Ready to leave behind the city and live in the fresh air?
It might not be as impossible as you think. With the right business sense and a lot of hard work, you can make a decent living on a farm.
Of course, you’ll have to make your purchase carefully. Check out these key considerations when buying a farm for sale in Kentucky.
1. Farm Life
Many people have an idea of farm life being a certain way. Their vision is idyllic and sweet with lambs leaping in the fields and apple trees blossoming in the orchard.
While farm life can certainly be much less hectic (and noisy) than living in the city, it is far from easy. You’ll have to put in a lot of hours and work hard to grow your business.
You’ll spend most of your time one step from disaster. One disease or blight can easily wipe out a herd or crop. If you have all your eggs in one basket, you could be ruined. That’s why diversifying your income stream is important.
However, if you can handle all the work and the risk, farm life is very rewarding.
2. Existing Farm vs Starting a New Farm
The first decision you should make in your farm search is whether to purchase an existing farm or buy land to start a new one. There are a few things you should take into consideration.
The advantage of buying undeveloped land is that you can start whatever type of farm you’d like. It also seems cheaper because the value of undeveloped land is so inexpensive. But don't forget about all of your startup costs.
The cost of digging a well, building a barn, fencing, and whatever else you need to get started adds up fast. If you're going to be raising chickens or cows you will need to purchase the animals. If you're going to be planting crops, you'll need to buy the seeds, fertilizer, pesticides, and the equipment necessary to work the land.
In short, you’ll need a lot of capital.
Also, depending on the type of farm, you may have to wait a few years before it begins producing enough to earn money. That means you’ll need either enough money saved to live on for a few years or another source of income.
By buying an existing farm, you give yourself the opportunity to start earning income immediately. Even though the purchase price might be higher, with financing your cost will be spread out over your monthly payments, making it easier to handle.
Even if the farm you buy isn’t exactly the vision you have in mind, you can always modify it as you grow your business. Just because you bought an existing chicken farm doesn’t mean that you can’t plant apple trees on the unused portion of the land.
3. Adverse Possession
Before purchasing a large tract of land, it's a good idea to request a boundary survey. This will identify any potential adverse possession claims.
What is adverse possession?
Informally known as squatter’s rights, this provision allows a trespasser to claim ownership of your land. As shocking as it might sound, this situation comes up quite often in farmland.
Adverse possession laws are different in each state. In Kentucky, a trespasser has to prove five conditions. These are that their land use was:
- Hostile- without the owner's permission
- Actual- having control of the property
- Exclusive- only the trespasser was using it
- Open and notorious- not hiding the fact that they were using it
- Continuous for 15 years
The idea is based upon the fact that if a trespasser begins to use a piece of land and the real owner never objects, after a certain period of time it's unfair to kick out the trespasser. In Kentucky, that’s 15 years although under certain circumstances it can be less.
Easements are another common situation in farmland. As farmers sell off portions of their land, it is common for an easement across their land to be necessary to provide access to the newly divided portion.
This means that someone could have a driveway that goes through the land that you’re buying. The details of the easement should be clearly spelled out in the real estate contract. This makes it different from an adverse possession claim and they won’t be able to take possession of the land in the future.
The main thing to worry about is to ensure that the paperwork is in order. Your real estate agent can review the documents and help you determine that everything is as it should be.
5. Property Taxes
Almost regardless of what kind of type of farming you're going to do, there's one thing every farm needs. Space.
Thus, you might be wondering, how much are you going to have to set apart to pay your property taxes every year?
Not as much as you might think.
The law as it stands in Kentucky is very lenient with land use for agricultural purposes. Back in 1969, the concern was that many family farms would drown under their tax burdens because prices were rising so rapidly.
Land of 10 contiguous acres or more used for agricultural purposes is taxed at a much lower rate. You can take advantage of this agricultural exemption whether you're raising animals, crops, or even timber.
Finding Your Farm
There is a lot to consider when buying a farm for sale in Kentucky. The best way to find the perfect piece of property for you and understand all the legal ramifications that come with it is to work with a real estate agent.
As an expert in the local area, they can lead you to the right farm for you and guide you through the purchase process. Plus, as a Clever client, you’re eligible for a $1,000 home buyer’s rebate on properties that sell for over $150,000.
Contact us today to learn more!