Looking for Ideas on Income Properties

[Douglas R.]

Good evening. I purchased 1,772 acres of Oregon dry land wheat acreage in late 2014 and since then it has significantly appreciated in value (approximately 800%) owing to newly-available irrigation and the fact that it is ideal ground for potato production. I will have the option to sell for around $8-9m in about a year and have already been approached by two prospective buyers.

I am thinking of a 1031 Exchange and wanted to ask your advice: if you were in my position and wanted to support your family with a safe, reliable income-producing real estate investment what path would you take? I am attracted to the idea of just buying more agricultural land and leasing it out to a producer for a share of the crop, as it seems safe, but realize that there may alternatives outside of ag that have the potential to net $500k or more annually from a $8-9m investment. Location and other particulars do not matter as much as ensuring reliable income.

Thanks! Have a great weekend.

[Tyler Kastelberg]

@Douglas R.

Douglas: You hit a gold mine - congratulations!

You're wise to highlight "reliable" income as a goal. I'd recommend a cash purchase of a Class B/B+ office or multifamily asset. I can't speak for Oregon, but on the east coast, you should be able to achieve a 7% to 8% cap rate, which would net you significantly above $500k on an $8 million to $9 million investment. 

Find a trusted asset manager to monitor your properties, and enjoy the passive income that is generated.

Best of luck! DM me if you have any further questions.