Which is better investment for $1.5 mil

[unicas]

Buying a bungalow on the Westside or 4,000 acre in Sask.

http://www.theglobeandmail.com/report-o ... le4610589/

While most of the other farmers in the café have been tilling soil in the area for decades, Mr. Zou is a newcomer – to farming, to Ogema and to Canada. He immigrated from China in 2008, an entrepreneur with a background in engineering and a brief history of running a broadband company in the U.S. Mr. Zou, 40, was at loose ends at first, shuttling between Vancouver, Calgary and Toronto looking for a business opportunity. But during a drive across Saskatchewan, he became enchanted with the Prairies, and the investment possibilities of farmland.

He took the plunge a year ago, putting down $1.5-million to buy 4,000 acres near Ogema, roughly 115 kilometres south of Regina. Soon he moved to Ogema with his wife Linda, daughters Jennifer and Angela, and friend Alice Jin, who was so new to Canada she had notes with English words plastered around her apartment in Regina. Ms. Jin bought the Rolling Hills Restaurant while the Zous became farmers.

“I am still trying to buy more land,” said Mr. Zou, a landed immigrant, who has rented out most of his property and farms the rest with local farmers who are teaching him the ropes. He hopes to one day manage all the land himself and to recruit more immigrants to Ogema. “I think that if I can teach basic farming to new immigrants, I see an opportunity,” he said. “It’s very easy for Chinese to accept this idea to buy farmland. It just makes sense.”

The Zous are part of a new wave of immigrant investors who are changing the face of Saskatchewan’s countryside. These investors, who come mainly from China, South Korea and India, are buying up farmland, by the hectare, often in cash, and frequently becoming landlords to dozens of local farmers.

[timber2012]

Smart man.

[robert james]

Smart man.

No kidding!!! Buying 4000 acres of farmland compared to a rat infested shithole in Vancouver is very smart.. Ogema is about 100 miles West of the Bakken formation oil fields but there are new discoveries all the time.. Food on the surface and energy in the basement is a win win situation...

[jimtan]

Smart man.

Food on the surface and energy in the basement is a win win situation...

As I understand it, the landowner has no say in the mineral rights. The province sells the rights and pockets the proceeds.

Unfortunately, it also means that the owner of the rights is able to access your property as he needs. One complaint about fracking is that it contaminates the water table. Will you pipe in your drinking water from...?

Hope it doesn't affect the crops?

"Most land in Alberta has two owners and two sets of rights. The owner of the surface rights (the landowner) has control of the land’s surface and the right to work it, in addition to any sand, gravel, peat, clay or marl which can be excavated by surface operations. The owner of the mineral rights has the right to explore for and produce oil, gas and other minerals. The mineral rights for approximately 81 per cent of the province are owned by the Alberta Crown and managed by Alberta Energy. The remaining 19 per cent of the mineral rights in the province are referred to as freehold minerals or non-Crown rights and are owned privately by individuals, companies, national parks or First Nations reserves."

[jimtan]

Buying a bungalow on the Westside or 4,000 acre in Sask.

What a facile proposition.

The farmers go to Saskatchewan or Delta. The urban folks buy residences in Vancouver.

Which might be more profitable? The farmer faces weather variation. As well as unpredictable prices for his crops, as well as unpredictable changes in the prices for his inputs. One indication is that the locals are selling.

Who will profit in the long run? Depends (as young Jesse) points out on when you sell. Surely there's no useful answer for a rhetorical question.

[robert james]

Smart man.

Food on the surface and energy in the basement is a win win situation...

As I understand it, the landowner has no say in the mineral rights. The province sells the rights and pockets the proceeds.

Unfortunately, it also means that the owner of the rights is able to access your property as he needs. One complaint about fracking is that it contaminates the water table. Will you pipe in your drinking water from...?

Hope it doesn't affect the crops?

"Most land in Alberta has two owners and two sets of rights. The owner of the surface rights (the landowner) has control of the land’s surface and the right to work it, in addition to any sand, gravel, peat, clay or marl which can be excavated by surface operations. The owner of the mineral rights has the right to explore for and produce oil, gas and other minerals. The mineral rights for approximately 81 per cent of the province are owned by the Alberta Crown and managed by Alberta Energy. The remaining 19 per cent of the mineral rights in the province are referred to as freehold minerals or non-Crown rights and are owned privately by individuals, companies, national parks or First Nations reserves."

There is a big difference between Sask and Alberta regarding mineral rights..Pretty well everyone I know has mineral rights In Sask.. The land owners own the mineral rights on the uneven numbered sections of land { a section is a square mile or 640 acres ) My mineral rights are on section 9 and I leased the rights for 16% of the oil that is pumped out... If a person does not have mineral rights you would still get approx. 7 to 9 thousand dollars for the surface lease to drill a well which varies with the size of the lease,, usually around 5 acres but after the well is drilled the pump jack only needs a couple of acres.. The land owner then gets between 3 to 4 thousand dollars per year for rent for each lease .. The Bakken formation is down around 6 thousand feet so fracking does not hurt the crops or water.. Maybe in shallow gas wells it might be different,, I don`t know.. My land is about 100 miles East of Ogema and I have 15 wells on my land and 3 more wells drilled into my mineral rights.. Nice money for nothing.. The Bakken formation is in North Dakota ,Montana and SE Sask and seems to be where ever the prehistoric inland sea was .. I think there has been some discoveries in SE Alberta so there may very well be Bakken oil in the Ogema area.. I rent my land out as I live in the Okanagan so getting cash from the sale of wheat ,,flax,, etc. each year as well as from the oil lease rental and the mineral rights seems a lot better to me than rent money from a Vancouver house and dealing with maint. and renters.. Of course farm land in Sask is not near as prestigious as a house in Vancouver but I seem to deal with it ok.. I have a guy building another deck on our house right now and his family has mineral rights in SW Manitoba so a lot of people have mineral rights.. The Albertans got screwed out of their mineral rights..

[eyesthebye]

Smart man.

buying in Saskatchewan is smart - living there isn't. I'd say it's a wash

[jesse1]

All the best to the guy but Canada's past is littered with people who couldn't make it as farmers, either as labourers or in this guy's case as a landowner. Pierre Berton wrote about them in Promised Land, though at that time speculating on mineral rights was no consideration, and on a first pass this guy is more interested in farming to make money than land speculation. I know, crazy talk. That said it still, after all the talk, is still about land. Makes sense I guess, for discussion on a real estate forum.

[robert james]

All the best to the guy but Canada's past is littered with people who couldn't make it as farmers, either as labourers or in this guy's case as a landowner. Pierre Berton wrote about them in Promised Land, though at that time speculating on mineral rights was no consideration, and on a first pass this guy is more interested in farming to make money than land speculation. I know, crazy talk. That said it still, after all the talk, is still about land. Makes sense I guess, for discussion on a real estate forum.

The guy in the story would be wise to rent the land out to someone that knows what they are doing..The previous owners will have the mineral rights so that is out fo the question..You never sell the minerals..Oil was first discovered in 1954 in the area where my land is located ..Back then,, a neighbor we know traded his mineral rights for a new 1956 ford and was kicking his arse until the day he died and now his grandchildren are kicking his arse..A few years ago my aunt was offered a million dollars for her minerals on a quarter section ( 160 acres) but thankfully turned it down.. You never sell them ,,you lease them for x dollars an acre and 15 to 16 percent of the oil that is pumped out.. A friend of mine had a few big boomers on his minerals and was getting 8 thousand dollars a day a few years ago.. The production does fall off over time so not sure what he would get now... Sask isn`t all that bad,,Eyes.. LOL

[jimtan]

A friend of mine had a few big boomers on his minerals and was getting 8 thousand dollars a day a few years ago.. The production does fall off over time so not sure what he would get now... Sask isn`t all that bad,,Eyes.. LOL

I'm surprised you didn't buy more land for their mineral royalties. Any regrets now?

Anyway, what is the condition for agriculture after its over? Any problems with water or the health of residents?

[westar99]

There are excellent opportunities in Saskatchewan for investors. I wish to someday get into farm land but for now I have two rental properties
in Regina which are cash flow positive. The vacancy rate is really low so it is easy to get great tenants. The economy there is dynamic and on the
way up.

[robert james]

A friend of mine had a few big boomers on his minerals and was getting 8 thousand dollars a day a few years ago.. The production does fall off over time so not sure what he would get now... Sask isn`t all that bad,,Eyes.. LOL

I'm surprised you didn't buy more land for their mineral royalties. Any regrets now?

Anyway, what is the condition for agriculture after its over? Any problems with water or the health of residents?

I have enough land now and don`t want anymore..Besides the mineral cheques just started coming about 2 years ago and there is no land for sale around there.. I only have minerals on 160 acres that I inherited from my parents.. I bought the land in 1976 and and some in 1977 from my parents... As I said,,there have been oil wells there since 1954 and there is no problems for agriculture or water thus far and I don`t think there ever will be.. You can smell the wells sometimes but I live in the Okanagan and you can smell exhaust fumes in the valley as well at certain times so probably no different or any worse..

[jimtan]

All the best to the guy but Canada's past is littered with people who couldn't make it as farmers, either as labourers or in this guy's case as a landowner. Pierre Berton wrote about them in Promised Land, though at that time speculating on mineral rights was no consideration, and on a first pass this guy is more interested in farming to make money than land speculation. I know, crazy talk. That said it still, after all the talk, is still about land. Makes sense I guess, for discussion on a real estate forum.

For once, I agree with Jesse. Apparently, this Zou guy is not even a farmer. He is a collector.

"At first glance, Sheldon Zou looks like any other farmer sipping coffee in the dining room of The Little Amego Inn in Ogema, Sask. He wears a rumpled hat, drives a pickup truck and talks earnestly about canola prices.

While most of the other farmers in the café have been tilling soil in the area for decades, Mr. Zou is a newcomer – to farming, to Ogema and to Canada. He immigrated from China in 2008, an entrepreneur with a background in engineering and a brief history of running a broadband company in the U.S. Mr. Zou, 40, was at loose ends at first, shuttling between Vancouver, Calgary and Toronto looking for a business opportunity. But during a drive across Saskatchewan, he became enchanted with the Prairies, and the investment possibilities of farmland."

[jesse1]

A collector? That's an interesting way of looking at it. What I see is someone trying to make money, and part of the business case is appealing to an "intrinsic" value placed in land that he believes certain future immigrants will covet. His particular venture may succeed but in the end it still seems to be, after everything, about growing and selling food, whether this is borne by him or by others.

[robert james]

All the best to the guy but Canada's past is littered with people who couldn't make it as farmers, either as labourers or in this guy's case as a landowner. Pierre Berton wrote about them in Promised Land, though at that time speculating on mineral rights was no consideration, and on a first pass this guy is more interested in farming to make money than land speculation. I know, crazy talk. That said it still, after all the talk, is still about land. Makes sense I guess, for discussion on a real estate forum.

For once, I agree with Jesse. Apparently, this Zou guy is not even a farmer. He is a collector.

"At first glance, Sheldon Zou looks like any other farmer sipping coffee in the dining room of The Little Amego Inn in Ogema, Sask. He wears a rumpled hat, drives a pickup truck and talks earnestly about canola prices.

While most of the other farmers in the café have been tilling soil in the area for decades, Mr. Zou is a newcomer – to farming, to Ogema and to Canada. He immigrated from China in 2008, an entrepreneur with a background in engineering and a brief history of running a broadband company in the U.S. Mr. Zou, 40, was at loose ends at first, shuttling between Vancouver, Calgary and Toronto looking for a business opportunity. But during a drive across Saskatchewan, he became enchanted with the Prairies, and the investment possibilities of farmland."

Sheldon Zou is going to have a tough time making a go of this.. To farm that much land he could easily spend another million on equipment.. He will need big equipment to work that much land ..A new combine would probably be around 350 K just for starters ..You can buy used equipment which I always did but then you have more breakdowns.. Then of course you have to know how to maintain the equipment and fix the stuff when it breaks down .. Welding is essential..The nieghbours love to give advice and help when they can but man,, he taking on a lot of risk.. Then there is all the input costs of fertilizer , fuel , chemical weed spray which could be close 100 dollars an acre.. My land is organic so I did not use fert.,, weed spray but then used more fuel as I had to till more.. Organic grain is a higher price but then you get a lot less of it.. The farming now is zero till so you would seed every acre every year where as organic you would only seed half or so and till the rest for that year..The best thing would be to rent it out to people that have the equipment and know what they are doing which would be ok if he has investor money backing up.. When you rent land out you either get cash rent ( X dollars a seeded acre ) or a crop share of one third. Out of 4000 acres he may have about 3400 acres that are cultivated the rest being sloughs ,, brush, low spots etc. When I rent my land I rent it on a crop share so if there is 9000 bushels of wheat come off ,, I would get 3000 bushels.. Grain prices go up and down and seems are never high enough but are not bad now because of the drought in the Southern US.. I wish Sheldon luck !!