Sorry Guys!
I don't go to Agora much in the busy seasons and hadn't checked the off topic for a while.
Land. Whew! It is generally a solid investment though I am wondering if there is something of a bubble. Generally, it should double in value ever 12 yrs or so. Land down our rd sold for $1000 an acre 3 or 4 yrs ago and you could rent it for about $45-50 per yr. So, if you look at it like owning a bond, you get about a 4.5% yearly return (landtaxes of a few bucks an acre) and the principle should double in a decade or so. Bubble? A section (640 acres) a few miles away sold for 2 million. ummm, $3000 an acre is obscene. If you bought that, and put every dollar you made after your expenses(no personal stuff like food!) to the mortgage, you would never pay it off unless the economics of farming changes drastically! I don't think that will be the new norm, but some farms have sold for $2000 an acre tho I don't know if tht price incl some buildings (the $3000 did not). On the flip side, twice in the last 20 yrs I have turned down land cuz it seemed too high and it ended up a mistake to let those deals go.
So... if you buy the $3000 an acre and rent it for 50, you get 1.5% and my question is would you be able to sell it for what you paid for it in 10 yrs? I don't know. I have had a fellow who came over from Europe 20 yrs ago say if I had a chance at land and couldn't afford it, tell him and he and some invstors will buy it and rent it back to me. You never heard of this stuff even a decade ago. Not here anyways.
What I worry about is the long term of farming economics. Dad says in the 70's they had great prices, were told to produce all they could, China would be buying food forever. The 80's and 90's saw many farmers go under with dismal prices and some weather issues, many with big mortgages from the 70's. Over the long term, farming is a low return business and if history repeats, the good prices for grain won't last. Maybe we are in a new economy?
Land nearby is coming up for sale and I will try to buy some, but not at any $3000 an acre!
Cheers!
