Paul and Carrie own a cane farm that produces approximately 10,000 tonnes a year. They have identified another farm that they could purchase which would increase their tonnage by a further 3,200, as well as receiving extra water allocation and farm equipment. Paul and Carrie saw the purchase of the farm as a key part of their retirement planning. Their biggest issue was how to fund the purchase of the property without adversely impacting their cash flow.
The profit before financing cost was estimated at approximately $48,000, which could be eaten up via interest costs, which would not have improved the overall cash flow of their farms.
After understanding what they wanted to achieve, we gave them a solution which saw the funding cost reduced from $500,000 to $120,000, which has now added approximately $40,000 to Paul and Carrie's cash flow. This extra money can now be directed towards overall debt reduction or farm improvement to increase the yield of their farms.