I bought 12 acres I called farmland and spent two years mowing it

This was my first purchase and it was small on purpose, which is the only thing that saved me.

12 acres about 40 minutes out, listed as farmland, $4,200 an acre, so $50,400. The photos showed a hayfield and I did the math on hay rent at maybe $60 an acre and told myself $720 a year plus appreciation on cheap dirt. I walked it once in November when everything was brown and flat.

What I actually bought was 12 acres with about 4 acres of usable field, a creek running diagonally through the middle, and the rest in scrub willow and wet ground. The previous owner had been cutting the 4 acres himself for his own horses. No operator wanted it. I called six people. The answer from all of them was some version of the equipment can't turn in 4 acres and I'm not crossing a creek for it.

Costs: property tax was $610 the first year, then it jumped to $1,340 in year two because the parcel came off agricultural use valuation once nothing was harvested, and how ag use valuation works and what triggers losing it differs by state, which I did not know when I bought. Add $900 for two seasons of hiring a guy with a brush hog because the county has a weed ordinance. So call it $3,790 out of pocket and zero dollars in.

I sold it last spring for $47,000 to a neighbor who wanted the frontage. Round trip loss with closing costs was about $8,500 and two years.

What I'd do differently: walk it in July when I can see standing water and what's actually growing, and get one operator to say in writing what he would pay to rent it before I sign anything. If nobody will rent it, it isn't farmland, it's a lawn.

3 replies

2jordan_ellis2ActivePRO6

Six months in and this is the post I needed. The line about calling an operator before signing is going in my checklist, because I'd been treating tenant demand as something you solve after closing rather than something you verify during due diligence. The tax jump is the part I'd never have seen coming. Did the county warn you, or did it just show up on the bill?

1dmitri_v6CapitalPRO6

The documents would have told you most of this before you drove out there. The county soil survey shows hydric soils and drainage class free online, and a wet diagonal through the middle usually prints clearly. FEMA flood maps would have shown the creek corridor. And ag use valuation almost always has a written application on file with the assessor that states the qualifying use and the acreage enrolled, which you can request as a public record in most states, and it often carries a rollback of past taxes when the use stops, so ask the assessor how their rollback works before closing.

None of that is exotic. It's an afternoon of reading, and it would have cost you nothing.

1raj_mehta14CapitalPRO6

So the parcel was priced like productive ground and used like a yard. Was the listing agent describing it as farmland because of the old tax classification, or was that just marketing? I'm still trying to work out how much of what shows up in a listing is a fact somebody filed somewhere versus a word somebody chose.

I bought 12 acres I called farmland and spent two years mowing it

3 replies