How To Profitably Invest In Farmland

Since 2000 over the last ~22 years, United States farmland has provided a pretty solid return of 12.24% annually. 

Some may consider this return as bad, but when comparing investments we must take the risk-free rate which just refers to the rate at which the stock market goes up on average per year. That number is currently around 8-10% not including the 2022 market correction.

At this 12.24% rate, $10,000 invested in farmland in 2000 would now be worth over $96,149! That is very impressive for just buying land and sitting on it. Farmland returns are made up of two values, land appreciation, and capitalization rates of the property. 

While you own this land, it does not have to be vacant. Like other investments, you usually are not able to really use them during the timeframe you hold them. With Land, it provides an excellent opportunity to run multiple cash-flowing activities.

While you sit on the land, you can run rentals out of this land, and run vacation experiences such as camping or hiking amongst many others. You could farm, as a matter of fact in 2009, corn had an average price of $3.55 per bushel. Only three years later, corn was pricing in at an average of $6.89 per bushel.

The point of this is that you are able to utilize the land while getting an above-average return. This is a very safe and reliable approach as land continues to be a scarce resource and more people continue to be born. Everyone needs some land!