The land purchase decision is one of the most important decisions farmers will make in their life. Yet, it is a decision that is seldom made. Because the decision is not often made and due to the complexities surrounding the decision, it is too often a decision based on emotion rather than careful analysis.
An Iowa State University study in 2000 revealed that only 29 percent of Iowa's farmers had identified a successor for their farm. This study further showed that only 45 percent of the farmers had an estate plan. The land tenure survey of 2002 found that 48 percent of Iowa's farmland is owned by individuals over 65 years of age with half of that owned by individuals over 74 years of age.
These studies show that over the next several years a significant portion of Iowa's farm land will change ownership. Further, the studies also reveal that few people have planned what will happen to their farm upon their death. This means there will be a number of people who will be facing the decision whether or not to sell the land and whether or not to buy land.
To help address the needs of these people Iowa State University Extension has updated two important decision aids. The first is a pamphlet entitled So You have Inherited a Farm. This pamphlet is designed to provide basic information for the decision regarding what to do with a farm inheritance and how to make the best decision. The second decision aid is this home study course.
The purpose of this course is to provide relevant information to help evaluate the land purchase decision. Remember as you go through the course that land price and land values are not necessarily the same. The price of land is determined in the market, whereas the value of the land is an individual determination.
This course is designed for purchase of agricultural land in Iowa. Most of the basic concepts, however, will apply to other real estate purchases as well.
To help analyze the land purchase decision, the course is divided into five lessons.
The land purchase decision involves long-term projections and substantial capital investment. As such, it is always a risky decision that can have major consequences. The decision must be carefully analyzed. Hopefully this course will provide a sound basis for making this important decision.
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