Anyone Invest In Farmland?

Question

Hi,

I know BP is geared more towards residential and commercial real estate but I was just curious if anyone is invested in farmland and if so how that's doing for you? Just a general question.

Thanks!

Jay Hinrichs · Answer

yes farm land in the path of progress one investment that I like to have at all times. As for farming itself One needs to either grow up in it
or get a degree in it.. If you want to borrow any money that is. Ag lenders wont lend to anyone without a ton of experience

But Like @Henry Clark I did the timber and timber land business for many years and really enjoyed growing and harvesting NW Douglas fir and Western Red Cedar along with maple and Oak which in the NW is a by product. If you hit it right in Timber there can be massive profits very quickly.

But path of progress is long term play.

One i had in Sonoma CA was just 4 acres I paid 25k for in 95  Never touched it except to mow the grass every year and that sold in 2020 for 2.2 mil took a long time but it was a set it and forget it one.

I have one now that is 117 acres I optioned in 09 for 5 million  and we are looking at offers right now for 17 to 20 million and the way I structured the option 100% of my option payment reduced my strike price.. so interest free loan.. Not sure if we would have had better use for the capital but it seems like a good deal for us.  Largest privately owned industrial developer in the US is the one making the play on it now.

Juan Jorge · Answer

@Chris LumLee I'm interested in farmland investing, and currently doing research on markets, soil productivity, conservation programs that pay  $$$. Have you considered "land flipping" where you direct mail to landowners in a given county/area, with the goal of buying for below market value? That may also work for farmland.

Mark S. · Answer

@Chris LumLee Yes, I do. I have found it to be a very nice compliment to my other real estate (SFR, STR and non-trader REITs) I invest in ND and MT. Cash returns are low but steady appreciation and ease of management are pluses. As with other real estate, you do need to know what you are doing or have someone you can guide you.

Interestingly, if you look at returns over the past 30’years or so, farmland as a general category has outperformed other investments. Granted, that is based on broad indexes and there are certainly segments and markets that have done better or worse, and like everything else, location and timing have a huge impact on returns.

Henry Clark · Answer

Researched them heavily.  Was already doing a Teak plantation in Belize so did not pursue further.

What are your questions or areas you want to delve into?

Bill B. · Answer

You can click on the magnifying glass in the upper corner. It’s asked quite frequently. There’s almost no money in Midwest farmland (my only experience.)

TLDR: 160 acre “quarter” will run you about $1.3mil you can rent it out to a farmer for about $25-$35k per year. As long as you have farming experience you’ll know if they’re running your land out of nutrients or not rotating crops correctly. So maybe a 2% return if you pay cash and have zero property taxes or insurance. Not a great use of cash. But a great way to spend your fall seasons. Once you’ve farmed, even as a seasonal know nothing, not much else feels like a real job.

Out there you have to build RIGHT in the path of progress of a big enough town. I’ve driven past the same 50 towns with a population of 1-5,000 people, for 30 years. They haven’t expanded more than 1 block. The medium towns might go a block every 10 years. Major metropolitan goes about a mile every 10 years. (These are MN numbers, you mileage may vary. )

Daniel Martinez · Answer

we buy it and sell it, we don't hold it. We got some recently with some cows, but it doesn't make much sense for us to hold onto at the moment.

Mark S. · Answer

@Mark S. Just for reference, there have been a few interesting article about this lately. One is in the September issue of Forbes. But it’s not for everyone. Just depends on your goals, risk tolerance and really what you like. I love getting in my truck and driving my fields!

Henry Clark · Answer

Apologize.  Re-read.  Thought you meant something elseFarm Land-  I’m in Iowa.  Say $10,000 per acre.  Cash rent $250 per acre.  Less property tax. Say $20 per acre.  Net return $230.   Equals a 2.3% return.

Inflation= ??????? Versus 2.3% return

Your question does anyone invest in farm land.   We just bought 75 acres for $9,000 at an auction. $675,000.

Plan to invest $200,000 into developing the land.

Pay 7% sales commission.

Sell for $30,000 to $50,000 per acre.

Lookup my name and Silver Lake Subdivision on my posts on the project. Won’t start selling for a year so capital gains tax 20% versus if we sell within one year ordinary income of 38%.

Could do many 1031 exchanges but would rather pay the tax and move on.  Have done 1031 before but don’t like the timing pressure.

My brother in law lives in Maui for the last 30 years.  Talk to me about doing deals in Hawaii.  Would think it’s a great market to find deals.

Let me know if you have any specific interest in Farm land.

Anyone Invest In Farmland?

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