Buying an existing income producing mixed fruit orchard farm

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Buying an existing income producing mixed fruit orchard farm

bronkies's picture
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Joined: 14/03/2017

Hi All

 

My wife and I are looking to buy an existing income producing mixed fruit orchard, or avocado, or Mango farm in North Queensland for around the 700k mark (approx 30 acres). We are both in our early 50's and ready to make lifestyle change. We have no farming experience, hence purchasing established farm and keep going......

 

Now, were do we start...?

1. Income producing farm. Do we need to setup a bussiness acount and buy the farm in a bussiness setup, own name?

2. Dudeligence checks, soil tests, etc - Is it worth it? What to look for and what are the right questions to ask?

3. Profit and loss statements, etc?

4. Need to apply for bank finance. Assume it will be a commercial loan? Any recommendations?

4. Anything else I can think off....?

 

I appreciate everybody's input.

comments

admin's picture
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Joined: 28/02/2011

Hi Bronkies,

Welcome to the small farming forum and thanks for the questions, in answer to them:

1) Yes, you will need to set up a business account in the name of the entity that you intend to trade under. There are a large number of options regarding the entity set up including, sole trader, partnership, company and trust. Each will have different reporting, tax and legal responsibilities. Seek some professional accouting advice prior to the purchase to assertain which structure would best suit your situation.

2) and 3) Absolutely complete a thorough due dilligence process. I would be requesting 5 years of finacial statements (those lodged with the ATO) and also year to date figures. There will only be so much information that you can collect from the financials, you will have to get down and dirty on farm to get a good gut feel for the farm and business. Ask neighbours and other locals about the farm/business to get additional information.

4) Most of the big 4 banks (ANZ, Suncorp, CBA, Westpac) will do commercial finance, rural lending value ratios will usually range from 50-70% so you will need additional cash and or other assets to top up the purchase. Make sure you allow additional funds for working capital for when you take the business over.

Regards,

Charlie

 

 

 

bronkies's picture
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Joined: 14/03/2017

Thank you, appreciate the feedback.

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