Farming can be both a lucrative and high yielding investment, providing you have the right business strategy. The whole business of farming can be extremely competitive especially when you consider that you are competing with both the surrounding farmland, other farmers who are already very knowledgeable about the specifics of a successful farming business and serious business investors. If you are searching for farmland to purchase in Central Texas, you may want to consider bidding on and buying land at auction. The real estate professionals at Central Texas Auction Services recommend a three-part business strategy to help you purchase farmland that will help you pave the way to a successful business investment.

Part 1 – Using Your Farm Strategic Plan as Your Business Strategy

Just like many other business ventures, it is wise to have a board of directors to help you make an informed decision when purchasing farm land and the heavy equipment needed to fulfill the daily business operations. Your board of directors should include people who are educated in the following fields:
• Banking
• Business accounting
• Taxation & Revenue
• Estate Planning
It is in your best interest to consult with a representative from each area before making any large purchases. One of the most important questions to ask is “How will this land purchase enhance my existing operation?” An important part of your farm strategy should involve evaluating any potential land purchase to determine how it will compliment your existing operation. If you are unclear or hesitant regarding your reasons to purchase, you should rethink your strategy. While you are the president of the operation, it’s important to remember that you have advisors in place for a reason – to help you make good business decisions that will further enhance the extent and economic growth of your business and investment portfolio.

Part 2 – Farm Budgeting; Projecting Your Income Potential

Calculating your projected income potential can be a tricky undertaking. Realistically speaking, you should analyze the income of the land over the prior 10 years. Take into consideration the average amount of rent being charged per acre but also take into consideration that rental prices can fluctuate. Your financial advisers will guide you. Your tax advisor and accountant in particular can provide you with a projected calculation that will take into account a variety of different factors that can be presented to you to help guide your decision.

Part 3 – Your Farmland Pricing & Financing Strategy

What should you pay and how much you can afford to pay are two of the biggest dilemmas when it comes to making a large purchase of any kind. Begin by asking these very same questions to your financial advisers. They will provide you with an available cash and balance sheet to calculate your cash flow along with the amount of money that you can afford to pay for a particular piece of property. Your pricing and financial strategy should take into consideration not only your available cash flow, but also the type of loan that you are applying for (fixed or variable) along with the projected income that can be added to your cash flow should you need to repay the loan quickly.

Farmland & Other Real Estate Auctions in Belton, Killeen, Temple & Central Texas

By taking the above three-part business strategy into account, you can feel confident bidding at auction and ensuring your future financial success. For more information regarding the process of buying or selling land, heavy farm equipment and other quality items at auction, contact the professionals at Central Texas Auction Services today. And be sure to bookmark our upcoming real estate and auction events!