Investing in Ag. Land
Agricultural Land Investment
In these uncertain times, many of us are wondering where to put our money. It used to be that we looked for a reasonable growth opportunity by way of financial instruments such as stocks and mutual funds.
Today many investors are looking to various forms of real estate as an alternative investment.
While rental properties and foreclosures represent potentially good investments with good returns, there are a lot of elements to consider with these types of investments. The process involved in securing a successful property, finding a renter or buyer is time consuming and complex. The expected rate of return on this type of investment should be in the 8-9% range. Further, the competition for these properties is becoming intense and, as a result, will begin to drive the margins down.
Finally, most investors don’t have the time to manage the operation of rental properties and the need for a property manager will further erode the margins.
Another alternative is agricultural income property.
Agricultural property has historically been fairly stable with respect to prices, seeing some recent increases due to the past rise of commodity prices. The commodity prices have recently had a reversal, however, and subsequently, there is expected be some downward trend in the in agricultural land prices. These downward trends have not been extreme in the past and are not expected to drop with any significance.
A standard rule of thumb for these AG properties is to expect it to generate a 3-6% return.
Considerations when buying agricultural property:
- What crops can be grown on the property?
- What crops should be grown on the property for the best return?
- What are the water rights, and are they enough to support a successful AG property?
- What is the condition of the soil, pivot sprinklers, other equipment?
- Who can I get to operate this property?
- Do I want to just rent the property?
These are all important questions, the answers to which will determine your success or failure in an AG investment.
We at Beacon Mountain Farm & Ranch have the resources to assist you in securing a successful AG property. We can provide you with a “turnkey” investment complete with the management component in place to insure that the property’s AG value is maximized.
Please contact us for consultation to determine if this type of investment meets your requirements.
Tags: Colorado Ranches for Sale Ranches for Sale in Colorado
