All the sudden you have a windfall of cash and someone tells you "put some of that into land!" Great, where? Why? How?
Those familiar with 1031TFE sales/purchases know the value of rolling these purchases forward. Check with your tax accountant for the extremely valuable investment opportunity here. Basically, you sell an investment property and very quickly invest in another property using the proceeds from your sale. Now that gain is basically deferred.
But what if you have a long time horizon. What are the considerations you should have on buying an investment property? Let's look at raw land. Random purchases of raw land don't work out well a lot of times. Generally speaking, you would expect raw land to appreciate about the rate of inflation, but it doesn't always work out that way - in both directions. Are you prone to win with lottery tickets? Then the random approach may well work for you when the DOT decides that new bypass needs to go through or alongside that random purchase giving you valuable commercial frontage property.
The better approach is to go to your local DOT office and see what is in their 10 year or 20 year plan. It may help you decide where you want to invest on a tract of land! Check with your local county and city officials as well. Often there are plans for communities going out 10-20 years or more that reach well beyond city limits but may affect your future plans.
What about taxes? Consider checking into conservation tax use reductions on your land. If it is a 10 year hold on your own plans anyway, why not use this? It can save you tens of thousands of dollars in taxes -and all you have to do is NOTHING! Really, it encourages those people to do absolutely nothing to their land for 10 or more years and you get a tax advantage for doing so.
But taxes should be a real consideration in making those purchases. Can you afford that annual tax bill? Look at the information available from the County you are buying from. It is free and gives you a lot of information.
Insurance is something to consider particularly if there are any structures on the property. Liability insurance is a good idea as well...even if someone is trespassing, if you have someone get hurt on your land, you want to be covered. Another good reason for putting this investment in an LLC to protect you from similar liability.
Did you know you can sell the timber off your property - even before it has grown to the size needed for timber? Sure, you won't get top dollar - but if you need cash today and don't really care if they cut the land 5 years from now - go for it - but keep in mind if you put it in a timber conservation program beforehand!
Call a Realtor that deals in land for investment. That is really key as they not only will be aware of good deals but they can walk you through the other aspects of your investment.
Saturday, January 7, 2017
Sunday, January 1, 2017
Buying or Selling a North Georgia Poultry Farm
If you are considering buying land to build - or buying a poultry farm to get into the poultry business, the first step is to have your head examined. Make sure you check in with any psychiatrist who can diagnose your lunacy! But then again, if you get past that - and you still want in, let's take a look at some big considerations.
The biggest single consideration before getting into the production side of the poultry industry is knowing you are confirmed to have a "contract" for a company to be a grower or producer. Without an actual letter from that production company, DON'T take the next step! Does it matter which production company - oh hell yes! But how do you know? You probably need to do some research.
Back to the beginning. You think you may be interested in growing chickens for either additional income or a full-time job. If the closest you have never been to a farm before, you may want to ask permission from a poultry farmer to visit their farm. That would be the first step. Then, if they agree and the company they grow for allows it, learn what "biosecurity" means - and practice it! This is extremely important! To spread some of the worst disease agents from one farm to another requires about 1/2 the volume of a sweetener pack for your coffee in contaminated manure total. So now you are in a vehicle that has not been on another poultry farm, the tires are washed down and you are wearing clean fresh clothes. Your boots are clean and you can wash them down with a powerful iodine solution that kills everything when you get out of your vehicle. Again, with permission all-around, you meet your farmer where they tell you to and they may have you ride in their vehicle to the poultry house.
Keep in mind, you are learning as you go - this is exactly how you will need to handle anyone who visits your farm when you build it! The farmer will rattle the door if the chickens are a couple of weeks old or older...listen to them scatter. With a house 54X500, tens of thousands of growing chickens are inside. They eat, sleep, drink and poop in there. The white stuff, on top of a squirt of chicken poop, do you know what that is? More chicken poop! Actually, that is the concentrated part with higher urates. It all stinks - excuse me - smells like money - but you may find out something right now - you may be allergic to all the chicken dander floating around, or the ammonia may burn your eyes and nose.
Even in a well-managed poultry farm, some small percentage of chickens die. So look around, are you going to be sick picking up dead chickens as you walk through the houses several times a day to be sure everything is working - feeders, drinkers, lights, fans - and think if you will be mechanically able to repair these products. It gets expensive if you are always having to pay someone else to do that work.
Ask the farmer what he does when the chickens get old enough to move out. There will be caked litter where any water overflowed accidentally or other reasons some of the litter must be removed. Ask what a stack-house is, and an environmental plan for spreading manure. Ask about water demands, what is better propane or natural gas, for value over time. Ask anything you can come up with because you are learning! A good farmer normally will share if you are nice and respectful and really are trying to learn.
Now that you have seen what actually happens on a poultry farm, and you have been psychologically evaluated, and you still want to go through with it, have you put a pencil to paper to see if you can afford it? Sure, land can be had from $1,200-5,000 an acre across Northeast Georgia if you have a good realtor looking for you. But not all land works - and it is always a good idea to be closer in than further out. Fuel costs can cut down on your desirability for that second flock of chickens. $300,000 is a lot of money, I don't care who you are. First-time farmers can get financing with that special letter, but once you do - can you make the numbers work? Can you get a better return on other investment? Are you employing family members and buying them a job? I get that - but people sometimes aren't exactly tickled about this kind of work. Do you have a back-up plan?
What is the difference to you between buying an operating farm instead of building new? Well, cost is one and wear/tear is the other. If you are building new, warranties are involved for some period. You are also a new grower and will be on the more competitive grow-out list. Used equipment is like any used equipment...it is more prone to break, may require updating by the contracting company to go forward, and may be very expensive to upgrade. That may be why the grower is selling. The real important key for you here - make sure you have that contract transfer in hand before you commit to the land purchase, no question!
Some very important key facts:
I sell land for new houses - I sell farms already under contract with poultry companies - so if you are in Northeast Georgia and need a professional to assist you, please don't hesitate to call. I work with Wayne Farms, Fieldale, Harrison Poultry, Pilgrims (Athens and Gainesville), Cobb Breeders, and a few other companies for specialty needs. I started out 38 years ago as a broiler supervisor for what was then Country Pride Foods, Ltd. So if I can help - I will! 404-316-7821 efickey@gonorton.com
The biggest single consideration before getting into the production side of the poultry industry is knowing you are confirmed to have a "contract" for a company to be a grower or producer. Without an actual letter from that production company, DON'T take the next step! Does it matter which production company - oh hell yes! But how do you know? You probably need to do some research.
Back to the beginning. You think you may be interested in growing chickens for either additional income or a full-time job. If the closest you have never been to a farm before, you may want to ask permission from a poultry farmer to visit their farm. That would be the first step. Then, if they agree and the company they grow for allows it, learn what "biosecurity" means - and practice it! This is extremely important! To spread some of the worst disease agents from one farm to another requires about 1/2 the volume of a sweetener pack for your coffee in contaminated manure total. So now you are in a vehicle that has not been on another poultry farm, the tires are washed down and you are wearing clean fresh clothes. Your boots are clean and you can wash them down with a powerful iodine solution that kills everything when you get out of your vehicle. Again, with permission all-around, you meet your farmer where they tell you to and they may have you ride in their vehicle to the poultry house.
Keep in mind, you are learning as you go - this is exactly how you will need to handle anyone who visits your farm when you build it! The farmer will rattle the door if the chickens are a couple of weeks old or older...listen to them scatter. With a house 54X500, tens of thousands of growing chickens are inside. They eat, sleep, drink and poop in there. The white stuff, on top of a squirt of chicken poop, do you know what that is? More chicken poop! Actually, that is the concentrated part with higher urates. It all stinks - excuse me - smells like money - but you may find out something right now - you may be allergic to all the chicken dander floating around, or the ammonia may burn your eyes and nose.
Even in a well-managed poultry farm, some small percentage of chickens die. So look around, are you going to be sick picking up dead chickens as you walk through the houses several times a day to be sure everything is working - feeders, drinkers, lights, fans - and think if you will be mechanically able to repair these products. It gets expensive if you are always having to pay someone else to do that work.
Ask the farmer what he does when the chickens get old enough to move out. There will be caked litter where any water overflowed accidentally or other reasons some of the litter must be removed. Ask what a stack-house is, and an environmental plan for spreading manure. Ask about water demands, what is better propane or natural gas, for value over time. Ask anything you can come up with because you are learning! A good farmer normally will share if you are nice and respectful and really are trying to learn.
Now that you have seen what actually happens on a poultry farm, and you have been psychologically evaluated, and you still want to go through with it, have you put a pencil to paper to see if you can afford it? Sure, land can be had from $1,200-5,000 an acre across Northeast Georgia if you have a good realtor looking for you. But not all land works - and it is always a good idea to be closer in than further out. Fuel costs can cut down on your desirability for that second flock of chickens. $300,000 is a lot of money, I don't care who you are. First-time farmers can get financing with that special letter, but once you do - can you make the numbers work? Can you get a better return on other investment? Are you employing family members and buying them a job? I get that - but people sometimes aren't exactly tickled about this kind of work. Do you have a back-up plan?
What is the difference to you between buying an operating farm instead of building new? Well, cost is one and wear/tear is the other. If you are building new, warranties are involved for some period. You are also a new grower and will be on the more competitive grow-out list. Used equipment is like any used equipment...it is more prone to break, may require updating by the contracting company to go forward, and may be very expensive to upgrade. That may be why the grower is selling. The real important key for you here - make sure you have that contract transfer in hand before you commit to the land purchase, no question!
Some very important key facts:
The poultry processor-farmer relationship is extensively regulated by federal law. For example, by law growers are entitled to:
- A written copy of their contract with the poultry company.
- Information detailing how much they are paid.
- Information explaining how a contract can be cancelled.
- Right to a 90 day written notice of the processor’s intention to terminate the contract.
- Right to terminate the contract with the processor by giving a 90 day written notice.
- Right to discuss their contract with outside parties.
- Right to join an association of growers.
I sell land for new houses - I sell farms already under contract with poultry companies - so if you are in Northeast Georgia and need a professional to assist you, please don't hesitate to call. I work with Wayne Farms, Fieldale, Harrison Poultry, Pilgrims (Athens and Gainesville), Cobb Breeders, and a few other companies for specialty needs. I started out 38 years ago as a broiler supervisor for what was then Country Pride Foods, Ltd. So if I can help - I will! 404-316-7821 efickey@gonorton.com
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