With all of the recent talk about land stocks, REITs, and metaverse land – the land industry can seem very confusing. There are so many ways to profitably invest in farmland, as over time. Buy and hold is a great option that many will take, especially those who are given land through a will or looking for more recreational space while keeping their cash safe. Land flipping, similar to wholesaling or house flipping, is another form that we specialize in at land investing online. We will compare these two primary ways to make money and profitably invest in farmland.
Buy & Hold 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!
A much more active, but also much more profitable approach to land/farmland is land flipping! This is the act of buying and selling in particular vacant and raw land for a profit.
Many people around the country have land that they do not need, they do not regularly visit, or may not even know they own it! These same people may need cash for a wife’s birthday, doctor visits, or quite literally anything. That is why we are able to acquire land at a 50-60% discount and purchase it near 80% of market value.
There are many ways to acquire farmland, we prefer using direct mail. You can cold call, email, or advertise on billboards. There are plenty of ways to contact people, and as long as you can do that you are able to acquire farmland at a steep discount.
The main attraction for people to sell it quick and cash closes. If you are able to offer them a solution (cash) for a problem they are facing (wife’s birthday present) then people will accept your services.
While you may be able to attain a 12.24% rate of return while you buy and hold land, you could see upwards of 100-150% rate of return when flipping land on each investment!
Are you comfortable with missing out on these returns?
Whether you want to invest in farmland to buy and hold or flip it, you should be getting involved.
Ron & Dan created Land Investing Online to help those who prefer to take the path of land flipping. If you are curious about tapping into these amazing returns and potential freedom that land can provide, click here to check out our pricing page.
Still curious about types of land investing? CLICK HERE to check out our discord which has hundreds of investors from all areas of real estate investing.