Financial Analysis of Alpaca Ownership
Financing
Most alpacas are sold for cash. Many buyers convert other assets to purchase their first alpacas. Some people have a line of credit for investment purposes; others use their equity in real estate to secure funds. Some breeders offer financing for your purchase. It is typically short term and involves paying for the animals before you take delivery of them.
For instance, many breeders will accept the following arrangement:
1. Purchase price $22,500
2. Down payment <9,000>
3. Three installments of $4,500 each <3,500>
4. Balance at delivery -0-
A breeder may require that the purchaser obtain insurance for the animals with any balance still owed.
Creating your Herd
First, determine your goals for alpaca ownership. Would you like to own an inexpensive pair of gelding males for fiber production or as pets for you and your family? Are you going to be a full-time or part-time breeder? Will you invest in alpacas for current financial returns or are you going to build a herd toward the day you retire?
Once you’ve decided on your goal, the path to alpaca ownership will be more easily defined. Maybe you’ve decided to start a small herd and let it grow over a period of time before retiring and living off the income the herd produces. If so, you’ll have the power of compounding on your side.
If you’re interested in acquiring a producing alpaca herd with immediate sales, you may want to consider s a larger initial outlay. You would probably buy a number of pregnant females who would deliver a cash crop of cria immediately. This larger expenditure might also encourage you to become more involved in the industry and spend more time marketing your herd. Some breeders with larger herds have full-time ranch managers or hire additional labor to assist them with the day to day chores.
However you choose to be involved, there is an "Alpaca Approach’’ suitable for you. The industry is very young and represents a ground floor opportunity. Very few investments have the potential to reproduce themselves every year as an alpaca does. Today’s smaller breeder can choose to be almost any size in the future. An owner who likes the return alpacas offer, or the lifestyle they provide, can choose any level of investment.
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