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Cleveland, WI|Feb 22, 2025
I’m a small(ish) farmer that grows about 600 acres, mainly small grains and feed for our local Wisconsin dairy industry. I don’t have dairy cattle nor have the interest at this time. For those farmers that have grown significantly by taking on large tracts of land, how did you do it? I’m particularly interested in how farmers have developed relationships with other farmers that are nearing retirement and were looking for a succession plan? What kinds of things were those farmers looking for? For example: someone that was going to take good care of the land, an opportunity for the existing farmer to still help when they wanted to, anything else, or was it only price?
My goal is to develop a deeper relationship with two farmers approaching retirement who are looking at succession opportunities and I’m looking at how people have been creative to help develop and execute a solution in that space.
Thanks!
Answers (1):
Mar 02, 2025
A solid approach to structuring a farmland purchase while addressing both the buyer’s need for efficiency and the seller’s concerns about capital gains and long-term financial security. Seller financing can be a win-win, especially when structured properly with a financial planner to ensure smooth generational transitions and minimize tax burdens.
One key advantage of this approach is the flexibility it offers both parties. The seller benefits from interest income while avoiding a large lump-sum tax hit, and the buyer gains access to land at a potentially lower interest rate than a traditional bank loan. Additionally, involving a financial planner can provide stability, ensuring that payments continue even in the event of the seller’s passing, which can be a major concern for multi-generational family farms.
The only caution here is making sure that all terms are clearly outlined in the contract to protect both sides. While avoiding excessive legal involvement is a plus, having an attorney draft a solid, well-thought-out agreement is still critical. Have you seen many landowners in your area open to this kind of structure, or is there still a strong preference for cash sales?