Housing rentals, but I lack to patience to deal with idiot renters.

True

That is only a 4% return. Several safe stocks are paying dividends around that and long term 10 year CD's are approaching that the last I looked.

Most people have to borrow some of their money, when purchasing say 80 acres at 6Gs and interest is going to be over 4% so cropland doesn't pencil out. Do the math. Right now farmers are buying land and averaging down on land values to justify the price. Until farmers start to go broke land prices are where they are.

Yea, you can luck into some decent stock investments but this is something you can enjoy also.

Like he said in his first post, most savings are returning squat and if he wants land, he won't go wrong.

Doesn't sound like this guys deal. Do people borrow money to buy stocks?

We would not be looking to borrow or would be borrowing very minimally to fund this. I agree if you pay interest on a note it will not pencil out.

If you are paying cash then I would buy all you can. You of course will only lose money if you sell.

I have never made a stock purchase for 300 k so for any that have good for you. Apples and oranges.

For how I been seeing it go.Is that small farmers is going out and large farm outfits are paying what ever they can to get clear crop land.They are the one that is jack the price of land up.Also I do not know it is now but CRP ground when put in it,was about the same price of rent the ground for crops.Like stated timber land gose low after it was cut.Also some are buying the land for hunting only.that are from the big cities. They do not care about price as long they get there ground to hunt and bring there friends.It is factory farms that is mainly taken over farm ground. That is why it is so high mainly.For here that is.

1. Consistently making money in stocks isn't luck....isn't for everybody though either.


2. You absolutely can go wrong buying land. If you buy at a peak before a decline, then you may never regain value in this lifetime. Owning land isn't free, there is taxes and insurance, and upkeep. Rents are based on capital, so if land values decrease, then rents won't be sufficient to justify investment. That is simple economics.

In WI the UWEX keeps very detailed records on farm prices and has for decades. Over the last decade average farm prices are about $4,500 with ranges from less then $1,000 to over 20K.
On tracts over 35 acres or more about 35-40% of the transactions involved no credit or were cash sales. That means very well healed individuals be they farmers or non farmers have been buying the farm land. Around here with the land needed for our cows and their manure the land goes quickly if it even gets posted for sale. Most of the larger farmers around here are using credit to buy land and that is creating some issues with low milk and cattle prices. The huge investments in the dairy farms in facilities and land is encouraging a lot of non Ag money to come into the farm economy. With the new tax laws and the market doing well the return to outside investors is shrinking. When you could get a 30-35% or more bracket buying depreciable assets could make you money faster than most other investments. Also with the markets doing wel and no more processing capacity for new milk the investing is slowing rapidly. Prices here are down about 20-25% but that means decent land is about 7-10K per acre instead of 10 and up.

Bryce

Nice thread- I love real estate threads. I say buy land if it doesn't have a bunch of right -of-ways running across it.

here i look for the piece the guy had the money to buy but didn't realize how much it costs to keep it nowadays.

Always consider present and future taxes if possible. Around here you can buy a mix of tillable,Woods,and pasture for around $2000 an acre but even the Amish are leaving due to taxes.

ps. After some thought two grand is on the hi side.

Check the real estate taxes on that property!!! Land owners in Saline County NE are paying for a $31 million high school! Over $100/acre taxes on some of the better farmland.

I did a job for a member of the school board last week and I asked him what he thought the plans looked like as far as building a new school in the future, he told me he expects them to be tearing down and building a new school as soon as they can get it passed, it is a good thing to keep in mind.

There is a disconnect between the price of major grain commodities and the price of the farmland on which they are produced. This disconnect is not sustainable. Either the price of the land has to make a relative drop, or the price of gains has to make a relative rise - or some combination of each.

I do not see farmland as a good investment over the next 5 years. I do see it as a good investment over the next 30 years as inflationary pressures continue to build throughout our economy. The key is to find productive land that is in an area with a good "second use", ie where non-farming land development is creeping into farmland. That gives you an exit strategy if rents or other factors work against you.

Back in the 70's I had an Ag Econ class where the prof made the comment that farming was the only business he knew of that took an average 1 million dollar investment to make $30,000 a year.