Growing Wealth by Buying the Farm

Written by: David Wilkening

Do you want to get rich in the real estate business? Buy a farm.

No, that is not a joke, and while you may not get rich, buying the farm may be very profitable.

I have been reading recently about investment choices taken by the top 1 percent. The top people who have money.

This implies, of course, that they must know something. So what are they passing on to the rest of us?

They are looking at alternative assets to “grow wealth.”

Investments beyond traditional stocks and bonds or others are known as “alternative asset classes.” That can be anything from fine art to hedge funds.

Why are the rich looking beyond the usual suspects…or I mean markets? Volatility and uncertain returns.

Sounds familiar? But these investments are not restricted to the rich, mind you, but can be had by anyone. And out-of-reach huge expenses that used to be required are no longer the rule.

“For the rich, stocks and bonds aren’t cutting it. They continue to add more alternative asset classes to their portfolios. However, you don’t have to have millions of dollars to follow their lead. Regular investors now have access to plenty of these alts either through ETFs or publically traded companies,” writes Investopedia.

They cite some attractive dividends from companies buying farmlands but private individuals either alone or in groups are also looking at these markets. Most of the material I read on the subject recommended stock (either thourgh EFTs or publically traded companies) that were involved in buying and holding farmland as future investments that were rising in value. But they were not the only players tilling the soil here.

“Institutions and individual investors are treating farmland as a great asset class, and many are borrowing to purchase it,” wrote Steve Forbes earlier this year in Forbes. He was not in favor it as he added:

“Caveat emptor!”

Obviously, no everyone agrees.

The price of farmland has gone up and down, though in most ways it has held its value better than most investments. Other financial experts see it no more volatile, and probably less so, than other real estate investments.

I have warned before about the various issues of potentially developable land as an investment: holding costs and property taxes as owners sit on it, for example. But land does not have to be turned into housing to make money on it.

Check the Internet and you will find land being sold for hunters or other recreational users. In some areas, prices have dropped considerably. In some areas of Iowa, for example, prices plummeted from the $2000 an acre range to a third of that.

Some buyers are finding that small farms are also investments for family retreats.

So for the creative, this might be an area (pun intended) to look into.

Of course, whether you are among the top one percent of the wealthiest US families or even the bottom percent, you can always use the land for its historic purpose: You can farm it.


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Growing Wealth by Buying the Farm

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