Many people dream of leaving their nine to five jobs behind and buying a farm in later life. However, that will remain a fantasy for most folks because they never research the subject. They just like the idea of owning land and earning a living without a boss. As you might expect, farming is one of the most complicated trades available today. The realities of working in the industry are far removed from those dreams in your head. Even so, anyone could make a killing if they had the right amount of cash to invest. In an attempt to set the record straight, we’re going to discuss some of the most substantial expenses now.
Buying your land
The biggest expense faced by new farmers relates to land purchases. In most instances, it’s sensible to buy a working farm that already makes a profit. That way, you can pick up where the last owner left off. Just make sure you set a budget and avoid overspending. In most situations, you can then try to improve the business and make more money. However, you’re going to need a lot of cash to purchase your land in the first place. While banks will offer mortgages, you still need to save for a deposit. Presuming your chosen farm costs around $3,000,000, you would have to raise around $300,000. It seems like a lot, but it’s doable. That is the case, especially if you have another business to sell.
Buying your equipment
With a bit of luck, your working farm will come with all the equipment you require during the early stages. However, you’ll need to buy more storage items and machinery as you move forward. Perhaps you’d like an extra storage tank for livestock nutrition systems? Maybe you’d like to build a new milking shed, and so you have to find more pumping tools? Either way, most farmers can expect to spend somewhere in the region of $100,000 to $150,000 every year on new equipment. You can reduce that cost, but your business might suffer. The goal is to keep pushing forward until you have a gold mine.
Buying your animals
Unless you’re very lucky, your farm won’t come with animals. Most sellers will get rid of their livestock ahead of time to raise more funds. That means you’ll need to head down to local markets to purchase some sheep, pigs and cows. Make sure you take someone along who knows what they’re doing because people will always try to rip you off. Experienced farmers will spot a notice from miles away, and they’ll try to sell you something useless. Again, you might have to spend around $50,000 on animals during your first year on the farm. However, that cost should reduce every year as you breed more livestock on your land.
To answer the question posed in the title of this post, you’re going to need around $500,000 to buy and run a farm. However, that does not take any further years into consideration. So, you need to make sure your business makes a profit from day one. Otherwise, you’re going to need a lot more cash than that. The $500,000 figure is just enough to purchase your land and get things started. You’ll need to pay around $200,000 per year to keep your farm running if you don’t earn a profit.