Your 40-acre property is in prime whitetail country and sells for $3,800 per acre, costing $152,000.
You have great credit and put 20 percent down, which is $30,400.
You’re now financing $121,600 on a 25-year loan at 4.5 percent interest.
Your annual payment will be $8,112 (including interest).
Of your 40 acres, 24 are agriculture.
You have average soil and get $300 per acre for leasing the ag ground, earning you $7,200 cash rent per year.
You end up paying $8,112 – $7,200 = $912 annually.
After 25 years, you will have paid about $53,000 for the property, which will now start turning a profit.
At a 5 percent compounded appreciation rate, the property will now be worth about $514,000.…
