What to Know Before Buying a Farm

While fast-paced city life may be the perfect fit for some, many couples and families are opting to move out of the city and into a more rural setting. Whether it’s a one-acre lot or a 500-acre farm, families across the nation are starting to move toward a farm lifestyle. No matter which kind of farm you're considering, there are a few factors to keep in mind. One of the biggest is that your investment will need to be protected by the right farm insurance policy.

An independent insurance agent can easily help you find the right farm insurance. They'll get you matched to the policy that considers your unique farm's aspects and operations. But until then, here are a few things to consider before buying a farm.

First, Consider Why You Want to Buy a Farm

One of the key things to consider before purchasing a farm is what you'll use it for. A few questions to ask are:

• Will the farm be primarily for residential use and gardening? 
• Will relatives or in-laws be living on the farm with you? 
• Will you be attempting to make a living off the land? 
• Will you have livestock? 

Since many farms have the ability to be multipurpose, it’s helpful to figure out what you want to do with the land and do your homework ahead of time.

Next, Choose the Right Kind of Farm for You

There are many different kinds of farms out there, but two of the main types are hobby farms and working farms. Here's how to choose which is right for you.

Hobby farms

Hobby farms aren't started with the main intended goal of turning a profit. The name "hobby farms" implies their true intended purpose, which is to be used for joy and fulfillment. 

You might grow vegetables or fruit on your hobby farm or house livestock that can produce eggs, meat, or milk. While your hobby farm may be extremely rewarding on a personal level, it can also be expensive to run since it won't be used for profit.

Working farms

If you're not looking to buy a hobby farm but aren't yet ready for a full commercial farm, a working farm might be ideal. You can purchase an already-established vineyard or orchard that has mature crops that are already producing goods you can sell. 

Similarly, you might choose to buy an established dairy farm or apiary to start. This eliminates much of the initial work you'd otherwise have to do. 

Your job would be to go in and continue maintaining the farm, but you could likely start to turn a profit from your efforts early on. Buying an established working farm can also come with the major benefit of experienced staff who can help you with operations.

Finally, Consider Where to Buy Your Farm

The farm's geographical location is just one aspect to consider in this step. You'll also need to consider the soil types on the farm, and how they'll benefit the type of crops, livestock, etc., you want to live and grow on your farm. Be sure to research which type of soil is necessary for your farm's intended purposes beforehand.

Also, the type of grass on the farm will affect how well your livestock can thrive. The presence of natural water sources on the property is also a key factor not to be overlooked. Consider the area's average annual rainfall and if any rivers, lakes, ponds, or streams are present to help nourish your livestock and crops. 

Working together with a local real estate agent who specializes in rural properties and farms can help you choose the farm that's in the ideal geographical location, and that has the right kind of terrain for your desires.

Specific Farm Components to Consider

There are a few specifications of the farm you'll also want to take into consideration before you decide to buy. Here are just a handful to keep in mind.

Size and amenities

When it comes to choosing the size of your farm, you’ll need to have a firm grasp of what you’re going to raise and how much those animals will consume. On average, you’ll need one acre per cow, one-half acre per goat, one acre per every 20 pigs, and one-and-a-half acres for a horse, plus one more acre for each additional horse. 

If the farm has water, be sure to find out if it’s potable. If you’ll be growing a garden, you’ll need to allot land for that as well. Orchards, arbors, houses, barns, sheds, etc., will all need to be considered.

Fences, barns, and other structures

When it comes to running a farm, you'll need not only a place to keep your equipment and vehicles but also structures and fences to contain your livestock. Fencing comes in many different types, with varying prices and upkeep requirements. 

Pay close attention to a farm's fences, considering any places that may require additional fencing or sections that need repair. The supplies you need to repair fences are usually affordable, so it's a good idea to learn how to repair and install fences yourself, as having it done professionally can be expensive.

Barns can be a benefit or a drawback. If you get an inspection done on the property, pay close attention to the condition of the barns, making sure they're in good, usable condition. Tool sheds, chicken coops, and other structures can prove invaluable and make your farm set-up much easier.

Farmable acreage

While a 300-acre farm is a lot of land, some of the land will most likely not be farmable. Most farms have wooded areas, streams, or valleys that cannot be farmed. Consider what you'll be growing, and make sure that the farm has enough farmable acreage to accommodate your desires.

Access to services

When you move away from an urban or suburban area, the one major thing you'll notice is a lack of proximity to community services and retail areas. Many larger farms are even more remote, so weigh how far you're willing to drive to get your groceries and other necessities or even wants. Many farm families only do grocery shopping once a week or even bi-weekly.

Also, think about other community services such as fire departments, hospitals, and police stations. These may be much further away than you're used to. That's why having a first aid kit, home security system, and complete farm insurance coverage is critical.

Additional factors to consider

There are many components to consider before buying a farm. If you're able to, make sure to research the following items of any specific farm property you're thinking of buying:

• Included equipment and its condition
• Existing structures and their condition
• Crop history
• Irrigation systems
• Water sources
• Grazing history
• Pesticide usage
• Drainage systems
• Soil analysis
• Blight and disease history

None of these farm components should be overlooked before you decide to make a huge purchase. Failure to consider any of the above items could make it harder for you to successfully grow your crops, raise livestock, or otherwise enjoy the fruits of your labor.

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The Financial Side of Purchasing a Farm

Often, buying a farm is much more expensive than buying a home or another piece of land or property. Fewer lenders tend to be available when purchasing farms as well. 

However, help is available through the USDA's Farm Service Agency Farm Loan Programs. Multiple financing options for farms are available through the USDA for many different types of customers, including specific programs for women and minorities.

You can also go through a private lender if none of the USDA's programs are right for you or you don't qualify for their assistance. It can be difficult to apply for and be granted a loan for a farm, so keep that in mind. 

You'll also need to have a generous amount set aside in savings to cover annual farm expenditures and upfront costs. To start even a small farm, the average cost can range from $600 to $10,000 and above. Of course, you'll also need to fit the cost of a proper farm insurance policy into your budget to protect you from losses related to all kinds of disasters that could impact your crops, property, or profits.

The Bottom Line and Working with an Independent Insurance Agent

There are many factors to consider before signing on the dotted line for a farm, and these tips are a good stepping stone to get a clearer grasp on the farms that may fit your family best. An independent insurance agent can advise you on your options and make sure your farm and all of its buildings, equipment, and livestock are fully protected with the right farm insurance policy. They'll shop and compare policies from multiple carriers that offer farm insurance in your area to find you the best overall blend of coverage and cost.