Mutually Beneficial Relationships.
It’s no secret that farming today is very capital intensive. For that reason, many farmers including ourselves, partner with land owners to hopefully achieve a mutually beneficial relationship.
On this page we would like to demonstrate land ownership as an alternate investment as compared to more traditional investments. Some potential investors shy away from land ownership because they feel it is not liquid enough. In our experience, buying the right piece of property does sometimes require patience, but normally, selling that property can be accomplished in a relatively short time frame. One simple way to look at land ownership as an investment would be to compare it to owning stock in a company. The annual increase in the land’s value would be the equivalent of the stock’s gain in value. The annual cash rent payment less property taxes would be the equivalent of a dividend on a stock.
As you can see from the accompanying chart, the S&P 500 total return since 1990 has been 9.74%. By combining the cash rent minus taxes to the land value appreciation, farm land in Indiana has had a return of 12.32%. This would also compare to a corporate bond return over the same time frame of 6.34%. Obviously, C.D. returns over the same time period have been far less.
By drawing on our thirty plus years of farming experience, we can offer advice on purchasing farm ground in North Central Indiana. We work with two different agronomists, allowing us to blend productivity indexes, soil test results, expert opinions, and real world knowledge, to achieve a fair estimate of a tract’s worth. The benefit of working with us is that at the end of the process, you would already be partnered with an established, financially stable grower/lessee that would have you and your land’s best interest in mind. The benefit to us is having a larger land base to spread out our fixed costs and increased scale for purchasing and merchandising. We also wish to grow our business to allow any of our children who want to farm the ability to do so.