Over the past three years investors have struggled to locate and obtain sound investments yielding fare annual returns. Well the truth is there’
s not many out there. However one area that continues to gain attention is the Ag sector; on land investments. Global investors have been scooping up just about as much land as they can get theirs hands on knowing that the future holds high promise for annual cash returns and rapid appreciation for land values. See the fact of the matter is when you do the math on the amount of land on the planet that can produce a crop; well.. there nearly more people than land?
“That’s really something to think about” and all of us can understand that even with the best technology and pushing yields to unprecedented levels the land will only produce so much! So forward thinking would lend itself to say the price must go up? And that’
s exactly what’s happening Ag prices have risen nationally to record levels. Now if your like me, your saying
“ok so how can I make this deal work for me and what level of investment am i interested in.” So first things first – identify the level of cash you can reasonably invest, look at a 25% loan to value rate, factor your finance amount at the interest rate and start looking the cash return. In the case of the here and now with the low interest loans and the high yielding cash rentals on cropland investments its safe to if you can generate 5-6% annual cash return on the investment; which will allow for it to cash flow itself. Now there are multiple ways to factor this but for this example what’s happening here is the annual return is carrying the debt and the land is gaining in appreciation. Over the course of several years the investment should start looking pretty good on you retirement plan. Outside of the farming rental there are other potential income factors such
hunting, timber, tax benefits and possibly land improvements. All in all one thing is for sure land is becoming increasingly valuable and finding other steady return based investments is becoming harder every day. To learn more on crop or timber land investments give us a call and lets see just how to put your money to work…
