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How to Buy Farmland With Little to No Money

Published: 08-31-23 Category: Buying

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Farming is a big business in America, generating over $164 billion in revenue every year, but owning and operating your own piece of farmland is no joke.

If you're thinking of buying farmland for sale, you have your work cut out for you. To assist, we put together this guide on how you can buy farmland for sale with little to no money. We'll discuss farmland costs, farmland financing, and a few different ways that you can profit from your purchase.

Let's get started.

How Much Does Farmland for Sale Cost?

How to Buy Farmland With Little to No Money

According to the USDA's 2023 Land Value Report, the average cost of farmland for sale in the US is approximately $4,080 per acre, although land prices can vary heavily depending on the state. The three states with the highest per-acre cost of agricultural land are:

Rhode Island: $18,300;
New Jersey: $17,700; and
Massachusetts: $15,300.

Commercial agricultural land prices across the US have been growing significantly in the past few years, rising nearly a third (~30%) between 2020 and 2023 alone. Land prices in Kansas had the largest percentage increase between 2022 and 2023, rising just over 16% to $3,060 per acre.

Where Is Farmland the Cheapest?

As of 2023, the state with the cheapest farmland prices is New Mexico, at just $610 per acre. Wyoming is the second-cheapest state to buy farmland for sale at $880 per acre.

More generally, farmland gets cheaper the further away from city centers you get, though certain exceptions do exist. Buying the cheapest farmland is not always the best option, though: Land might be cheap in New Mexico, but the land might not be able to yield sufficient amounts of the crops that you want.

Whether you're buying farmland for sale in Virginia or Idaho, we highly recommend working with a commercial real estate broker that specializes in farmland acquisitions. The right farm broker can be an invaluable asset when researching property financials and negotiating sales contracts.

What Other Expenses Are Involved in Owning & Managing Farmland for Sale?

Farmers have to deal with a myriad of production costs in addition to legal and tax expenses. Below are some of the most important operating expenses owners need to account for when buying farmland.

#1 – Labor

Labor is a major cost for farms as crop seeding, cultivation, and harvesting require a lot of manpower. The typical farm worker earns about $15.96 per hour, which is lower than many other industries. Salaries for farm workers can vary based on experience.

#2 – Machinery

Farms utilize a wide range of machinery and equipment, including but not limited to:

Combine harvesters;
Tractors;
Balers;
Plows;
Sprayers;
Backhoes;
Cultivators;
Disc harrowers;
Broadcast seeders;
Commercial seed; and
Fertilizer.

For example, US farm owners spent more than $17 billion on tractors and other self-propelled farm machinery in 2021.

#3 – Asset Depreciation

Asset depreciation isn't an expense per se, but it's something farm owners factor into reporting profits.

Farm equipment can depreciate in value from use and age. Farmers can deduct the depreciation of capital assets from their profit, which can lower the amount of taxes they're responsible for paying.

How to Get a Farm Loan With No Down Payment

The US government has a vested interest in ensuring agricultural production remains high, so they offer several land loan programs to help farmers finance and buy land with little to no down payments.

The Farm Service Agency (FSA) offers Direct Farm Ownership Loans for buying farmland for sale or expanding existing farmland. Financing for FSA loans goes up to 100% with a maximum loan value of $600,000.

To be eligible for an FSA farm ownership loan, you must:

Be a farm enterprise;
Have at least three years of farm management experience;
Be a US citizen in good tax standing; and
Not have a conviction for growing controlled substances.

Depending on the circumstance, you may be able to substitute postsecondary education for years of experience. The maximum repayment period for FSA loans is 40 years. The FSA may also require an environmental report of the land before issuing the loan.

The FSA also has a down payment program for socially disadvantaged beginning farmers. Under the down payment program, borrowers can make a 5% down payment and receive up to 45% of the value of the farm. The FSA can also guarantee up to 95% of financing for the rest of the farm value.

How Can I Make Money With Farmland?

The two main ways to make money with farmland are to either grow crops yourself or lease the land to other producers. Many farm owners don't actually grow anything themselves and instead lease the land to farmers who pay cash rents to grow on the land.

However, growing crops isn't the only thing you can use farmland for. Below are some ideas on how farmland owners can make money off their land that don't involve agriculture.

#1 – Billboards

If you've ever driven through the countryside, odds are you've seen a bunch of billboards. If you own land near a busy highway or interstate, you can lease your land to outdoor advertising agencies for a premium.

#2 – Harvest Timber

If your farmland has a lot of forests on it, you can lease the land for timber production. Timber and lumber prices fluctuate throughout the year and depend on the age and quality of the land's trees.

#3 – Herding/Hunting Lease

Farmland owners can also lease land for herding and hunting purposes. Ranchers can pay you to allow their cattle to graze, while hunters will likely pay top-dollar to hunt wild game.

#4 – Infrastructure Projects

One final option is leasing your land for various infrastructure and energy projects, like cell towers, wind turbines, and solar panels. For example, solar companies will pay a per-acre rate to lease unused land for panels. If you weren't using the land for anything else, leasing is a nice way to create some passive income.

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