Hobby farms have become a popular project for many people. A hobby farm is a smaller scale farm that consists of less than 50 acres. These types of farms are ideal for creating your own self-sufficient homestead.
While hobby farms are small, you still need funding. This is where agriculture loans come in. Land prices are increasing. According to the United States Department of Agriculture, prices went up 7.8 percent this year. Currently, acreage costs around $4,420 per acre. While you may be creating your hobby farm with no intention of running a business, you will still need to secure agriculture loans, rather than your typical homeowner loan.
Once you’ve found a potential agricultural property, whether it is land that you intend to develop or a current farm, the next step is to estimate what your overall costs will be. When purchasing land for your hobby farm, you have to take into account many factors. You want to make sure that your farm is successful and that you don’t stumble across any unexpected costs.
One of the biggest factors can be water. If you are a first-time farmer, water might be one of those overlooked costs. If you are purchasing a remote piece of land and there is not an on-site source of water, you need to determine how you will transport it there. You also need to gauge a rough estimate of how much water you will need when it comes to the type of crops that you are planning on growing.
Another cost to consider is energy. While it may be more expensive upfront, equating the cost of solar panels with your estimated amount for your agricultural loan can save you money down the line. Solar panels can range anywhere between $40,000 to $500,000 for a hobby farm, according to FIA. It all depends on the amount of power that you want to generate. Installing solar panels will also make you eligible for government incentives. While that may seem like a hefty price, look at it as an investment.
When procuring an agricultural loan, you also want to know information about the land itself. Is there already drainage? If not, is the land in a high-risk area for flooding? A good idea is to also give yourself an added cushion, in the event that the unexpected arises. Call us today for more information!