What are the most common financing routes for buying a farm?
Commercial banks, Land Bank, and private investors. Hybrid models, where an investor buys the land and the producer manages it, are also becoming increasingly popular.
What should buyers know about auctions?
Auctions require quick decision-making backed by careful research. The deposit is paid on the day of the auction, and guarantees are provided to settle the balance within 45 days. Buyers may be given grace if the bank process is delayed. It is, therefore, advisable to have all financing in place beforehand.
How can young farmers without major collateral enter the market?
Partnerships or guarantees work well. The investor receives a return on their investment, and the young farmer builds a track record for future financing.
How is a farm valuation conducted?
Independent valuations are essential for credibility. They ensure that the purchase price is market-related. Experts such as the experienced Vleissentraal Eiendomme team can be of great value to the buyer and seller.
What do financiers consider before approving a loan?
The major consideration isn’t land size; it’s cash flow. A financial institution must be confident that the producer will be able to service the debt even in difficult seasons.
How big is the interest rate risk?
Interest rates pose a significant loan risk, and loans should be structured so that the producer can absorb a 2% increase.
Your final thoughts?
Financing is not only about the money but also discipline, record-keeping, and realistic growth to sustain the business.
For more information phone Vleissentraal Eiendomme on 072 118 7509, or visit vleissentraaleiendomme.co.za.
