Farmland investing is a strategy often adopted by real estate investors. If you invest right, your farmland can generate income, as well as give you returns through capital appreciation. As far as income is concerned, you can generate it either through crop share or through cash rent. Similarly, you can sell your farmland for a profit when its value goes up and reap the benefits from this capital appreciation.
There is no doubt that farmland investing is a challenging undertaking. It is something that should be taken on by people who are consistent and are able to make a long-term commitment. Farmland income can often be negatively affected by weather and political instability. But these challenges are outweighed by the benefits that can be derived from such an investment if you do it right and if you have the patience and the perseverance to make your investment successful.
Here are some reasons why you should consider farmland investing:
- There will always be demand for food. Demand for food and soft commodities such as corn and wheat continues to increase. When you invest in farmland, you can be sure that demand for your product will always remain consistent.
- You are more or less guaranteed stable returns. The value of the money you invest in farmland will offer stable returns, as has been observed over the last two decades.
- There is room for great diversification in the agricultural industry. If you get the hang of the industry and your market, there is quite a bit you can do to diversify your portfolio and maximize your returns.
- Farmland real estate growth is not “just a phase”. Similar to other investment opportunities that start off big and fizzle out, farmland real estate does not seem to follow the same pattern. This real estate investment is not a bubble and value of farmlands have been appreciating consistently.
- Farmland commodity prices show consistent growth. This gives farmers the opportunity to further expand and to reinvest their own cash into their farm. Therefore, they do not have to undertake huge debts from banks and are able to manage their finances in a more sensible manner as compared to other investments.
- Customers will continue to increase. The biggest advantage of farmland investing is that it caters to a population that is guaranteed to increase. At present, we have 7 billion people who require food. This population is expected to increase to 9 billion over the next 30 years. Demand for food is thus something that will never go down.
Perhaps as you read through these perks of farmland investing, you’ll consider doing more research into farmland investing for yourself. There can certainly be profitable gains if you crunch the numbers right and get a great deal on the land.