A Guide to Investing in Farm Land

A Guide to Investing in Farm Land

Investing in farm land can be a profitable venture if you are willing to do your homework along the way. In order to invest in farm land, you must have a wealth of knowledge of the farming industry itself, and the local area in which you want to invest. The following tips and tricks will guide you through your quest to invest in farm land.

Tip #1 for Investing in Farm Land: Talk with a qualified lender if you will be financing this purchase. Not all lenders will loan money on farm land, so it is important to find someone who will. Be sure to explain upfront what you will be doing with this purchase. There are many different programs out there for financing rural property and farm land.

Tip #2 for Investing in Farm Land: Meet with an accountant to discuss the tax implications of your investment. Ask around to other farmers in the area and see who they may recommend. You will want to meet with someone who understands and has knowledge of the tax breaks offered to farmers and those who invest in farm land.

Tip #3 for Investing in Farm Land: Choose the area you will want to purchase in. Many things should be considered when choosing an area. Location, prices, weather, etc..

Tip #4 for Investing in Farm Land: Research the area well. It is worth it to take a trip to the local county courthouse and research the plat maps. Be certain the area is not in a flood plane, or was the past site of a waste dump area. It is well worth the time it takes to investigate all these issues now, as it can save you tons of money and time in the future.

Tip #5 for Investing in Farm Land: Go out and look at some land. Will it work for you? Is it laid out to perform the way you want it to? You will have to have a good idea of what you plan to do with this land. Will you grow crops yourself? Pasture animals? Lease the land out to other farmers?

Tip #6 for Investing in Farm Land: When you find some land you like, run the local comparables. You can do this yourself online, but it will take a lot of time and effort. If you are working with a licensed Realtor, he or she can do this for you also, as well as help you through the whole transaction. Calculate the price per acre to determine what the land is worth.

Tip #7 for Investing in Farm Land: Make an offer. If you have a Realtor do this with you, it will be a whole lot easier. If you are going at it alone with someone selling the land on their own, you may be able to save some money, but be prepared to do more leg work. However, it may be worth it in the end.

Tip #8 for Investing in Farm Land: Start working your land right away. Whatever you choose to do with the land to make you money, cannot be done on it’s own! Either start planting, start pasturing, or start advertising to local farmers that you have land to lease.

Tip #9 for Investing in Farm Land: Keep a file folder of all business with the farm land. As with any investment, the better records you keep, the more you can analyze your profit and hopefully increase it as time goes by.

Tip #10 for Investing in Farm Land: Check with the country to assure that are enrolled in the tax-reduction program for farm land and rural property, often referred to as the CAUV program. What this does, is lower your tax rate drastically, saving you money on your property tax bill. You will have to recoup those charges whenever you sell the property, however.

Farm land can be a great investment, but as you can see, it pays to do your homework! It can also be very rewarding knowing that you are helping preserve America’s farm land.

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