Rat Race Exit Strategy: Buying Christmas Tree Farm - Any Suggestions?

Greetings!

My wife and I will soon be 30 and have realized the rat race just isn't for us. We've been working very hard, putting our money into silver and rental properties (two triplexes and a house). We live very frugally and enjoy simply being outside rather than having enough money to buy a nice car, etc - it's just really never been our style. This all being said were planning our big exit from the corporate society. We've been looking at lots of small houses on 5+ acres to get away and figure out "new jobs". Were both creative and have lots of small business idea's which we think could work but when looking at properties and coming across a Christmas Tree Farm for sale have thought that might not be a bad way to get started and buy the land we want. The seller has ran the business for over 40 years and is now in his mid-80's and just can't take care of it. He is happy to help whomever buys it get started though. I haven't had a chance to sit down with him as his agent is between us at the moment and I want to respect that relationship and work my way to a meeting. It's said to have $110,000 worth of tree's over the 40 acers and bring in about $11,000 after expenses each year - what that entitles I currently have no idea, this is why I want to meet with him and understand everything.

I am in the process of starting a float center (where you go float in sensory deprivation tanks), and have a great idea for a retreat which I would like to incorporate into this or a neighboring property should zoning code not allow me to do it here. In the process of setting up meetings with County Planning Department now.

Nonetheless, being in Washington State and already a Christmas Tree Farm, I had a couple questions I wanted to see if anyone had any suggestions with:

1. All this being known now, anything you'd tell me before I dive into this?
2. What sort of questions should I be asking the owner of the farm? I analyze financials, I am not a farmer - yet.
3. Has anyone seen what can creatively compliment a Christmas Tree Farm? The farm is already know, so I feel like it's a decent base to work off of. It's not a "fresh" start but rather a new beginning. I have a platform and market to grow and use marketing with to start new things.
4. I've read mushroom farms can do decent in Washington State (legal type), anyone have any experience with this and would Christmas Tree sort of conditions be good for them as well?

Obviously we have a ton to learn, but we are both very excited and eager to find something else than sitting at a computer 14+ hours a day working for someone else.

Happy to meet all of you!

Question: Would it make sense to post this in "Farm Income" as some of my questions are in regards to what else I can do with a farm to make income so I can survive? Can't pay taxes without money!

I have a few questions before we even get as far as talking about the financials or the practicals of farming.

Help us understand where you're going with this goal. You mention "the rat race." And you mentioned "a computer screen 14 hours a day for someone else."
What do you do for money now?
How much extra money are you making right now? Above your bare needs?
What are the problems with where you are now? What exactly are you trying to change?
How do you anticipate that being a agricultural business owner will remedy what doesn't suit you about your current situation?

I would like to hear the answers to these things, but for an initial bit of feedback with the little information we've got, I wonder if you might be shooting your mosquitoes?

14 hour days are tough. Is there a way to get your work under 40 hours, with the commensurate pay cut, and regain some of your life without necessarily uprooting and changing everything?

I'm in a situation these days where I dread my work. I've been her before, and I got so desperate that I changed fields. I regretted it, and came back. Turns out, the work isn't bad, but an unreasonable workload is. The answer? In my case, go self-employed. People will overwork you when you're salaried, because why the heck wouldn't they? But if they pay you by some unit of work, then they're much more sensitive to things like, "Sorry, that's more than I'll be able to do a good job on right now."

Zach Bradshaw wrote:Question: Would it make sense to post this in "Farm Income" as some of my questions are in regards to what else I can do with a farm to make income so I can survive? Can't pay taxes without money!

I've added this thread to the 'farm income' forum. The same posts will show up in both forums now so you won't have two threads to chase around after.

Thank You, Burra!

Mike,

Good questions for personal thoughts and reflection:

Help us understand where you're going with this goal. You mention "the rat race." And you mentioned "a computer screen 14 hours a day for someone else."
What do you do for money now? I am in the commercial real estate industry making investors lots of money. Which has been great to team me everything about investments up until this point.

How much extra money are you making right now? Above your bare needs? Currently I am making quite a bit but I have been rolling it all into real estate investments. Haven't really pin-pointed a dollar amount as I have been moving/buying places for the past 2 years and haven't ever stayed in one place for more than a few months.

What are the problems with where you are now? What exactly are you trying to change? I currently live next to 7 of my tenants with zero land. I want land, incoming producing land would be an added bonus.

How do you anticipate that being a agricultural business owner will remedy what doesn't suit you about your current situation? I like the sustainable act (or thought of it anyways) of this. I wish to produce more of my own food, work with my hands outside, etc.

I would like to hear the answers to these things, but for an initial bit of feedback with the little information we've got, I wonder if you might be shooting your mosquitoes?

14 hour days are tough. Is there a way to get your work under 40 hours, with the commensurate pay cut, and regain some of your life without necessarily uprooting and changing everything? Absolutely; however, I don't mind working long/hard days. It's just what I do. I am motivated. I would just rather focus this energy towards other endeavors. I am going to keep my rentals, and keep buying more with syndicated funds among people I know earning myself ownership without putting in my own money and taking finders fee's.

I'm in a situation these days where I dread my work. I've been her before, and I got so desperate that I changed fields. I regretted it, and came back. Turns out, the work isn't bad, but an unreasonable workload is. The answer? In my case, go self-employed. People will overwork you when you're salaried, because why the heck wouldn't they? But if they pay you by some unit of work, then they're much more sensitive to things like, "Sorry, that's more than I'll be able to do a good job on right now." - I am currently a commission contractor, and have the freedom to do what I want, I just don't enjoy it. I am all for taking huge risks and leaps of faith. We won't be 30 years old for a few years yet so we have plenty of time to decide we don't like it and undertake the next endeavor should we want too.

Nonetheless, I will be buying land away which I can enjoy, grow some food, etc. We both want to quit or "jobs" and migrate to jobs we fully choose to do which result in us having more time for ourselves, hiking, outside, wilderness, etc. I will keep my investments, I will keep my float business, etc. Just want to add to the portfolio of life by figuring out something that gets me into being outside and creating something (if that makes sense) - food, tree's, whatever it might be.

Mike - there is an important aspect of my personal opinion which I did not mention but upon further review and reconsideration, I think it's fair to mention to you as you seem to be taking an honest interest in what is driving me to pursue this odd interest. I didn't want to bring politics into this discussion and will not; however, I am pessimistic as to the global financial strength of the current monetary system and in this pessimism part of my contingency plan is being able to be self-sustainable. If analyzing commercial real estate trends and economic data has led me to anything, it's that I don't believe we are headed towards "good economic times" - this is a large part of me personally wanting land. This particular piece of land fits well into my criteria of acceptable land. If not this Christmas Tree Farm, I still want some sort of land!

I'd hire a business broker to represent me, someone who can help run the financials. The realtor won't know squat about net income.

I hear you about wanting to exit the mainstream economy. Is a Christmas tree lot all that recession-proof? Or do you want to start diversifying right away to satisfy that personal security need?

Ann Torrence wrote:I'd hire a business broker to represent me, someone who can help run the financials. The realtor won't know squat about net income.

I hear you about wanting to exit the mainstream economy. Is a Christmas tree lot all that recession-proof? Or do you want to start diversifying right away to satisfy that personal security need?

The numbers I will understand okay, not too worried about that part but good idea nonetheless.

I would think Christmas Trees are the last thing people spend money on in recession, but the land is more what I am after. The tree farm is just an added bonus for while the economy is okay. I hope my thoughts are wrong and the economy stays fine so I can run a neat business out of the farm.

My secure investments are silver and rentals housing locked in on 30 year fully amortized non adjusting loans. This can ( a risky one and I am okay with that.

Zach Bradshaw wrote:I would think Christmas Trees are the last thing people spend money on in recession, but the land is more what I am after. The tree farm is just an added bonus for while the economy is okay. I hope my thoughts are wrong and the economy stays fine so I can run a neat business out of the farm.

My secure investments are silver and rentals housing locked in on 30 year fully amortized non adjusting loans. This can ( a risky one and I am okay with that.

How much more is he asking for this place over standard open land in the area? If it isn't much then it might make a good starting point for a more diversified farm. What are you going to have to pay in monthly loan payments if any? How will the potential $11k net income from the trees compare to these payments? Will you keep some outside income from other jobs to make up any differences in the payments and your living expenses or are you going to have to quickly add on extra diversified farm production to make up the income?

How close to a relatively large metro area is it? If it is within 30 minutes you can look at adding a lot of come to the farm type income opportunities. If you are more than that, but less than say two hours you can look at weekly delivery type things. If you are much further out you need to deliver large amounts of high value products monthly or so either to buying clubs or wholesale.

Personally I do not look at precious metals as a secure investment. I am setting on several hundred ounces of silver I purchased not that long ago when I was making jewelry for under $5/oz. It was selling for over $30/oz last year and last time I looked a couple weeks ago it was just under $20/oz. This is play money investing stuff. I do agree that rental real estate is pretty secure. I bought a 15 acre place a couple years ago and the two rental houses on the property will have it paid off in about 6 years. I am looking for another 20-30 acres with a similar type of potential. I almost went on a 20 acre place, but the rent on the house wouldn't cover a 15 year loan on it. I probably should have done a 30 year, but I really dislike debt.

Zach Bradshaw wrote:

1. All this being known now, anything you'd tell me before I dive into this?
2. What sort of questions should I be asking the owner of the farm? I analyze financials, I am not a farmer - yet.
3. Has anyone seen what can creatively compliment a Christmas Tree Farm? The farm is already know, so I feel like it's a decent base to work off of. It's not a "fresh" start but rather a new beginning. I have a platform and market to grow and use marketing with to start new things.
4. I've read mushroom farms can do decent in Washington State (legal type), anyone have any experience with this and would Christmas Tree sort of conditions be good for them as well?

1) How does he do his marketing (is this wholesale or you-cut?) You want the relationships with the buyers if wholesale, the FB page and mailing list if retail. If wholesale, is he tied to any long-term contracts?
2) Irrigation rights (and who has precedence), easements of all types, the ones that cross your land, and the ones you would depend on to get your water. Has he put the land into a conservation easement for taxes? Are his sales taxes paid up? What does his liability insurance run (if doing a u-pick, this could get spendy). Is he selling the equipment with the farm? Location, age and last servicing of septic. Well water test. Where does the replacement nursery stock come from? What's the labor pool?
3) Have met a family of fruit farmers in Michigan who diversified into Christmas trees, pumpkin patches, and then value-added products like jams, now making hard cider. Anything to get the same u-pick folks to come back in another season, turn it into a 6+ month cash flow. They are pushing an experience rather than a product (corn mazes, hay rides, etc.). You might be able to run poultry in the off-season, if you can find a slaughterer to process them. You could also look at the hard cider apple market, but I always say that!
4) The folks I know making $ in mushrooms are selling to restaurants and high end groceries, so it would be a totally different marketing channel than a u-pick or wholesale.

Paul -


This farm is 91% of the average 2013 sales price for "comparable" land. It's very difficult to find exact comparable, as it's unique but on the best ones I could find, so on that front it's okay. I will have to pay on the high at least $1,300/monthly (unless I am able to get FHA Owner-Occupancy Financing, which I don't think is possible, then I would have to add PMI). I make $2,000/monthly after fixed expenses on the rentals I currently own. So I can feed the property and live frugally and then use the potential tree income to pay down principal. I would like to do a blend of both. Probably not keep current jobs, but keep jobs to bring in some income; however, diversify the farm would be something we would want to pursue to phase out of our current type of work.

It's basically on a lake in a "rural" area but 20 minutes to metro areas both north and south.

I bought a couple thousand ounces of silver and not nearly that much gold to just sit on. It's an investment that will just sit, in my mind. I don't plan on trading, borrowing against, or using it for the foreseeable future, but I like the idea of owning it. I have bought a couple things on craigslist with some 1oz silver coins for fun, but that's the extent of my silver dabbling. I am much more into the property acquisition as you seem to understand! Would love to pay something off on a 15 year amortization; however, even finding awesome deals - the current state of the market here does not support it. I don't love the debt but at least the 30 years is locked in with no adjustments.

Two of the properties I bought almost a year about are worth about $150-200K more this year so I've debated selling and buying a smaller, simple duplex and just paying it off in a less metro area where prices are cheaper. I like being locked in 30 years at 3.37% though. Lots of debates for me on that one! Need to focus on the farm for now!

Also I looked up other farms, and between the two "metro" areas I mentioned, there are no other Christmas Tree Farms. There are several both north and south of those two areas but nothing in-between. Within 3 miles, 3,488 residence, with 67k annual household income. I don't know how demographics relate to tree farms, but that doesn't seem bad.

Ann - awesome questions - my list is coming along quite well. Thank You! I love the idea of making hard cider. I go brew with my uncle sometimes and did a few batches in college. Definitely something I have been interested in pursuing, nonetheless a fun hobby to make a delicious drink!

Zach, check into a loan from a Farm Credit company. They are a co-op style financing setup that provide loans that are usually better rates than standard bank loans. I am also adding a couple other links with some funding options for Washington State.

http://www.farmcreditnetwork.com/about/locations

http://wshfc.org/farmranch/

http://agr.wa.gov/marketing/smallfarm/docs/2-financingyourfarm.pdf

Paul - Awesome idea! I'd never even thought about farm financing. Definitely something I will look into. I wanted to look into owner occupancy, farm, etc. The owner is also willing to carry some balance (which I would consider if the terms were beneficial), and then I have an aunt with money rotting away with inflation in a bank account who will lend me some money at favorable terms as well. My wife is looking into a program to cash out her 401K, she would have to quit her job but it's less of a penalty if you roll it into your primary residence which were hoping would be quantifiable and she would then find a new job in this area in the meantime.

So the owners won't actually meet with me at this time. Initially they just wanted an offer, but they now understand I am more serious than I was before. The "owner" is 83 living in a retirement home and his 4 sons/daughters are the 2nd gateway between the listing broker and myself. Everyone has been very helpful. At this time they wanted to see a list of my questions. I was thinking I would be really honest with them and write why I want this and my intention with the property then list my questions and finish with how I believe a meeting would be mutually beneficial. Excited as I see this developing.