It is not hard to see why you would be thinking about buying a farm. After all, the joys of this type of life are there for all to see. From the fresh air to rural living, this can be paradise for a lot of people. Plus, it is an exceptionally rewarding and fulfilling vocation too. But, to make sure that this is the case, you need to avoid the common pitfalls that people often make when buying their first farm or ranch:
Underestimating ongoing costs – Almost all owners underestimate the costs they are going to be facing on a yearly basis. This includes fixed costs and variable costs. Common fixed costs include vehicles and machinery, cows (depreciation and interest), bulls (depreciation and interest), and land (opportunity cost). There are also variable costs to keep in mind. This includes interest, operating expenses, vehicles, machinery, feed, hay, medicine, vet bills, pasture, taxes, marketing, and transportation. It is always better to overestimate than underestimate.
Buying a ranch or farm that is too small – More often than not, people make this mistake when buying their first farm. They overestimate the carrying capacity of the land. It is a good idea to get a feel for the different types of plots that are available. You can see farms for sale here to get a good understanding. You will be able to see the different options in terms of the size of the farms in acreage. You can then determine how much it is going to cost you to buy a ranch that is suitable for the amount of livestock you are going to have.
Buying poor quality livestock or paying too much for livestock – When you are new to the farming industry, it is easy to get caught in the trap of paying too much for livestock or buying poor quality livestock. Of course, both can happen! So, how do you avoid this pitfall when you are a novice? You need to conduct thorough research in advance. Find people that you can trust, and develop a support network.
Purchasing the wrong type of equipment or buying too much – A lot of buyers end up making this costly blunder. They think it is necessary to own a new ATV, tractor, trailer, and pickup. Why not buy used equipment instead? Buying new equipment like this will eliminate the potential for profit because all you are doing is vastly increasing the cost of production. Plus, let’s not ignore the cost of hired labor either. This is something a lot of new farm owners tend to overlook because they are so concerned with the equipment and vehicles.
Underestimating the technical difficulties of farming – Last but not least, a lot of buyers are guilty of underestimating the technical difficulties associated with farming. Take the time to educate yourself before diving right in. Become acquainted with professionals that can help, and attend educational meetings. There is a lot to learn, from marketing and general business management to managing cattle and growing forages.