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.

“THAT DOG CAN HUNT”

 

BUYING YOUR OWN HUNTING PROPERTY

 

Why own?

“As we became more involved with our families, we had less time to maintain contacts with landowners.”

“With our own place, there’s no one to ask.  If I get an afternoon off, I can go hunting.”

“I get real satisfaction out of bringing someone to my place and putting them onto my birds.”

“To drive to Western Kansas, stay at a motel, get landowners permission and eat out every meal takes a lot of time, planning and money.”  It’s also harder to bring my son on this kind of trip” 

Owning a hunting property can make financial sense in some cases returning as much as 4 to 5 percent a year, and historically the price of good land will often increase over time.  Also, the federal government provides financial incentives for ownership:  In many cases, U.S. Department of Agriculture land conservation programs will pay you to convert farmland into wildlife habitat. 

Buyer’s checklist:

Ø  Determine the partners you wish to invest with and draw up an official partnership agreement.  Two or three partners are optimal, but a well organized group of eight or ten investors has tremendous buying power.

Ø  Hunt the property before you buy it.  There are many Hunting Properties for Sale in Colorado spanning a wide price range with varied hunting habitat.

Ø  Get a clear title description of the property.

Ø  Call the game warden.

Ø  Meet the neighbors and local wildlife biologists to understand the habitat.

Ø  Talk to local hunters.

Ø  Check into conservation programs.

Ø  Depending on the size of the property, consider hiring a farm manager.

Ø  Is a conservation easement of value in this investment?

Ø  During the due diligence period look for flaws, problems, or unwanted surprises.  Hire outside consultants if necessary such as stream consultants, wildlife biologists, etc.

Ø  Hire Beacon Mountain Farm & Ranch to find the best Hunting properties for sale in Colorado and New Mexico. 

Initial costs

Down payment (20%) 

Closing costs

Title Insurance, Escrow closing Agents fee, Brokerage fee 

Improvements/Equipment

Enlarge stream, ponds or warm water slough, Build duck blinds, Build goose pit, Fencing/Gates, Small cabin,

Drill Well, Tractor, ATV 

Annual Costs

Mortgage payment, Taxes, Fence maintenance, Blind and shed maintenance, Ranch manager 

Annual Income

Hay, Crops, CRP, Livestock 

Conservation programs:

Check with the U.S. Department of Agriculture’s Natural Resources Conservation Service. 

Ø  The Conservation Reserve Program (CRP) targets erodible farmland.  Qualifying owners receive payments to keep arable land idle.

Ø  The Wetlands Reserve Program (WRP) provides technical and financial support to help restore wetlands.

Ø  The Environmental Quality Incentives Program (EQIP) and the Wildlife Habitat Incentives Program (WHIP) offer up to 50 to 100 percent cost-share incentives for the establishment of a variety of land management practices.

Ø  The U.S. Forest Service Land Enhancement Program (FLEP) provides technical and financial assistance (including 50 to 70 percent cost sharing) to owners of 1,000 acres or less who implement sound forestry practices. 

If this type of property is of interest to you, please visit “Contact Us” on the Beacon Mountain Farm & Ranch Home page.  We look forward to working with you to find that once in a lifetime Fishing or Hunting Property.