Thread: Buying another rice farm - drawbacks?

My wife's parents are not rice farmers, but they do own 12 rai of rice land which they rent out to the tune of a little over 100k a year.

Recently a neighboring farm has come up for sale - 14 rai for 800k Baht.

The bank wants 200k deposit and a yearly payment of 50k.

The dad says he thinks the land is good, and it would add another 120k to their annual income (minus the 50k to the bank)

Since i have no interest in supporting them "fully" when they are old and unable to work, I figure this is a pretty good way to ensure a stable income for the rest of their years.

Thoughts?

Naturally there are good and bad growing seaons, but if that is the renter's problem then...

Rent out at 100k per year for 12 rai ?

Thats good money for not having to work it.
My wife and I bought only 5 Rai for 200k last year and returns on that are about 30-40k per yield after labour , fertliser ,seed and pesticide.
Three yields in a good year they say.
So it would seem that at 100k rent it is is a good investment at 800k for more farm.
If you have that cash to spend and are feeling all jai deed up i could think of lots worse ways to spend it.
Have a green.

Originally Posted by Lobster

12 rai of rice land which they rent out to the tune of a little over 100k a year.

Don't know much about rice farming but I'd say thats damn good money as land is normally rented out for a third of what the growers make..
Be a tidy little investment for the inlaws.

I don't know my ass from my elbow as far as rice farming goes, but I've been to their land and it seems to be pretty fertile.

Perhaps it is just in a good location?

Everything sounds great on paper. Wondering if anyone else is out there with a rented out rice farm on their hands?

For investing 200K and getting a return of 70 K (120k minus 50K) is very good. That is more than 30% interest and after 12 years you get 60%. Even if you have to pay for land and other taxes the return is great.
(BUY IT and put it in your wifes name and tell her the 70K will be a present to your parents-in-law)

I know sod all about farming but 120k a year on 800k is a 15% return, which seems amazingly high.

Originally Posted by Dan

I know sod all about farming but 120k a year on 800k is a 15% return, which seems amazingly high.

This is why I'm asking for advice. There has to be a catch. (not with the inlaws, they are quite solid and trustworthy) otherwise why shouldn't we pick up 14 rai EVERY year and retire as rice land barons?

I live in Phichit provience and my wifw tells me that land here rents for about
500 baht per rai a yaer. Sounds like somebody is trying to blow smoke up your ass. Before investing money, ask plenty of questions.

Lobster

There is a person on another Thai forum, where they like to censor peoples comments, who is an American college trained farmer who has farmed here in Thailand for the last 20 yr as a dairy farmer. If there is any one who can honestly answer this question, he is the one. He goes by the name of Maizefarmer. PM me if you would like details.

Originally Posted by BillyBobThai

I live in Phichit provience and my wife tells me that land here rents for about
500 baht per rai a yaer. Sounds like somebody is trying to blow smoke up your ass. Before investing money, ask plenty of questions.

If rai rented for 500b a year it would take 114 years to pay back the purchase price of each rai (57k).


Not to mention, 500b a rai..for a year??? You could rent that to a backpacker to set up a tent for 5000b a year easy.

Maybe Chiang Rai is differently priced than Phichit, but i can't imagine it is twenty fold.

Questions have been asked...the 100k has been coming in steadly for the last 5 years so... what am I supposed to think?

Lobster

I am not one who wants to see it rain on your parade, but, dark clouds are forming. As Dan pointed out in another post, you are talking about a 15% return on your investment each year. Sounds like Barney Madoff is around there somewhere. All joking aside, I can not see rice farmers paying 8000+ per rai per year. From what I have read, at that price they would be in the hole.
Contact Maizefarmer, he will be happy to answer in detail what the truth is.

Rubber plantations down here currently generate about 600 baht per rai ( after subtracting 50% cutter's costs ) But you try buying any land. No-one sells. And then it is at minimum 150,000 b per rai. If you can find it. That was from my brother-in-law because he had an accident with one of his buses which wasn't covered by insurance.

If you are secure with your wife, buy land.

It isn't a direct return, but an investment. It won't go anywhere.

Originally Posted by Lobster

My wife's parents are not rice farmers, but they do own 12 rai of rice land which they rent out to the tune of a little over 100k a year.

Impossible to make a profit growing anything (legal) on this amount of land renting at that price. !0k rent would be more like it, growing rice on 12 rai would bring in less than half this rental amount in profit, maybe they are not in Issan and can grow two crops a year? even them they would be hard pressed to make anything after the rent was paid.

After talking to my wife again I got a clearer picture of what is actually going on.


The parents do NOT rent the land, what they do is let someone else farm it in exchange for 50% of the crop.

The dad says that if he does the whole thing himself he can make 100k a year (two seasons) - but the family business is more profitable, so he decides to let someone else do the farming and take half instead.

I'm going to estimate that he is getting 30-40k a year after water and chemical costs.

Not the gold mine that I had originally envisioned!


So...with these figures we would actually be losing 10-20k a year on the new land until the bank is paid back.


I still think it is a pretty decent thing to do though. A rai that costs 60k now will probably be 100k+ in 10 years...

Originally Posted by Lobster

The bank wants 200k deposit and a yearly payment of 50k.

Have you talked with the bank yourself or just believing someone elses opinion? Banks are not in the habit of making loans without knowing all the facts, market conditions and return on investments etc.

Originally Posted by Carnwadrick

Originally Posted by Lobster

The bank wants 200k deposit and a yearly payment of 50k.

Have you talked with the bank yourself or just believing someone elses opinion? Banks are not in the habit of making loans without knowing all the facts, market conditions and return on investments etc.

At this stage I am just believing what I am hearing.


However, I do know that the new land is right next to a main road and a water source, so I would imagine the bank would think it was a good idea.

I am in the same boat as shaggersback. Here is what 23 rai look like. Now I have to admit I know very little about rice farming. But as retirement is nearing I am learning.

y'all explain what 23 rai is to Arkansas rice farmer in acres. Enjoyed the thread, sounds like I need to buy land in Thailand.

Aprox. 1,600sq m = 1 rai.

Originally Posted by isanmick

Aprox. 1,600sq m = 1 rai.

As he is from the States probably no idea about meters. 2 and1/2 Rai 1 acre. Jim

I was just trying to relate that to my rice acres here in Arkansas. I farm 2050 acres of long and medium grain in the se corner of Arkansas.

Originally Posted by ricefarmer

I was just trying to relate that to my rice acres here in Arkansas. I farm 2050 acres of long and medium grain in the se corner of Arkansas.

You must get a big laugh out of these people trying to make money on 5 or 10 acres. Jim

Originally Posted by jamescollister

You must get a big laugh out of these people trying to make money on 5 or 10 acres.

Indeed. Rice farming in Thailand is not going to bring riches.

Rice farming isn't going to bring riches anywhere I don't think. As far as the farm size goes, that all relates back to the differences in production practices. I wish I didn't have to farm that much, I'd get to see my kids more.

How does a baht relate to the dollar?

I'll give u some of my numbers and I'll convert when I can.

Average yield per acre - 8000 pounds or 3628.7 kg. We have cut 10000 before.

Sell price yesterday for rough - 11 cents per pound $4.95 per 45 pounds or bushel

Urea fertilizer. 450 dollars per ton. Around 120 dollars an acre for total N.

Hybrid clearfield seed XL 729 around 5 dollars per pound. 125 dollars per acre

Water can vary. Anywhere from 50 to 200 dollars per acre.

We paid 185,000 dollars for new tractor last year

Buying a combine this year over 250,000 dollars

There are labor, flying, chemicals and a bunch of other stuff in there too. Not to mention a huge debt load so I don't have a whole lot of extra money. I just enjoy farming rice.

We also farm 3000 acres of soybeans 500 acres of corn 500 acres of Milo and some wheat.