Considering Buying Farm Land in Saskatchewan? Here are Some Tips
Investing in agriculture and live stock can be really profitable and a Farm Land in Saskatchewan could be a good option. But jumping into the expensive market without a well-researched financial plan may not provide you a better return.
Since record prices have made land buying decisions tougher, I will recommend you to consider few specific factors before planning to purchase your farm land. These tips will surely help you meet your expected revenue.
I am dividing my researched basics into two parts. One will be about caring your finance & the other will help you collect some compulsory knowledge about the land you should purchase.
Care Your Finance
- First you need to determine if buying farm land in Saskatchewan or anywhere for that matter is the best use for your cash or not? For this you have to consider needed investment, expected expenditures and crop conditions. Then you should research the sales trends and expected revenue of a potential land to determine if the purchase fits your plan and will the potential return meet your targets.
- After determining how much you can prudently invest and the revenue needed to justify your purchase, you should consider that if you are paying a premium land price, how long will it take to regain your investment?
- Be sure to stay within those targets. Involve your banker to structure the payment procedure. Avoid making all in cash transaction payment. Land is an illiquid asset and purchasing it will impact your farm’s fluidity.
- You always need to think wisely before investing anywhere so take your prime time to think on all aspects.
- Never be rushed by a broker and never reveal your best price or financial goals with a party working for the seller.
- Don’t make the deal without visiting the property numerous times. Before presenting the offer, rework with broker’s purchase contract by deleting what you don’t like and adding what you want. Consult your lawyer in this regard.
Know the Farm Land before Purchasing
- When it comes to land, the very first thing you should determine is the accurate idea how much land you are going to acquire. Though it sounds simple but there could be confusion how much land is actually being purchased. To prevent any such confusion, you should know what actually you are getting and before finalizing the deal; make sure it matches the detail of the offer.
- Also confirm if there are any special passages tied to the land, and if so, make sure to study and understand them completely.
- To establishing the land value, have some knowledge about the comparable sales in the area you want to purchase the land. Though appraisals are expensive but it is the best way to determine land value.
- After getting appraisal, knowing the soil quality is a key factor that necessarily should be considered. A good soil is a paramount, so determine the capability of soil you are buying. You should also research to know its annual crop rotation. If it would be a quality soil, rest assured that every seller will feel proud to inform you about its past farming practices.
- When you are on research about the soil quality, don’t miss to know its water source. See if the property is irrigated and do the water equally and rightly conveys to it. Water cost may negatively impact to your return so when you make your financial plan also include water cost in it. Make sure all water wells are registered as per state laws you are purchasing land in.
- After determining the soil quality, see how your property is zoned.
- Be sure there are no conservation easements that could restrict the property. This factor can significantly impact on your valuation of property, particularly if your plans conflict with current-zoning restrictions.
- No one would like to buy a costly environmental problem. Arrange an onsite environmental audit to ensure that you are not going to buy in an expensive cleanup. It may worth a cost but it will prevent you from a future damage.
- The last thing you should consider is if you will own the property individually or jointly with a spouse, in a family-owned entity or in a trust. The pros and cons of how you own the land will depend on your long term goals.
I hope these tips will help you make a better decision for buying farmland in Saskatchewan. Feel free to contact me for any questions.