When it comes to investing, knowing where and how to spend your hard earned cash can be difficult. While some investors choose precious metals and energy, others are plowing into farmland. Here are three reasons why farmland today, and historically, has been popular:
1) Attractive risk and returns
2) Provide for portfolio diversification
3) Hedge against inflation and stability
When it comes to performance, farmland competes well with other investment opportunities when considering appreciation/depreciation and the return on investment (ROI) or dividend you will receive on the land.
Appreciation/Depreciation of Farmland
According to the USDA’s National Agricultural Statistics Service, since 1988, Illinois farmland has appreciated, on average, nearly 8 percent per year. Illinois farm real estate values have declined only 6 times since 1970 as compared to previous years (1982-1987, 2009), and there were 4 years when farm real estate values increased over 20 percent.
Return on Investment
Unlike some real estate investments, row crop farms have nearly a 100 percent occupancy rate with good competition for leasing opportunities. Historically speaking, those same acres produce a three percent ROI (dividend), which has been a benchmark for farmland and lacks in huge fluctuations. No double digits, but steady, and the last five years have been average with record incomes for farmers and landowners alike.
Farmland provides solid historical results and can be an excellent part of an investment portfolio, and while simple on the surface, there is complexity.
Whether buying, selling or navigating through ownership, Busey Ag Services and Busey Farm Brokerage have the experience and expertise to answer your farmland questions. To learn how our team can help you, call us today at 1.800.67Busey.