

King Priam
King Priam
05/05/2014 5:51 am

I am genuinely concerned about this as well. Ignoring the irony of Cassandra’s warning not being heeded, you are playing with fire when you use this much leverage. If property values went down (which seems past due in Canada), or you lost your job, you would lose much more than what you had put into these properties–potentially wiping you out. You only need to get rich once. No reason to be this risky.

King Priam
King Priam
05/05/2014 6:22 am
Reply to  King Priam

The more math I do, the more concerned I become. You are working with a 2.4% capitalization rate given its earnings before interest and it’s purchase price. Looked at another way, this is like buying a stock with a P/E ratio of 41–and that’s without including the interest expense.

If you really wanted cash flow, you could even go out and buy the S&P 500–and you’d earn about a 2% dividend yield right there. I’m sure you could hit 3% if you went after dividend stocks. But buying a property for $172,000 that brings home $4200/year after taxes is just not a winning combination.

04/17/2014 9:26 am
Reply to  Cassandra

While I wouldn’t personally feel comfortable with the amount of leverage Liquid employs, I think to each their own. Investing is so personal and unique to each person’s tolerances and needs.

Leverage can play an important role in wealth creation and I think Liquid does a fantastic job showing that!

04/17/2014 9:14 am

Do you also get a portion of the profits generated from the fields or does the $40/acre factor that into the rent that gets paid to you?

04/17/2014 9:27 am

I too have a negative cash flow for my rental property after mortgage/strata payments each month. But it’s okay. Building up equity as we speak is key in the long run. Patience will prevail.

Tefffany @ Gen Y Finances
04/17/2014 6:33 pm

Farm is a great way for investments. We do have farm when I was younger, I enjoyed playing at the farm. lol. And I noticed my mother find it useful to have own farm.

04/27/2014 5:00 pm

I am sure you know all about it but a farm was one of Buffett’s first investments! Although he was 14 lol

07/11/2015 9:59 am

I am new immigrant to Canada from India (my dream country). I live in Brampton ON till last year i landed. I read all u write about farmland investment and and the procedure to buy and lease out. I found all this information very interesting and useful. In India i was a farmer. So m interested in buying farmland in saskatchewan. Can u suggest which part of saskatchewan has best fertile land for wheat, Canola. and where more cash rent. and how I can get finance because m new immigrant.

04/14/2016 6:16 am

[…] this year’s adjustment using the 9.4% Saskatchewan increase from the new FCC report my farmland should now be worth $129/acre more than last year. Since I have about 300 acres of Saskatchewan […]


[…] also a fan of using other people’s money to work for me. For example, my 8x leverage in farmland has earned me the equivalent of 8 years of returns in just one single year! ? The leverage used […]

10/22/2016 7:49 pm

[…] bought a farm in 2012 for $150,000. And then bought another farm for $172,500 in the following year, for a combined purchase price of […]