Is Farmland The Best Investment

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Is Farmland The Best Investment

Dec 10, 2019 | 14:39 1 Even overpriced, wouldn't crop insurance at least make the payments if you couldn't?

My kids wont farm, but they can be land holders. Contemplating buying them something as an investment. They can rent it out when they are older for a little income and use the asset as backing to buy a home.

Thoughts? Reply With Quote
Dec 10, 2019 | 14:51 2 There are a lot of concerns on here about farmers going back to becoming serfs on rented land, and land being unaffordable to farmers. If those are concern of yours too, your children would be part of the problem and not the solution. Reply With Quote
Dec 10, 2019 | 15:14 3
Quote Originally Posted by AlbertaFarmer5 View Post
There are a lot of concerns on here about farmers going back to becoming serfs on rented land, and land being unaffordable to farmers. If those are concern of yours too, your children would be part of the problem and not the solution.
Guess you better not rent your land out to anyone either then. Reply With Quote
Dec 10, 2019 | 15:25 4 Land rent coming down to $75 - $85 tops. No one paying $100 Lots of land for sale asking $500k a quarter. Reply With Quote
Dec 10, 2019 | 15:42 5 Ab5

If I worked my ass off for 50 years farming and IF I leave my land to my children or grandchild and they at one point want to rent the land out rather than farm explain to me what type of problem have I caused? Reply With Quote
Dec 10, 2019 | 15:46 6 Nothing selling in my area. We are in a prolonged recession and it will get worse yet. Not much cash around. If you have the money and like the price it is probably a good investment though in the long term. Reply With Quote
Dec 10, 2019 | 15:47 7 If you took the principle plus interest money, assuming you are borrowing some of the money, and bought 5 or 6 blue chips, reinvesting the dividends would you be better off.

The last 10 or twelve years has seen rapid land inflation, but over a long period of time (50 years) probably similar to the stock market which has been in that 4 to 6 % range.

Land value in 1970, $30,000 compounded for 50 years @ 5% ( same as stock market ) = $333,000
Very similar to today's value.

Land is more recession proof but if ag stalls and you need cash, sales can be sluggish but you can sell stocks fairly quick, sometimes at a discount.

Depending on the person, sometimes large sums of cash are safer if you can't get access to it immediately.

Personally I'd go with the dirt, but I've made my living standing on it. Reply With Quote
Dec 10, 2019 | 15:58 8
Quote Originally Posted by rumrocks View Post
If you took the principle plus interest money, assuming you are borrowing some of the money, and bought 5 or 6 blue chips, reinvesting the dividends would you be better off.
I would probably consider stocks as well but you cant borrow to invest like you can to buy land.

I can put up a quarter and probably buy 2 or even 3 more. I cant do that with stocks. Would have to sell some of the land I have to buy stocks and I don't really think that's a great idea.

All we are talking about is servicing the mortgage for the next 20 yrs. My other cheaper land could possible subsidize a bit on the lower rents. After about 5 yrs or so rents shouldn't be falling a lot more and it should be self sustainable I would hope.
Last edited by jazz; Dec 10, 2019 at 16:01.
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SASKFARMER's Avatar Dec 10, 2019 | 16:16 9 The land was an investment for me when I was young and even my useless Banker at the time asked me why I would buy some much land and not rent a bunch.

Today he is long dead and gone but I think I did better than the Investments etc. Except that Apple one and maybe Tesla.


Point being each has to think about what will work best for them. Renting it all out now would give a great retirement income and kids would still get the land someday. Reply With Quote
Dec 10, 2019 | 16:30 10
Quote Originally Posted by SASKFARMER View Post
The land was an investment for me when I was young and even my useless Banker at the time asked me why I would buy some much land and not rent a bunch.

Today he is long dead and gone but I think I did better than the Investments etc. Except that Apple one and maybe Tesla.


Point being each has to think about what will work best for them. Renting it all out now would give a great retirement income and kids would still get the land someday.
And you can still live on your investment too. Plus the restrictions on ownership by non farmers.

Very unique asset class. Reply With Quote
Dec 10, 2019 | 17:51 11 My kids are quite young too, all under 10. I could take this on for them and by the time they are in early adulthood they could have a significant asset under their belt. Time is always a huge factor in getting ahead.

Wished I would have started buying younger than I did. I have owned in a couple different places and land has always treated me good. We could be toppy now and I guess thats a risk, but it would be no different if I bought them apartments or stocks, those can go down too. Reply With Quote
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  • Dec 10, 2019 | 18:01 12 I have seen quite a few lose there land all the while waiting for inflation to pay for it,some that had good off farm income did ok,some planed there bankrupsy before they even started only to buy back at 30 to 50 cents on the dollar,thanks to AFSC. I think they pluged that loophole now but there is probably a new scam in the works. Reply With Quote
    fjlip's Avatar Dec 10, 2019 | 18:12 13 Accountant says only use up your CG deductions selling stuff, after that best to sell/rent to kids, they can own as asset or sell and use their CG deduction, that is of course assuming F*CKING Liberals/NDP/GREENS don't change the rules. I am hearing CG going to 75% taxable from 50%. Last few years cash rent equals about 3% return. Some crop share landlords made a killing, 1/4 of $500/acre malt or canola.

    Old joke...guy sells farm, later asks an investment banker where to invest funds, banker says.... buy LAND!
    Last edited by fjlip; Dec 10, 2019 at 18:20.
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  • Dec 10, 2019 | 18:26 14
    Quote Originally Posted by Horse View Post
    I have seen quite a few lose there land all the while waiting for inflation to pay for it,some that had good off farm income did ok,some planed there bankrupsy before they even started only to buy back at 30 to 50 cents on the dollar,thanks to AFSC. I think they pluged that loophole now but there is probably a new scam in the works.
    Good point, buying land is similar to tuning engines and a successful honey moon, timing is everything. Reply With Quote
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  • Dec 10, 2019 | 23:41 15 I likely have Jazz mixed up with some other poster(s). He may never have said anything about investors and farmland, but it seems to be a common complaint on here, so I brought it up to stir the pot.

    The great part about capitalism, is that we are all free to work as hard as we want, and do what we want with the wealth we created, such as passing it on to the next generation. But, by passing it on to the next generation, we may be denying the opportunity for someone else who might have been willing to work even harder. Reply With Quote
    Dec 10, 2019 | 23:51 16 But back to your original question. We are almost certainly closer to a long term cyclical top, than a bottom right now. But currencies and politics will likely override that in the medium to long term, as the CAD drops, and separation becomes reality. Could be a lot of other investors trying to divest of their CAD into something with tangible value, and get a foothold in the west before it is too late. Reply With Quote
    farmaholic's Avatar Dec 11, 2019 | 00:51 17 So I too will stir the pot.

    I have zero sympathy for land investors who are only looking for somewhere to park their money or ride the parabolic appreciation of Sask land, which in my opinion is over. So if a tennant of land owned by this type of owner is looking to reduce their inputs.....i don't care if the rent on this land is the first place they do it.

    I also have very little sympathy for people who inherit the asset but chose not to farm in the first place, pay them less, I dont care.

    The guy I do have some sympathy for is the guy who slogged through a career of farming and is using his land rental as retirement income....that may be his only "pension".

    Here is another one I can't wrap my head around. 7 quarters sell beside me for about 2.1 million. Investor puts down a million and mortgages the rest.....1.1 million mortgage(1.1 million @ 5% for 20 years annual payments)....some quick loan calculator number crunching and this guy only needs about $80/acre rent from the tennant to effectively be making his mortgage payment!!!! How stupid. Farmers are tripping over each other AND themelves to farm this stuff! WHY? Reply With Quote

  • SASKFARMER's Avatar Dec 11, 2019 | 07:05 18 The investor it is all fine till the Tennant says **** you and quits paying the high rent. But it is also the time other idiots don't move in and try to farm.

    We have land beside me that maybe I should have bought years ago. It was high and the begining of the land climb.

    The first renter paid really good compared to others around. The guy from China was happy. Yea he has a home in Vancouver but phone him and he is back in China all the time.

    Got greedy and this summer the first guy was done and rent went up 20 an acre and the new guy will farm next year.

    Funny the new guy might be the last hurrah for the Chinese guy. I don't think he'll make it. The first renter had deep pockets the second HAHAHAAHHA no.

    Now if Errol is correct and Cash is king. So will be paid for the land. Even if it does like the 80s and drop from 182,000 to 65000. Yes, it did do that. So 308000 down to 110000 is still better than a stock thats worth a 1000 down to a penny stock.

    Cash is king but Canadian is not going to be worth anything more than toilet paper. Reply With Quote
    Dec 11, 2019 | 07:06 19
    Quote Originally Posted by farmaholic View Post
    So I too will stir the pot.

    I have zero sympathy for land investors who are only looking for somewhere to park their money or ride the parabolic appreciation of Sask land, which in my opinion is over. So if a tennant of land owned by this type of owner is looking to reduce their inputs.....i don't care if the rent on this land is the first place they do it.

    I also have very little sympathy for people who inherit the asset but chose not to farm in the first place, pay them less, I dont care.

    The guy I do have some sympathy for is the guy who slogged through a career of farming and is using his land rental as retirement income....that may be his only "pension".

    Here is another one I can't wrap my head around. 7 quarters sell beside me for about 2.1 million. Investor puts down a million and mortgages the rest.....1.1 million mortgage(1.1 million @ 5% for 20 years annual payments)....some quick loan calculator number crunching and this guy only needs about $80/acre rent from the tennant to effectively be making his mortgage payment!!!! How stupid. Farmers are tripping over each other AND themelves to farm this stuff! WHY?
    Friend of mine was over last night. Made an assessment on 400 acres that sold across the road from him. Came up with payments of 118 an acre. He shakes his head. I shudder.

    Farmers are our own worst enemy. Reply With Quote
    Dec 11, 2019 | 19:41 20 Plagued by a troubling question for the last year or so. I've asked numerous farmers from various age groups, younger chaps to those retired:

    "Do you think we will see a time when land will be a liability rather than an asset?"

    Usually a moment of silence.

    Then, the younger guys laugh and regard the Q as if it's a joke.

    Middle age chaps shrug and get back to work.

    The oldest guys look off into the distance for a bit and then look back with a look that says more than their words. They understand.

    Then I read Garth Turner -

    https://www.greaterfool.ca/2019/12/1...scis/#comments

    When the Marxists take over, they don't care if they take your cash, your cow or your land.

    It's all the same to them.

    The wealthy will be "punished" before too long, I'm quite certain.

    And we farmers/ranchers are the wealthy. Reply With Quote

  • farmaholic's Avatar Dec 11, 2019 | 19:47 21 Burnt,

    I think if the land is owned by the guy farming it, it will always be considered an asset....

    The guy who owns it but doesn't farm it might someday find himself "owning a liability". Reply With Quote

  • Dec 11, 2019 | 19:58 22
    Quote Originally Posted by burnt View Post
    And we farmers/ranchers are the wealthy.
    Thank god for the homestead act. Reply With Quote
    Dec 11, 2019 | 20:00 23
    Quote Originally Posted by farmaholic View Post
    Burnt,

    I think if the land is owned by the guy farming it, it will always be considered an asset....

    The guy who owns it but doesn't farm it might someday find himself "owning a liability".
    I really want to agree with you. (You know, great minds, good friends and all .... )

    But history tells me that I should be very cautious about doing that. Reply With Quote
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  • Dec 11, 2019 | 20:06 24
    Quote Originally Posted by jazz View Post
    Thank god for the homestead act.
    I don't know what the homestead act is.

    Because we have known nothing but prosperity, law and order in all of our living years, we expect that that is the norm and will continue.

    Therefore, I don't think any of us can fathom what a corrupt government is capable of visiting on its people.

    What we see on the news only happens on the other side of the world, you know, in countries like China or North Korea, those "basic dictatorships" that our Incompetent in Chief said he admires for their ability to get things done.... Reply With Quote

  • farmaholic's Avatar Dec 11, 2019 | 20:08 25 Ok then, the cycles of high and low land appreciation are long enough that investment timing could very well determine if you bought an asset or liability? Reply With Quote

  • Dec 11, 2019 | 20:17 26
    Quote Originally Posted by burnt View Post
    I don't know what the homestead act is.
    That is the most important piece of legislation ever enacted for rural folks.

    Nobody, not the govt, bank, UN, nobody can take that home quarter from you and your immediate family.

    The Homestead Act predates the indian treaties. Even they cant fk with that 160 acres including the mineral rights. If the trespass laws can be beefed up, every farmer basically a protected compound.

    In Europe, farmers have been regulated and taxed to death so much that some said fk it and just live in their yard now and produce just enough to take care of themselves. Get revenue from bogus green projects like wind and biomass, let some foreign BTO run themselves ragged trying to grow food for the world. Reply With Quote

  • Dec 11, 2019 | 20:17 27 Excellent question Burnt.

    My wife's maternal grandparents were considered "Kulaks" in Russia at the time of the revolution. Land and wealth were definitely a liability at that time. The act of owning land cost most owners their lives. Her family barely escaped with their lives. I need to ask how they managed to rejoin society in the end, I know they had to run away and go into hiding for a long time. Her father's people not much different.

    There are many among us who would love nothing more than to repeat that horrendous failed experiment all over again here in Canada. Reply With Quote
    Dec 11, 2019 | 20:23 28
    Quote Originally Posted by Sheepwheat View Post
    Friend of mine was over last night. Made an assessment on 400 acres that sold across the road from him. Came up with payments of 118 an acre. He shakes his head. I shudder.

    Farmers are our own worst enemy.
    How does that compare to rents in the area? I hear of rents not far east of here that are very close to that price already. And the renters have nothing to show for it in the end.

    Personally, I'll pay up to 2.5 times rent to eventually own the asset, and potentially benefit from appreciation or development, or lease revenue. Reply With Quote
    Dec 11, 2019 | 20:27 29
    Quote Originally Posted by AlbertaFarmer5 View Post
    ...The act of owning land cost most owners their lives...
    Seems like that would put one hella dent in the asset side of the ledger.

    We're not just taking about laws and land values here.

    Your wife and her parents would likely have an answer to the question. Not many old-timers left who could describe what happened back there. Reply With Quote
    Dec 11, 2019 | 20:36 30 Given the direction we are headed, not hard to envision a time when we have been regulated out of being able to farm the land in this country, but still responsible for maintaining it. Paying property taxes, restoring habitat, controlling noxious weeds, liability for trespassers.

    Look at how many are already calculating the costs to abandon and restore all oil and gas facilities and infrastructure, and who they expect to pay for it. As Jazz said in another thread, shutting down oil and gas is just the beginning. Reply With Quote