Slow and Steady
A reader recently asked for a farmland update. So here’s the latest. I’m collecting $8,500 a year from my tenant who is growing canola on my 310 acres of farmland. He pays me twice a year, half the total amount in the spring and the other half in the fall. Here’s the latest cheque that I deposited into my bank account last week. This amount includes 5% GST.
My farmland loan outstanding is about $193,000. The interest rate is 3.4%. Property tax was about $1,500 this year. No insurance or other cost is necessary for owning farmland. So my total expenses came to $8,100. I’m rounding these numbers to the nearest $100.
Thus I’m able to make a $400 profit on my farmland in 2016. Slowly but surely, the financials are improving each year. 🙂
I think farmland returns are starting to dry up in North America. Commodity prices still haven’t recovered. So unless crop receipts increase by a substantial amount it’s hard to see any reason for the underlying land to become more valuable. Maybe farmland will continue to keep pace with inflation for the foreseeable future so it’s still a good store of wealth, but I don’t see much more appreciation from here.
It’s too bad the Canadian prairies is so cold. Many plants like hemp can’t grow out there. Since marijuana will soon be legalized there will probably be a lot of new cannabis growers by this time next year. Not to be blunt, 😄 but this obviously creates opportunity for investors too. For example, last year I blogged about buying some shares in Canopy Growth Corp, a supplier of medicinal marijuana. So far the stock has doubled in price! Not bad. 😀
Free eBook Download
Maybe I just got lucky with that marijuana stock. You shouldn’t get your investment advice from an amateur finance blog anyway. 😉 But my acquaintance David Chilton, who runs his own financial planning business is more than qualified to offer quality advice. I use the term “acquaintance” loosely because we’ve only corresponded by email a couple of times. 😛 Anyway, he’s teamed up with Tangerine bank to give away the eBook edition of his latest work, The Wealthy Barber Returns.
If you’re interested, just go to this Tangerine page and use one of the download links on the right. I’ve read the paperback before and recommend it for anyone who likes personal finance. The book covers a lot of core investing topics like index funds and the stock market. You can download it to your computer, or mobile device. It also supports the Kindle App. Enjoy! 😀
Random Useless Fact:
Makeup doesn’t just make you look younger. It can also make you look older.
It’s just sad that girls do feel the need to grow up and be sexualized early.
Some children don’t know how lucky they are. As the saying goes, youth is wasted on the young lol.
Girls only “feel the need” because they are being conditioned and brainwashed by marketing companies and general movements in society at large. It’s all about the money. When you live in a Capitalistic society, everything will suffer an attempt to be monetized.
This is almost an exclusive North American issue. Other societies around the world naturalize sexuality (Nordic), neutralize sexuality (Middle East), and everything in between.
$27 acre rent? Thats really cheap.
It’s more like $31.50 per acre because we only count cultivated acres when negotiating rent. But yes, even then it’s still relatively cheap. I don’t live out there in Saskatchewan so I lack the leverage of local intelligence. For example, I don’t know anyone else who would be interested to rent my land for a higher price.
No insurance on farm land? Don’t you need some sort of liability in case a tractor rolls or a trespassing snowmobile crashes?
A car dealership in Ontario was recently found partly liable because a car stolen off their lot and one of the thieves was permanently disabled during a drunken crash.
Haha, maybe you’re right. I just don’t think it’s worth it for me to get insurance right now. But my tenant has insurance to cover incidents that would affect both of us.
As a general rule, property owners are not liable for the injuries of trespassers. The case in Ontario was an exception because when people are expected to trespass with some regularity (like at a car dealership) then the property owner has a responsibility to warn or mitigate hazards that could cause injury to people on the property.
Obviously I’m not a lawyer, but my understanding is that the liability risk for me is pretty small so I decided not to insure my farmland. :0) But I can certainly buy some insurance in the future if I change my mind.
“Commodity prices still haven’t recovered.”
That’s because commodities are an economic input; if prices are depressed it probably means the general economy is depressed…leading to depressed future yields and returns.
The saving grace with farmland (which I also own) is that people won’t stop eating and there’s more people on the planet every single day. The big road blocks being efficiency advances in agriculture as well as gov’t regulations and policies, both domestic and foreign. In the end, it’s almost always better to be an owner than a renter.
“The Wealthy Barber”
The hilarious thing about TWB is that it’s the best-selling book of all-time in Canada — 2+ million copies — yet the population of wealthy Canadians hasn’t changed. That’s the fatal flaw with any ‘self-help’ publication: the massive gap between theory and action. Almost everyone will fail to do the necessary work. Kudos to Dave, though. He really understood the Canadian psyche (i.e. zealous focus on retirement and safety) when he wrote the book and made a wad of cash.
I figured it’s popular but I didn’t know it’s the best selling book in the country. One of those 2+ million copies is in my home, lol. I agree that most people don’t take any action, even if they acquire the knowledge. As Bruce Lee once said, “Knowing is not enough, we must apply. Willing is not enough, we must do.”
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