How I Buy Farms and Ranches

When I was twelve years old, I had bought and sold many shares of stock on the NYSE. I was a motor mouth even then. I always was eager to talk to anyone who liked to invest and discuss stock picks. One of my fathers friends John was such a person. John only had a 3rd grade education. His mother was a prostitute and his first job was collecting and selling leaches to whores in Trenton to be used to remove hickies on their...Well, you got the picture? John could hardly speak, he studderd so bad that it was a labor to talk to him. But John was no dummy. He had gone on to become a noted designer of transformers and had built up a large company. He lived on a large estate that overlooked a huge pond which to a twelve year old was an eye opener. What ever John would say or do had to be noteworthy. John would also talk of the lastest electronic gadgets, hottest stock picks, Trees, hunting stories, and about real estate. Just what I was interest in. One day John came to our house. He was so excited that he could hardly talk to us. He handed me a book and said," Re...re...re..re...re...read this. "It was a book on stock options. The book detailed about puts and calls and how powerful they are in investing. At the time there were few options offered. I read this book. I reread this book over and over. I was amazed at how powerful an option could be. I did not buy or sell any as I did not have the funds to risk on them but I said to myself , "This is something that I am going to do some day." Most options on stocks or commodities expire as worthless. Some estimates are that 80% expire as worthless. Not a very good track record for an investor. Now for every option buyer there is a seller. Someone is making money, not just the brokers. Option buyers aquire what can be called leverage. An occasional winner can make up for a bunch of losers. The option sellers don't necessarly lose unless they trade options naked, ( they don't own the underlining security) they just don't have potential gains that they would have had. Options clearly define an investors loss liabilities. When you buy an option it defines the price of the asset, the time you have to excerise the option, and the capital that you risk. If the value of theoption cotract goes down the most you lose is your inital investment. There are two basic options, a put and a call. A call allows the buyer of the option to buy the asset a established price for an established peroid of time. A put allows the buyer to force the right to force the seller to buy the asset at and establihed price for an established peroid of time. What I decided to do when I purchased real estate is to acquire real estate options for farms which had long term contracts. I sought contacts that went out 5-10 years. If I could put together a contract that would run long enough, the rising real estate market would make the contract price a bargain price in afew years. I would offer yearly option renewal payments to the sellers. I made those payments applicable to the purchase price so as time flies the property becomes cheaper. Now I know that your thinking that this can't work. I know it does for I have done many of these contracts. Most people who have sold me these contracts want just what this contract offers. They can remain on their property and have the option payment which suppliments their income. They just don't own any appreciation in the property which they would not have if they sold it. There are also great tax reasons for selling an option. When an option is written it is considered an opening transaction. Taxes are assesed on completed transactions. If a option is not closed revenue is generally not taxed. (see your investment advisor and make sure the contract is properly formed.) Once this contract is in place one could lease the fields from the owners. This could be known as a lease purchase contract. Now you have ground on which you can plant trees. In many instances I have aquired land this way for less than the cost of the taxes on a yearly cash flow basis. You can see Bill's web sit at http://www.seedlingsrus.com Read on about Me: There are a few people, very exceptional people, who are so singularly special that the complimentary joke is made; after they were born, the mold to make them got broken. In other words, there's no chance for posterity to make any more of the likes of Michelangelo, George Washington Carver, Franklin Delano Roosevelt, etc. In my case, they threw out the "mold," but I fooled 'em and grew back! Seriously speaking, the first lesson I learned while very young is that in order to sell successfully you must be relentless. You have to be downright incredible to be able to keep your integrity and successfully sell something like, "ice in the wintertime to Eskimos." However, As John Paul Ghetty, the oil-marketing billionaire, observed, if you have a high quality product you know people both need and want, repeatedly, it will almost sell itself." Like the nursery stock we grow at Highland Hill Farm. I have learned these lessons. There are basic concepts that are important to understand. Starting when I was very young, I've always had "business." My first business was making and selling potholders when I was 5-years old. My parents had bought me a small potholder-making contraption. Rather than just make a few for the sake of "arts and crafts," developing my fingers and hands, I made hundreds and hundreds. I got real good at making real good potholders, you could say. Whenever I met someone I tried to sell them potholders at 25 cents each. As I earned more and more money, I started an account at the savings bank in Lambertville, always carrying with me lots of differently colored potholders when I walked into town to make my deposits. On the sidewalk and inside the bank, grownups would inevitably say, "What a cute little boy," and then, "Why are you carrying all those pretty potholders?" They sold themselves. The potholder sold themselves. The customers "sold" themselves. I sold enough potholders for me to buy 2 shares of General Electric stock and 2 shares of the Atlas Corporation, upon the advice of my great-uncle Bill. (See My Uncle Bill's Story, Part I of my life and my lessons learned). I got these shares of stock when I was 7-years old. My small beginning business venture then expanded to include looking for Helgermites, or Hellgrammites, they're like Redworms, which I'd sell out along the road (leading to the Delaware River, of course). I picked wild blackberries and sold them along the road too. I bought fishing lures and took them to sell along the Delaware River's east bank, our side of the river. There were "hot spots" where Shad fishermen would gather during the intense "fish runs." It seemed like a good idea to bring along some blackberries too. The fisherman needed a snack. I did too. I parlayed my growing savings and bought 144 chickens. A "gross" of chickens came at a discounted unit price. I didn't quite realize it at the time, but I was "leveraging" my money and buying in bulk, "wholesale." So, here are two more valuable lessons for us all. Buy as cheaply as you reasonably can. (Did you notice I didn't buy a dozen gross of chickens? That's 1,728 chickens. The price per chicken would have been cheaper, but I would never have been able to handle them all!) Also, make your money work for you. Make your money work just like a transistor works, use a little power to control a lot. My father, who coincidentally worked in electronics engineering, had a wonderful friend who bought me a book about stock options. John stuttered so terribly he could barely speak, but I will always be grateful to him for teaching me about the greatest investment vehicle of all in the stock market: Options. What a great way to make money work, investing a small amount of money to "own" rights to shares worth far more money. With my 144 chickens, I created an "egg route," using the experience from my potholder business. I had "saturated" the market. Just how many potholders can people buy? John Paul Ghetty was right. It is best to sell something people need repeatedly, like fuel, and like food. I sold eggs in the two towns nearest to our little farm, Lambertville and Titusville, New Jersey. I joined the 4H club and started to raise bees for their honey. Again, not realizing it, I was selling food, something people needed over and over, like John Paul Ghetty said. As I sold honey along with my eggs, I noticed that unlike some of my friends, I never got an allowance. Then again, I didn't need one. There was a great lesson in another book my father gave me, The ABC's of Beekeeping. It mentioned that if you wanted more bees, just put an advertisement, an "ad," in the newspaper. Just have the "ad" say "Wanted Bee Swarms," with your phone number below it. Well stupid me, I believed everything I read and I therefore I did just what it said in the book. Within a few days a woman called me from Lambertville and said she had a bee swarm, could I come and get it? I followed the guidelines my father taught me and from the book. I captured that first swarm, and many, many more. Bees at the greatest price discount possible, free, were available for my to use to make honey and make money. The above paragraphs contain a number of more unmentioned, as yet, valuable lessons. First, it's important to find parents who are supportive of your efforts. I was lucky, but if you're not as blessed, find "mentors" as so many other successful people have. Second, it is important to read books. Give books as gifts too. Don't believe everything in 'em, do believe most of what is in 'em. Especially when you use at least two sources for your information. Reporters call this "corroboration," and "confirmation." Third, the best way to find things or market things is through advertising. With all these money making ventures going on, I was spending a tremendous amount of time outdoors. I developed a love of hunting and fishing. I loved the woods and being out in nature while "harvesting" the wild blackberries, collecting worms, tending the bees, walking my egg-and-honey delivery route etc. As I got older, I became an adolescent and then a teenager. Really, you ask? No fooling? I say this because like practically every other teenage boy, I got interested in cars. I started to collect junk cars and trucks. As I began to tinker with one of them, my mother came outside to talk with me. (There's that lesson about the importance of finding supportive parents. Boy I was lucky with both!) My mother said, "Bill you don't want to be a farmer. They don't make money. You have to study. Go to college and get a respectable job. If you don't, you will be a farmer working too many long hours worrying about weather and crop diseases and such. Or, you'll be a trash collector. I love you." Then, she walked back into the house. I guess she saw the junk cars and trucks I had collected as trash. Listen to your mother. That's a lesson you probably already knew before reading this. I picked out a college in the not-too-far from home backwoods of Pennsylvania. I graduated from Juniata College, near Huntingdon, in 1973 with a B. S. in Chemistry. My wife, Marjorie, also a Juniata graduate, is a teacher. We were married in 1977. We settled in Dublin, Pa. I worked for a small chemical plant. One weekend we had a yard sale. The first item that sold was the bunch of flowers that I removed from my wife's window box. Here's another valuable lesson that I have learned. Be observant. This eye opener was telling us that there is a market for plants here. If people will buy them from your window box, plants "will sell themselves." I always had a desire to raise trees and plants and own a farm, though not be a farmer like my mother warned me, so we decided to "go for it." Another valuable lesson: It is good to have a plan... We purchased a small farm near Doylestown, in the well-to-do and growing heart of Bucks County, Pennsylvania. We began our "tree farm," our nursery. The local newspaper, The Doylestown Intelligencer, became our "store." Placing small "ads" in the paper under the classifieds was our method of advertising. A small, cheap 2 line ad such as, "Pine trees delivered. Planted and mulched, $8. Guaranteed. Call 215-345-0946," were awfully economical and phenomenally successful. We tried many ads. We found that just about anything can be sold or bought using classified advertising. Would it have been better to place quarter-page or full-page sales ads? Would it have made sense to spend money we didn't have yet? I believe the answer is no. "Buy as cheaply as you can," I said above is an important lesson. http://seedlingsrus.com/MilanHirst.html Now, besides trees, we market anything at our consignment store in Milan, Pa. A few years later, we learned another lesson. Friends, Walter and Paul, who make Christmas Tree ball kits, had us over for dinner. They had years of marketing experience and told us that you have to test your market. Their suggestion was to run ads for what you want to do or sell and see the response, see if the market "likes" what you offer. Duh! This seems so obvious. They were right, though primitive and simple, isn't this similar to what Marjorie and I had been doing naturally with our flowers and ads for pine trees? Most people don't test out their markets before they invest. We were lucky we did. So take this valuable lesson and "test." My final lesson is, always ask questions when you can't find the answers yourself. I've asked thousands of questions. Then, listen to the answers. See Bill's web site at http://www.seedlingsrus.com