About me: Long time US farmer with substantial capital saved from farm management operations within the US.
Prior to Year 1:
Manor - Amortization Schedule
Worked out a deal with a UK based property management firm to take over a recently foreclosed and mismanaged farm near Marwell Manor. Existing management has until to the close of the year to sell remaining livestock and vacate. Existing farming equipment was worked into the forclosure amount, and the entire operation was offered to me for $2.1 million. Selling interests in the US and putting 100% of the proceeds into this project. Was a little short but after working with the property management firm was able to make a deal. Paid in cash for existing farm.
Also foreclosing through the same firm was the actual manor near the farming property, which was already vacant and had been for just over a year. After a tour of the grounds, determined that for the right price, and some general improvements, buying the manor could be a possibility. Settled on a final sale price of around 1.9 million for the manor, with annual payments of 120,000, due on 12/31; the first being due at the end of the first year. Repairs will begin as soon as possible with plans to move in by the end of Year 1. Will be staying in the existing farmhouse until complete. Might be able to put the farmhouse up for rent after move-in. Purchase of the Manor will be a separate operation from the farm as it is a personal acquisition. I just hope the annual payment won't drive us into the ground. It has a pool so the kids will be happy anyway.
Budget of year 1 shows we most likely won't make a profit in Year 1, but the loss shouldn't be too bad. This is because we will be leasing equipment to make hay for our cows, and buying cows, which most likely won't have any return until future years. In addition, because our depreciation isn't on straight line (more than 20% is depreciated in the first year) depreciation expense will be higher than in future years. We will need to leave enough cash so that we can make the payment due Dec 31 on the Manor. These will be Owner Distributions on our balance sheet. Because we are restoring a historic building, taxes have been waved by the Queen. (God save the Queen.)
We plan on selling most of the existing equipment and buying what we need. Previous management clearly didn't know what they were doing.