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Equipment cost?

Bootheel, I own enough equipment to operate the ranch. I would like to update my equipment some. It is interesting to me how many people can see the negative side of this, does anyone see the positive side. Not trying to be rude, but I am not stupid and I understand quite well what happens with depreciation as well as wearing out equipment. I also know what new equipment cost and understand better than some how to buy something of value. If I can get paid what it is worth to operate my equipment, it doesn't matter if it is new or old as long as it is dependable and does what is required. What I am trying to say is that it is worth the same no matter the age, the condition of the equipment is what matters. A hay contractor that runs 20 yr old equipment gets paid the same as one with year old equipment. If I can pay for my equipment in a short period of time and update it a little, I can start to put the income generated into something that will show me more return. I am not asking whether or not to furnish the equipment, I want to know what a reasonable rate to furnish the equipment would be. Then I can make my own decision. I can't see having the equipment set around if I can get paid for it and I don't have any interest in selling it. If I don't get paid what it is worth, I guess it will set around.
 
Then you put a value on all the equipment you will supply and charge a lump sum of 20%+ for that value, then add fuel, oil, twine etc.

I would think a high enough percentage to cover repairs and also put enough in a kitty for a rainy day fund when a major happens.

FWIW, don't EVER buy new. There are enough pieces out there with the first 40% depreciation already gone. :wink:

As I was told one, I like the way you're thinkin', just leave them rose-coloured glasses in the dresser drawer!
 
Red Barn Angus said:
You can't make any money doing custom work. You might generate a baler payment if you were short of cash but that is a short term deal. I think you are cruising for a disappointment if you take on his work with your equipment. Let him buy the equipment and pay you to operate the ranch if you want but don't furnish the machinery. You'll wind up with a bunch of worn out iron and no money to replace it with. Make a deal with the owner to let you run a few cows on the ranch and next year a few more etc. That way you really would accumulate something.
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I dissagree. There is a guy here that is all he does is custom hay work, he's been doing it a long time, he must be making money or he would be broke by now. I think trying to find a reasonable rate is very situational to the area.
 
gcreekrch said:
Then you put a value on all the equipment you will supply and charge a lump sum of 20%+ for that value, then add fuel, oil, twine etc.

I would think a high enough percentage to cover repairs and also put enough in a kitty for a rainy day fund when a major happens.

FWIW, don't EVER buy new. There are enough pieces out there with the first 40% depreciation already gone. :wink:

As I was told one, I like the way you're thinkin', just leave them rose-coloured glasses in the dresser drawer!
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I have no problem buying new equipment as the used equipment in my area has been well used before being sold. In areas with more active farming/ranching operations then used would be a good option. I did travel 600 miles last spring purchase a 20 year old tractor.
 
I will chime in here, since we have already talked about it in person, and I have a pretty good idea of both Flyin S equipment, him, and the area. I have also leased tractor out, since I am one of the strange ones, that thinks iron is a good investment. I own 4 tractors, ranging from 50 horse up to 150. They are all older, but I wouldn't be afraid of using them everyday, all day.
I lease my tractors back to the ranch, and I figure $15/hour for up to 60 horse, $20 for the 65 and 70 horse tractors, and the big one is $25/hour. The ranch pays for all the fuel, oil, and minor repairs. I stand anything major.
As far as your tools and such, I would figure what I had invested, and divide that by about 10 years, cause I figure that is about how long it took you to accumulate them.
Vehicles would be value/ years. Maybe 6 years. Guess that is kinda how long I figure you can make one hold together in the sandhills.

I would go into this with eyes wide open, and have more then a hand shake, for the agreement. Like everyone else has said. There are alot more bad experiences then good, in situations like this. Been there done that, only difference I had, was I THOUGHT I had the ground leased and was operating totally on my own. Found out differently, and it cost me alot of money, but I am still a dreamer, and would try it again, just like you are trying!!
 
This bunch will talk you out of anything but the fact is expansion is absolutly neccessary if you are under 50 and want to have enough to pass on.

That being said, get everything in writing and if it pencils out to you then go for it.

I for one would rather go broke expanding than go broke waiting for a sweet deal to fall in my lap. A whole lot of things don't pencil but end up being a good deal.
 
If you think it is good, do what you want.

What I've seen guys who farm with their own equipment and at the end they are expecting a check for machine hire and instead they get booted out on their rear. Since they are short on money they end up moving on with no compensation. Protect yourself.

I know of a guy who would always promise guys to manage his place for minimal compensation but with the promise after five years they'd get a quarter of land and so on. Ya know not a one lasted five years, something always got in the way. With that promise he seemed to always get a taker, figuring that he really meant it with them or the last guy was worthless. protect yourself
 
Larrry said:
If you think it is good, do what you want.

What I've seen guys who farm with their own equipment and at the end they are expecting a check for machine hire and instead they get booted out on their rear. Since they are short on money they end up moving on with no compensation. Protect yourself.

I know of a guy who would always promise guys to manage his place for minimal compensation but with the promise after five years they'd get a quarter of land and so on. Ya know not a one lasted five years, something always got in the way. With that promise he seemed to always get a taker, figuring that he really meant it with them or the last guy was worthless. protect yourself
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This would be my concern also. I WAS one of those guys. Lasted about 4 years, and was out everything I put into it, other then the experience, and I have had enough of that, now I want MONEY.
 
I just finished a bad deal myself, miles of new fence and treating a place for 8 years like you owned it now it is sold and I am out the window like the trash but I go back to the original post. Get it in writing and then go for it if you think it will work.

I started with nothing and I will roll the dice and may end up with nothing but at least I will know I tried everything in my power to make things work.
 
Doug Thorson said:
I just finished a bad deal myself, miles of new fence and treating a place for 8 years like you owned it now it is sold and I am out the window like the trash but I go back to the original post. Get it in writing and then go for it if you think it will work.

I started with nothing and I will roll the dice and may end up with nothing but at least I will know I tried everything in my power to make things work.
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Not trying to be sarcastic but when you say "Out the window like trash" Do you mean the deal is just over but you were compensated or you didn't get treated right on the whole deal? Did you have an agreement in writing?
 
Doug Thorson said:
This bunch will talk you out of anything but the fact is expansion is absolutly neccessary if you are under 50 and want to have enough to pass on.

That being said, get everything in writing and if it pencils out to you then go for it.

I for one would rather go broke expanding than go broke waiting for a sweet deal to fall in my lap. A whole lot of things don't pencil but end up being a good deal.
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I agree that a person needs to be agressive and proactive rather than reactive. But not everyone needs to expand. I have seen many people that think like this and want to say they farm or ranch x amount of acres. But then they end up having two or three hired men somebody is always screwing things up and you end up covering a lot of acres making a little per acre instead of maximizing profits on acres you can tend to properly. I think I agree where your coming from, but some people don't need to expand. Also most of the concerns on this post can be simply avoided by a contract of some sort.
 
Some of us would just like to have something to call our own, other then equipment and horses. The horses like the equipment, just keep breaking down and costing money. :mad:
 
The thing is I believe some of these guys will try and do whats right in the deals but when it comes to coughing up the money or what they promised they are just too tight. They think dang thats a lot of money or I didn't need those kind of dollars starting out.
Then there are some of these guys who have this land and try to get help and have no intention of living up to an agreement. It is sad when these young guys just want a fair shot to get started.
Then there are some who do what they say
 
WP, you already know that having something of our own is the point. I am not sure whether the deal will last a year or 20. I don't have anything to lose and everything to gain. I was one of those guys that was setting around waiting for something to fall into my lap until I lost my job 2 yrs ago and had to sink or swim. I make less than I ever have and have built more in 2 years than I have in my lifetime. I won't ever have an inheritance and had nothing to begin with. When I got of my bum and started taking some risk, I started building something. It's always easy to say someday I am going to do this, it's a helluva lot harder to actually do it. When opportunity knocks, I have to answer. WP's iron is an investment because he buys it for pennies on the dollar. Much like myself, most of his equipment appreciated as soon as he wrote a check for it. Too many people get caught up in keeping up with the Jones's and blow their head off buying the biggest and the best. I don't care about the Jones's, I just want buy something that makes me money, I have been pretty successful thus far. That being said, I can either rent my equipment and pay for it as well as put some money in the bank every year or I can sell it and pay it off and try to re-invest the profit in something that will show the same return.
 
Can you do a share of the calf crop? I got a deal that a guy owns the cows and bulls, facilities, and supplies the grass. I put up the hay with my equipment, and whatever hay we dont use on his cows, i get half, or I carry it over to next year, but eventually i get half of whats left. We split the calves at weaning. I pay for all vaccinations. And i do all the labor. We have been going year by year and tweeking a little every year. I agree with you, you arent out anything, but make sure you know who your working with real well.
 

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