I also walked beans in Iroquois County Illinois in my youth. The land that was $3k a acre 5 years ago is now over $5k an acre. Lease rates are still around $150 an acre...if you have the money to carry it, it's a good investment. Me, I never could afford teh 20% down and big vig.
As of 1.5 years ago, you could buy South Carolina low country pine treed land for $1k. Timberland can be a good investment. Some government conservation groups will plant saplings for virtually nothing.
Id rather make 40% a year trading stocks, until my account gets so big there isnt enough liquidity, at which point my returns will start going down. But who cares, ill be super rich then :mrgreen:
you get better leverage with real estate so that 10% per annum in appreciation in real estate including "dividends" can really be 50% + roi. then you figure out a way to get the investment to pay for the mortgage in a conservative way with little to no chance of outlier or Enron type events or other sharp drawdowns.
In the opinion of any and all of you kind folks, how much percentage upside and time wise, do we have to go in this Farm land bull market? What is the best way to maximize reward/risk ratio to make money in the Farm land bull market? If it is corn prices that are drivng the land prices, why not just get long corn futures? It appears that un-leveraged, March Corn Futures are up about 95% over about the last year. Thank you.
Excellent Commentary........... What is interesting here is the subject of farm subsidies....particularly with respect to the WTO talks and globalization agreements... It appears that the typical farm subsidy programs can be eliminated to some degree as an agricultural definition....whereby the categorical change will be to evergreen green ...annually renewable energy.... Therefore the shift from food production to energy production will be the same approach to market price meddling...but for different reasons.... It is very interesting indeed that the land amortization with respect to higher overall needs for agricultural/energy production will exhibit higher land prices...albeit fleeting because of subsidized economics...subject to downfall by the stroke of a government pen.... ................................................................................................. Also ...the bid ask spread on any real estate....along with the liquidity realization process...simply does not compare with the worlds stock exchanges..... However this asset class does have a place...as some percentage of ones worth....and one cannot live in tradable securities...and one cannot grow plants on securities as well...
Still doesnt compare to trading. If I used just 2X leverage, I would make 80%, 4x leverage 160%, and im still not approaching the leverage used in buying a home in san diego (10 to 1). Apples to oranges. The chance of a blowout even at 4X is virtually zero since my max drawdowns are in the single digits. So a land investment would be a huge opportunity cost for me and simply a dumb idea.
<i>"So a land investment would be a huge opportunity cost for me and simply a dumb idea."</i> That part is entirely true. To some of us, the intrinsic value of land is much more than mere $$$. I'm personally talking about money outside of speculative trading accounts. Enjoying the benefits of land ownership means far more to me than a portfolio of buy & hold stocks or commercial real estate. Not to mention the fact that it is by far the lowest risk investment vehicle of all. Even U.S. backed securities can be shunned someday... but land remains fungible in many ways.
THAT is what i`m talking about. I want to sit on my porch with my Remington 700 drinking bud cans and plunking varmints....lol (i`m a NY`r with a desire to be a redneck) I have been shopping for a 100 acre piece for awhile now..but cant decide what state. Probably end up in the hills of NC,SC or KY Some good soil for organic farming would be nice too! Great thread! Oh and farmland is the new oceanfront...or so i`ve been told...