Ranches and Farms Can Be Good Investments
If you are looking for an alternative investment, farm and ranch land can be a good choice. Even though you hear a lot about “factory farms” these days, more than 96% of farm and ranch land is still owned by families, and many of those families’ younger generations are leaving rural areas for other jobs, leaving no one to continue running the agricultural operation. That is creating opportunities for investors to buy those acres.
There are many advantages to buying farm and ranch land. Just like residential real estate, agricultural land has tended to rise in value over the long haul, even though there have been periods, such as the farm crisis of the 1980s, where values have declined. Currently, due to low commodity prices, the value of farmland is plateauing in many places and even declining in some areas. However, the slowing in prices after several years of large increases, can be a good time to invest.
Ranches for sale may be even better deals right now than farmland. Severe drought a couple of years ago caused many ranchers to sell off their herds, especially ones in Texas. Even though the drought ended and low commodity prices mean input costs are low, many ranchers are still losing money on their cattle, leaving incentive to sell the land and get out of the business. That means you may be able to find bargains among the ranches for sale
Even though crop prices are at multi-year lows, improvements in farming techniques have led to better yields, so farmers are able to squeeze more corn, soybeans, wheat and other crops out of every acre. That helps to continue to make farming profitable for most farmers and keeps cash rents high.
Another advantage to investing in farm and ranch land is that most states tax such land at much lower rates than other types of land, which can help boost your investment return.
Before considering investing in farm or ranch land, you should weigh the pros and cons and also consider what other places you might put your money. While agricultural land can be a good investment, it can lose money just like any other investment, and it also is subject to more than just market conditions, with factors such as weather playing a role.