What are your thoughts on investing in farmland?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

What are your thoughts on investing in farmland?

Post by CobraKai »

I stumbled upon a nearly 10 acre parcel near me for $160k. It's in a great location that I may very well want to build on someday but that may or may not happen. It is currently being used as farmland.

I am not sure what the rate is to rent it out to a farmer. Neither did the realtor.

Could it be worth it to invest in?

My initial thoughts are that it would be worth it if I know for sure that I want to build on it and/or I can pay cash for it. I would be financing much of it as I do not have 160k in cash lying around.
kj10
Posts: 34
Joined: Mon Jul 06, 2020 11:01 am

Re: What are your thoughts on investing in farmland?

Post by kj10 »

You can look up cash rent averages through the U.S. Department of Agriculture (USDA) National Agricultural Statistic Service (NASS). You can see figures by state and county. https://www.nass.usda.gov/Surveys/Guide ... by_County/ I would recommend poking around on the NASS website.

You also need to factor in what crop the land is being used for because that will impact the price. Rates not only vary by location but also by crop and other important features. Does it have access to water? Does it have historical yield data if it is being used for row crops? Is the land currently using any federal farm programs that will generate money? Etc.

I would also search for primers on investing in agricultural land. This one is a bit old, but here’s one that was on WCI a few years ago: https://www.whitecoatinvestor.com/inves ... nd-timber/ There are also a lot of resources about cash rents published by state Extension services (search for your state’s name + Extension + cash rent) as well as other farm organizations like the American Farm Bureau Federation.
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

Re: What are your thoughts on investing in farmland?

Post by CobraKai »

kj10 wrote: Wed Aug 04, 2021 11:52 am You can look up cash rent averages through the U.S. Department of Agriculture (USDA) National Agricultural Statistic Service (NASS). You can see figures by state and county. https://www.nass.usda.gov/Surveys/Guide ... by_County/ I would recommend poking around on the NASS website.

You also need to factor in what crop the land is being used for because that will impact the price. Rates not only vary by location but also by crop and other important features. Does it have access to water? Does it have historical yield data if it is being used for row crops? Is the land currently using any federal farm programs that will generate money? Etc.

I would also search for primers on investing in agricultural land. This one is a bit old, but here’s one that was on WCI a few years ago: https://www.whitecoatinvestor.com/inves ... nd-timber/ There are also a lot of resources about cash rents published by state Extension services (search for your state’s name + Extension + cash rent) as well as other farm organizations like the American Farm Bureau Federation.
Thanks for the links! There are currently soybeans planted on the land.

I guess it all comes down to how much rent one can charge. The current owners are building a house on the adjacent parcel and getting out of the farming business so I would need to find someone new in order to keep it as farmland. The marketing on the ad is pushing for the buyer to build on it, but I don't see anything prohibiting the continuation of it being used as farmland.
User avatar
Wiggums
Posts: 7051
Joined: Thu Jan 31, 2019 7:02 am

Re: What are your thoughts on investing in farmland?

Post by Wiggums »

It sounds like you have a lot of unanswered questions and you need to identify a farmer. The fact That you would need to borrow the majority of the money is also a negative. I’d pass on it unless you were going to build.
Last edited by Wiggums on Wed Aug 04, 2021 12:03 pm, edited 1 time in total.
"I started with nothing and I still have most of it left."
User avatar
MrMars
Posts: 163
Joined: Thu Jan 07, 2021 3:26 pm

Re: What are your thoughts on investing in farmland?

Post by MrMars »

you might give this a listen. https://moneyfortherestofus.com/farmland/. David Stein is far from a Boglehead but his podcast has been super informative for me.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: What are your thoughts on investing in farmland?

Post by dbr »

It's been a long time since I owned farmland, but 10 acres for $160k does not sound like farmland to me. How did it get into such a small parcel. Is it contiguous with other land such that the same farmer can work all of it. I had 140 acres and rented about half of it. The rest was wooded and we eventually got it into a woodland conservation program.

To me this sounds like a rural living site for you if you are serious about living there. But is ten acres of flat land in soy beans actually where you want to live. Most people with ten acres of rural land to live on would not have land where any of it is actually cropped as opposed to maintaining woods and maybe a stream and pond. What are the surroundings like and what is nearby?
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

Re: What are your thoughts on investing in farmland?

Post by CobraKai »

dbr wrote: Wed Aug 04, 2021 12:05 pm It's been a long time since I owned farmland, but 10 acres for $160k does not sound like farmland to me. How did it get into such a small parcel. Is it contiguous with other land such that the same farmer can work all of it. I had 140 acres and rented about half of it. The rest was wooded and we eventually got it into a woodland conservation program.
The people that own an adjacent parcel are selling it and building a house on their parcel (which used to be used for farming as well).
dbr wrote: Wed Aug 04, 2021 12:05 pmTo me this sounds like a rural living site for you if you are serious about living there. But is ten acres of flat land in soy beans actually where you want to live. Most people with ten acres of rural land to live on would not have land where any of it is actually cropped as opposed to maintaining woods and maybe a stream and pond. What are the surroundings like and what is nearby?
There is a house currently being built on the adjacent parcel. There are a couple houses nearby but not too close. Otherwise there are mostly corn fields.
flyfishers83
Posts: 408
Joined: Fri Jun 07, 2019 6:08 pm

Re: What are your thoughts on investing in farmland?

Post by flyfishers83 »

That’s a really small piece of farmland. Unless you found a neighboring farmer to rent to, it wouldn’t be worth the hassle. I usually figure around $150/acre as a ballpark estimate for cash rent around me, but rates vary significantly.

$16,000 per acre sounds more like a lot be developed than farmland. Also keep in mind that prices could have really jumped over the last year. Land that was selling for $3000-$3500/ acre around me is now being listed for $5000/acre.
chazas
Posts: 853
Joined: Wed Nov 01, 2017 1:22 pm
Location: NoVa

Re: What are your thoughts on investing in farmland?

Post by chazas »

I would not invest in a small parcel of farmland unless you knew it was in the path of development and zoned for it and could afford to lose money.

My ex and I had a 40-acre defunct dairy farm near DC that we knowingly slightly overpaid for - we were planning to build a home on it. Rent even on 40 acres to local farmers was minimal - we had it hayed and the payback was a few bales of free hay. Luckily we never got around to building the house, but when we sold to a developer a couple of years later we lost money.
Last edited by chazas on Wed Aug 04, 2021 4:47 pm, edited 1 time in total.
fuddbogle
Posts: 200
Joined: Fri Jun 21, 2019 8:35 am

Re: What are your thoughts on investing in farmland?

Post by fuddbogle »

At that price per acre, you'll lose money from cash renting as farmland. If that's OK but you want to speculate on future development or develop it for yourself, it may/may not work out.
neverpanic
Posts: 1023
Joined: Sun May 10, 2020 12:26 am

Re: What are your thoughts on investing in farmland?

Post by neverpanic »

Without knowing anything about your location, that asking price is way too high unless future, near-term development is already in the works.

But if that's where you want to build your dream home, paying above market makes sense. I'm willing to bet it's priced 25% above what it's worth, however.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
mike@jb
Posts: 178
Joined: Mon Sep 28, 2020 10:19 pm
Location: Florida

Re: What are your thoughts on investing in farmland?

Post by mike@jb »

$16k per acre is high for farm land, as said before. Where is this property?
Our family has a much larger parcel that could probably go for $4k per acre.
Check the tax valuation of surrounding parcels. In some areas, that can get you a baseline.
User avatar
Huygens
Posts: 109
Joined: Tue Dec 04, 2018 7:35 pm

Re: What are your thoughts on investing in farmland?

Post by Huygens »

Some of the selling points of farmland are quite attractive: high yields, low vol, low correlations to US equities, etc. But I don't understand it well enough to justify investing, and it doesn't sound like you do either OP. Maybe consider dipping your toes in via FarmTogether or AcreTrader.
There are the haves, have-nots, and have-yachts.
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

Re: What are your thoughts on investing in farmland?

Post by CobraKai »

flyfishers83 wrote: Wed Aug 04, 2021 12:23 pm That’s a really small piece of farmland. Unless you found a neighboring farmer to rent to, it wouldn’t be worth the hassle. I usually figure around $150/acre as a ballpark estimate for cash rent around me, but rates vary significantly.

$16,000 per acre sounds more like a lot be developed than farmland. Also keep in mind that prices could have really jumped over the last year. Land that was selling for $3000-$3500/ acre around me is now being listed for $5000/acre.
Good points. Perhaps that is why the marketing is geared toward getting someone to build on it. And true....I bet they would have asked for less a year or two ago. Not sure how much less but definitely less.
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

Re: What are your thoughts on investing in farmland?

Post by CobraKai »

chazas wrote: Wed Aug 04, 2021 1:08 pm I would not invest in a small parcel of farmland unless you knew it was in the path of development and zoned for it and could afford to lose money.

My ex and I had a 40-acre defunct dairy farm near DC that we knowingly slightly overpaid for - we were planning to build a home on it. Rent even on 40 acres to local farmers was minimal - we had it hayed and the payback was a few bales of free hay. Luckily we never got around to building the house, but when we sold to a developer a couple of years later we lost money.
It's zoned for residential. The marketing on the ad is suggesting that whomever buys it builds a house on it.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: What are your thoughts on investing in farmland?

Post by 000 »

16k / acre seems too high for farmland unless pricing reflects likely future development

https://usda.library.cornell.edu/concer ... ?locale=en
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

Re: What are your thoughts on investing in farmland?

Post by CobraKai »

fuddbogle wrote: Wed Aug 04, 2021 2:37 pm At that price per acre, you'll lose money from cash renting as farmland. If that's OK but you want to speculate on future development or develop it for yourself, it may/may not work out.
It would definitely be a nice area to live in. However, there's no way I'm paying to have a house built anytime soon with the prices the way they are. It would be sometime in the distant future but it's not a sure thing.
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

Re: What are your thoughts on investing in farmland?

Post by CobraKai »

mike@jb wrote: Wed Aug 04, 2021 3:48 pm $16k per acre is high for farm land, as said before. Where is this property?
Our family has a much larger parcel that could probably go for $4k per acre.
Check the tax valuation of surrounding parcels. In some areas, that can get you a baseline.
I don't want to get too specific but it's in the midwest.

Taxes are cheap, only $500 or so (at least until there is a dwelling on the property).
kenoryan
Posts: 267
Joined: Tue Sep 12, 2017 7:11 pm

Re: What are your thoughts on investing in farmland?

Post by kenoryan »

I bought a 40 acre farm just outside my city 15 years ago, in the path of progress. I paid 12,000 an acre for it. Cash. It has 25 tillable and rest is woods and barns etc. The tillable generates $160 an acre which pays the property taxes. I am now in the industrial zone, surrounded by huge warehouses. The land is valued at $150,000 an acre.

I also have 220 acres of land in the middle of nowhere. The closest Walmart is 40 miles away. I paid $1500 an acre, cash, 18 years ago. Now the land around me is selling for $5,000 an acre. I get $130 an acre on the 80 tillable acres. Rest is woods.
User avatar
galawdawg
Posts: 5231
Joined: Thu Dec 14, 2017 11:59 am
Location: Georgia

Re: What are your thoughts on investing in farmland?

Post by galawdawg »

CobraKai wrote: Wed Aug 04, 2021 11:12 pm It's zoned for residential. The marketing on the ad is suggesting that whomever buys it builds a house on it.
Then you're not buying farmland for investment, you are buying a residential parcel to either build your own home or for speculation. Depending on your local zoning laws, using it for agricultural purposes now or in the future is likely be a prohibited use. No farmer is going to lease a ten (10) acre parcel zoned residential.
mrjohnanderson007
Posts: 105
Joined: Fri Jul 30, 2021 3:23 pm

Re: What are your thoughts on investing in farmland?

Post by mrjohnanderson007 »

I own 155 acres tillable. 25 CRP. 15 CREP. My father owns over 500. We farm corn and soybeans in this area with $180-$250 an acre rents. I have bought ground any where $3,000 an acre (15years ago) to $10,000. The main thing is, if it's good ground it will appreciate like the markets.

What is the productivity of the acres?

What do people grow in that area?

What could you get from rent each year?

Is the 10 acres by itself? 10 acess is a small piece to farm that makes it worth less than say a quarter.

Future development?

The property taxes?

Our property taxes can be homesteaded if you farm it yourself. Or live within 1 county and rent it to a relative.
chazas
Posts: 853
Joined: Wed Nov 01, 2017 1:22 pm
Location: NoVa

Re: What are your thoughts on investing in farmland?

Post by chazas »

galawdawg wrote: Thu Aug 05, 2021 5:28 am
CobraKai wrote: Wed Aug 04, 2021 11:12 pm It's zoned for residential. The marketing on the ad is suggesting that whomever buys it builds a house on it.
Then you're not buying farmland for investment, you are buying a residential parcel to either build your own home or for speculation. Depending on your local zoning laws, using it for agricultural purposes now or in the future is likely be a prohibited use. No farmer is going to lease a ten (10) acre parcel zoned residential.
It could be in an ag zone now with permitted residential use on 10 acre minimum. That’s how the ag land around me is getting redeveloped without rezoning.
Zeno
Posts: 1042
Joined: Wed Sep 12, 2018 10:44 am

Re: What are your thoughts on investing in farmland?

Post by Zeno »

CobraKai wrote: Wed Aug 04, 2021 11:38 am I stumbled upon a nearly 10 acre parcel near me for $160k. It's in a great location that I may very well want to build on someday but that may or may not happen. It is currently being used as farmland.

I am not sure what the rate is to rent it out to a farmer. Neither did the realtor.

Could it be worth it to invest in?

My initial thoughts are that it would be worth it if I know for sure that I want to build on it and/or I can pay cash for it. I would be financing much of it as I do not have 160k in cash lying around.
Last edited by Zeno on Sat Mar 19, 2022 9:45 pm, edited 1 time in total.
User avatar
Kagord
Posts: 1676
Joined: Fri Nov 23, 2018 12:28 pm
Location: Peaksville, Ohio

Re: What are your thoughts on investing in farmland?

Post by Kagord »

CobraKai wrote: Wed Aug 04, 2021 11:15 pm I don't want to get too specific but it's in the midwest.

Taxes are cheap, only $500 or so (at least until there is a dwelling on the property).
10 acres is a residential lot in small midwest towns, lol. Might be good for a personal farming hobby, maybe you can get someone to give you a few hundred a year for grazing rights, then at least you won't have to mow it.
User avatar
RickBoglehead
Posts: 7877
Joined: Wed Feb 14, 2018 8:10 am
Location: In a house

Re: What are your thoughts on investing in farmland?

Post by RickBoglehead »

Land is rarely an "investment".

People are getting out of farming. You might ask yourself why.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
Mike Scott
Posts: 3579
Joined: Fri Jul 19, 2013 2:45 pm

Re: What are your thoughts on investing in farmland?

Post by Mike Scott »

Investing in farmland in the midwest has been hot for several years. The local properties that have sold have seemed like eye popping prices for trying to make your money back via farming. However, it sounds like you are looking at a property that has been subdivided and is now up priced for residential development. Locally, they get advertised as "room for a horse".
User avatar
BrooklynInvest
Posts: 1183
Joined: Sun Jul 28, 2013 9:23 am

Re: What are your thoughts on investing in farmland?

Post by BrooklynInvest »

It would be hard for me to value accurately and it'd be more illiquid than I'd want. Two strikes and I'm out.
User avatar
Monster99
Posts: 628
Joined: Tue Aug 29, 2017 10:28 am

Re: What are your thoughts on investing in farmland?

Post by Monster99 »

Grew up in rural Indiana - wouldn't consider 10 acres farmland. Basically a residential lot with room for a pole barn and a garden. If it's not attached to more acreage to make it accessible, the rent most likely won't pay the taxes....
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: What are your thoughts on investing in farmland?

Post by dbr »

Just to recapitulate, this purchase is not an investment in farmland. It is the purchase of a development parcel at development prices. It makes no sense unless there is a plan to capitalize on the development value of the land. It does not even sound like the location is a nice place for rural living. Any rent that can be gotten to crop the land would be small.

I don't know what state this is in, but prices for Indiana show farm values and at the bottom of the attached chart one can find the price for "transition" land characterized as "Transition land is land moving out of production agriculture into other, typically higher value, uses." In the chart that hits $17,759/acre vs top farming land at around $11,000/acre. Of course a different state could have different pricing.

https://ag.purdue.edu/commercialag/home ... h-in-2021/
Topic Author
CobraKai
Posts: 1057
Joined: Mon May 07, 2018 10:17 am

Re: What are your thoughts on investing in farmland?

Post by CobraKai »

Thanks for the responses and to those who shared their experiences.

This does not seem like such a good idea after all for the reasons that were pointd out.

1) It's too small of a parcel for farmland and would require making a deal with a farmer that is very close to the property, which would give him leverage.

2) It's too expensive for farmland

3) It is illiquid

4) It is difficult to tell how much it is actually worth and how much of the purchase price is part of the recent bubble.

Seems that the only way it would make sense is if I'm sure I would want to build on it. Even then, it seems like an uphill battle as WyomingFIRE pounted out.

I guess I had this idea etched into my head after hearing my dad complain so many times about not buying land when it was "cheap" 30-40 years ago. It is one of his regrets. However, past performance is no guarantee of future results.
Wash.Invest
Posts: 703
Joined: Sat Jun 13, 2009 1:25 am

Re: What are your thoughts on investing in farmland?

Post by Wash.Invest »

10 acres is a hassle to farm (too small for the trouble of moving in equipment and spraying).

10 acres is a hassle to maintain as private residence. Too much to mow, too little to hobby farm.

$160k leveraged out on a current high valuation RE purchase may see you stuck for 10+ yrs figuring out how to maintain / market the property.
Zeno
Posts: 1042
Joined: Wed Sep 12, 2018 10:44 am

Re: What are your thoughts on investing in farmland?

Post by Zeno »

CobraKai wrote: Thu Aug 05, 2021 11:44 am Thanks for the responses and to those who shared their experiences.

This does not seem like such a good idea after all for the reasons that were pointd out.

1) It's too small of a parcel for farmland and would require making a deal with a farmer that is very close to the property, which would give him leverage.

2) It's too expensive for farmland

3) It is illiquid

4) It is difficult to tell how much it is actually worth and how much of the purchase price is part of the recent bubble.

Seems that the only way it would make sense is if I'm sure I would want to build on it. Even then, it seems like an uphill battle as WyomingFIRE pounted out.

I guess I had this idea etched into my head after hearing my dad complain so many times about not buying land when it was "cheap" 30-40 years ago. It is one of his regrets. However, past performance is no guarantee of future results.
+1

You nailed it
CurlyDave
Posts: 3182
Joined: Thu Jul 28, 2016 11:37 am

Re: What are your thoughts on investing in farmland?

Post by CurlyDave »

CobraKai wrote: Wed Aug 04, 2021 12:13 pm
...There is a house currently being built on the adjacent parcel. There are a couple houses nearby but not too close. Otherwise there are mostly corn fields.
Quite a while ago, I drove across the US a few times. Always in summer. One of the things that really struck me about farms was that if one flew over them in an airplane they would be described as "corn fields". BUT having driven through them in a car and had to clean the windshield every 20-30 minutes, from the ground they were "insect farms".

Having a house in the middle of that does not appeal at all to me.
Answering a question is easy -- asking the right question is the hard part.
banook
Posts: 94
Joined: Sat Jul 14, 2018 3:25 pm

Re: What are your thoughts on investing in farmland?

Post by banook »

Most of what I was going to post has already been posted. No one will lease 10 acres for row crops (soy/corn etc) it's too small an acreage even if those commodities hit astronomical prices. Farmland value is typically correlated with commodity prices, the land doesn't lose value much, but it may sit at a certain price for awhile... 15-20 years. Water rights - depending on the type/state are also an important consideration for anything in the luxurious TNV (tree, nut, vine) sector - this sector is also over-allocated at the moment due to demography (most exports go to CN and they are not buying as much), and decreased interest in trade. You may find something creative to do though! Ag unit economics are fun.

If you like hobbies and space - there's nothing more fun than experimenting with land use. 10 acres would be good for a stocked pond, maybe a large greenhouse, and a horse. Can't do that in the suburbs.
averagedude
Posts: 1772
Joined: Sun May 13, 2018 3:41 pm

Re: What are your thoughts on investing in farmland?

Post by averagedude »

On average, lower returns than equities and higher returns than bonds if their are no management fees. If you invest in farmland with good foresight in geographical regions, you will experience higher rates of returns than equities, and if you have bad foresight in geographical regions, you will experience lower rates of returns than bonds. The best geographical regions to invest in the future are only known by a crystal ball that is unclouded.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: What are your thoughts on investing in farmland?

Post by dbr »

banook wrote: Thu Aug 05, 2021 9:15 pm
If you like hobbies and space - there's nothing more fun than experimenting with land use. 10 acres would be good for a stocked pond, maybe a large greenhouse, and a horse. Can't do that in the suburbs.
Indeed, but the value that applies to that is location, location, location. I doubt ten acres that can be rented for soybeans is going to be very amenable for woods and a pond.
mnnice
Posts: 831
Joined: Sat Aug 11, 2012 5:48 pm

Re: What are your thoughts on investing in farmland?

Post by mnnice »

flyfishers83 wrote: Wed Aug 04, 2021 12:23 pm That’s a really small piece of farmland. Unless you found a neighboring farmer to rent to, it wouldn’t be worth the hassle. I usually figure around $150/acre as a ballpark estimate for cash rent around me, but rates vary significantly.

$16,000 per acre sounds more like a lot be developed than farmland. Also keep in mind that prices could have really jumped over the last year. Land that was selling for $3000-$3500/ acre around me is now being listed for $5000/acre.
Where my in-laws land goes for that much far from town and in large parcels (180 acres).
jt13
Posts: 25
Joined: Mon Jul 19, 2021 7:55 am

Re: What are your thoughts on investing in farmland?

Post by jt13 »

mnnice wrote: Fri Aug 06, 2021 7:52 pm
flyfishers83 wrote: Wed Aug 04, 2021 12:23 pm That’s a really small piece of farmland. Unless you found a neighboring farmer to rent to, it wouldn’t be worth the hassle. I usually figure around $150/acre as a ballpark estimate for cash rent around me, but rates vary significantly.

$16,000 per acre sounds more like a lot be developed than farmland. Also keep in mind that prices could have really jumped over the last year. Land that was selling for $3000-$3500/ acre around me is now being listed for $5000/acre.
Where my in-laws land goes for that much far from town and in large parcels (180 acres).
I echo your thoughts. I'm in the suburban/rural interface in central Pennsylvania and tillable land has been selling for between $10-20k an acre. A 9 acre soybean field sold two weeks ago for $27k an acre to an amish family to be used as a vegetable plot for their farmers market.
Jack FFR1846
Posts: 18502
Joined: Tue Dec 31, 2013 6:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: What are your thoughts on investing in farmland?

Post by Jack FFR1846 »

That is REALLY expensive.

I once purchased 81 acres in Massachusetts for $36k as an investment. All on gentle slopes near the top of a named mountain. There was a town road that ended at the far border and became a 4x4 trail. I later decided to go back to college and sold it for something like $45k.

In my state, 10 acres is the minimum size for any programs for tax reduction. I have 12 acres of my property on a forest management program and pay tax on only 10% of the value. But if there is anything on the property.....driveway, building, an exclusion has to be included which would reduce your acreage and likely make the property ineligible for farming, forest programs.

The previous owner likely chose the absolute best part of the property to build on. What's the 10 acres? Wetland? Steep ledge? Other problem land?
Bogle: Smart Beta is stupid
banook
Posts: 94
Joined: Sat Jul 14, 2018 3:25 pm

Re: What are your thoughts on investing in farmland?

Post by banook »

If you do want to "invest" vs "own and enjoy" in a more Boglehead-ish way (maybe) you could look into Ag REITS: https://www.gladstonefarms.com or seemingly actual holdings: https://farmtogether.com/ways-to-invest

I like to differentiate between investment and enjoyment properties - it would be nice if the two categories decide to meet at some point in the future.
Beardog
Posts: 116
Joined: Thu Mar 22, 2007 10:38 pm
Location: Arkansas

Re: What are your thoughts on investing in farmland?

Post by Beardog »

I didn't read the answers to this thread, but IMHO, 10 acres is usually not a farm. 10 acres of farmland isn't useful to a farmer unless the farmer owns significant adjacent acreage. If one wants to build a home on 10 acres, or develop 10 acres for other purposes, it might be a worthwhile investment. Otherwise, probably not.
Beardog
investuntilimrich
Posts: 235
Joined: Thu Jan 21, 2021 1:33 pm

Re: What are your thoughts on investing in farmland?

Post by investuntilimrich »

The only way I could see you making money on farmland is by appreciation of the land itself. I've never looked into it but I have a relative who rents out 80 acres for grazing. It pays for the taxes on the land and the house and he wants the land because he doesn't want neighbors close by, but it's not profitable other than if the land appreciates in price (it probably has). It also has some negatives with cows getting loose and ending up in his front yard, more flies, etc. Seems a lot easier to stick money in recommend financial asset portfolio to me but if you already have that, then if you're talking about trying to develop a house that doesn't already exist I would be even more concerned about how much this is going to end up costing and any pitfalls. By the time you got the house built the housing market will probably have had a major correction and you could pick up a foreclosure easier and cheaper.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: What are your thoughts on investing in farmland?

Post by dbr »

investuntilimrich wrote: Sat Aug 07, 2021 10:57 am The only way I could see you making money on farmland is by appreciation of the land itself. I've never looked into it but I have a relative who rents out 80 acres for grazing. It pays for the taxes on the land and the house and he wants the land because he doesn't want neighbors close by, but it's not profitable other than if the land appreciates in price (it probably has). It also has some negatives with cows getting loose and ending up in his front yard, more flies, etc. Seems a lot easier to stick money in recommend financial asset portfolio to me but if you already have that, then if you're talking about trying to develop a house that doesn't already exist I would be even more concerned about how much this is going to end up costing and any pitfalls. By the time you got the house built the housing market will probably have had a major correction and you could pick up a foreclosure easier and cheaper.
That sounds a little too familiar. And, remember, the landowner is responsible for the fences.
SGM
Posts: 3341
Joined: Wed Mar 23, 2011 4:46 am

Re: What are your thoughts on investing in farmland?

Post by SGM »

Too small a plot. We have a large farm near a city. We rent crop land to a farmer at a good rate. Grazing land gets very little.

Deer damage decreases the farmer's profit by 10%. The farmer also gets subsidies for not growing certain crops. Everything is computerized. Farmer's have to be smart to make a good profit.

We have stables that we do not rent out.

We have a good relationship with the farm family that rents our fields.
User avatar
TomatoTomahto
Posts: 17158
Joined: Mon Apr 11, 2011 1:48 pm

Re: What are your thoughts on investing in farmland?

Post by TomatoTomahto »

Jeremy Clakson’s show https://www.amazon.com/Clarksons-Farm-S ... /ref=nodl_ highlights some of the farming problems that he encountered on his 1,000 acre farm, mitigated by a $60M NW and $20M annual income. My kids wanted me to farm our very small (by comparison) land, and I suggested that they watch the show; I will try some vegetables for our family next year. The previous owner suggested a Xmas tree farm; I’m not even thinking about it.
I get the FI part but not the RE part of FIRE.
teamDE
Posts: 504
Joined: Tue Jun 28, 2016 9:16 pm

Re: What are your thoughts on investing in farmland?

Post by teamDE »

Timely, I was just reading this review of AcreTrader.
https://www.physicianonfire.com/acretrader-review/

I wouldn't normally consider it, but POF seems keen on some of these real estate schemes. It is interesting.
Post Reply