Land prices / insane!!!
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daniel93077
Active Member
Stock market just hit all time highs. They aren't backing out. Land is typically a non-correlated asset to the stock market so the super rich use farmland as a diversifier. The stock market is the greatest wealth generating machine of all time and still will be 100 years from now...but the ride might be bumpy.
theDoorman
Member
This is crazy talk. Still will be 100 years from now?
Windlooker
Well-Known Member
I’m not super rich. I have money in the market, land and other places. It’s simply smart to diversify regardless of income level. I read the last two days or so on this thread and see a lot of “noise”. Stop over thinking and buy land when you can. You will not lose money, however, it’s a long term type of investment. Those always waiting for the right time will never own anything.
All I have to say is I’ve heard people say this that have no place buying ground! Good investment or not, if you can’t cash flow it and can’t make payments. It’s not a good investment. Just because the neighbor paid the same price a month ago. Doesn’t mean it will work for everyone!!
Anyone that backed out of the not safe stock market lost out on a 20 - 30% return over the last year.
Has anyone factored in interest expense to the land return? I have…. I own land, I am putting myself in position to buy more but 7%+ interest, current land prices and commodity prices are concerning and not everyone is financially able to purchase rec ground. The days of picking up a second job after work and eating beans and rice a few days a week aren’t going to cut it like it used to.
Hardwood11
It is going to be a good fall!
I’d predict a 10-15% correction in the stock market soon. Even Warren Buffett made a few hints that the market is due for a change.
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daniel93077
Active Member
Absolutely….but then, I’m personally a big believer in human ingenuity, America, and the power of capitalism.
Bottom line I believe the population will be larger (barring something catastrophic) people will still be buying and selling goods, advances in technology will make things more efficient and profit margins higher, there will be new industries, there will be companies that don’t exist today that will find themselves among the largest businesses in America. No matter what regulations get in the way people will find a way to make legitimate profits.
Being successful in land investment is largely dependent on the above being true. If it’s not true then rule of law and property rights probably won’t be secure.
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daniel93077
Active Member
I do 100% agree with what you say about long-term investment, I also agree with it being smart to diversify. I actually don’t believe in market timing for a diversified, long-term portfolio. Price still matters in this case but not quite as much.
Unless you are buying the land to hold for 20+ years I see a land purchase as different. Unless someone is super rich a land purchase is typically a substantial concentrated risk relative to one’s entire net-worth. It’s for this reason price matters more (unless the goal is to hold the piece long-term). I think most first time recreational land buyers hope to start small and move into bigger pieces over time.
In 2006 I was living in Las Vegas and the residential housing market was on fire. I had close friends in the Real Estate market (legit experts with 20+ years in the market…real estate executives) encouraging me to buy the absolute biggest house I could afford. If I had FOMO I would have bought. I proceeded with caution because the market just felt overheated and when I finally bought I picked up a house at half-price from when they encouraged me to buy.
It was still the biggest purchase of my life at the time and scary but it felt reasonable…actually felt like a bargain to be more accurate. My life is immeasurably better today because of just that one decision. Waiting for something that felt right didn’t mean I was never going to buy a house.
I have seen periods in my life where farms felt like a reasonable deal but I wasn’t in a position to purchase at that moment. Today, they don’t feel reasonable as a whole. I’m convinced I will find one that will at some point…even if the market doesn’t come down.
Realistically, if one is diligently saving for land and could make a land payment their cash pile should only be growing larger and larger through capital gains, interest and savings so I guess if land prices just keep growing one could just purchase cash, make a large down payment, or buy more than they could today.
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daniel93077
Active Member
For those of us still in the accumulation phase of our lives we can only hope that will happen. For those in decumulation, they should be fine with the proper asset allocation.
Hardwood11
It is going to be a good fall!
I never look at a drop in the market as negative! Good time to buy more!
Jerry Gille
Member
There are some of us that do not look at land ownership as an investment. It is a place to recreate and enjoy - to leave to children so they can recreate or sell. ROI has never factored in to my decisions and in fact, I have always done everything possible to not make money off of land. I invest in the stock market and through other means. I own land for other reasons. Granted, most people will never own a ton of land with this mindset but there might be more of us then you think out there.
I bought my first place in 2005 or 06 - can't remember for sure. The days or "not eating out" and "living frugal" to buy land where I live are a thing of the past mostly. An 80 acre rec tract at $6500 an acre is a crap-ton of replacing Jimmy John's sandwiches with PBJ's everyday at work. That math doesn't work anymore. You either have the income or not nowadays in my opinion. Sure, not buying a $60k truck every 7 years helps but most of us have families to support and ain't buying them new trucks anyway. I ain't never gonna own a ton of land and and sit buy watching my kids go into huge debt to go to college as an example. It's all a balancing act and land comes last and with whatever is left. Some have different priorities and some have more left at the end than others.
This market absolutely sucks for buying additional rec ground. That won't stop me in the least from buying something I might want and can afford. It's way closer to buying a toy than an investment for me. But I also won't do it if I can't afford it - period.
I bought my first place in 2005 or 06 - can't remember for sure. The days or "not eating out" and "living frugal" to buy land where I live are a thing of the past mostly. An 80 acre rec tract at $6500 an acre is a crap-ton of replacing Jimmy John's sandwiches with PBJ's everyday at work. That math doesn't work anymore. You either have the income or not nowadays in my opinion. Sure, not buying a $60k truck every 7 years helps but most of us have families to support and ain't buying them new trucks anyway. I ain't never gonna own a ton of land and and sit buy watching my kids go into huge debt to go to college as an example. It's all a balancing act and land comes last and with whatever is left. Some have different priorities and some have more left at the end than others.
This market absolutely sucks for buying additional rec ground. That won't stop me in the least from buying something I might want and can afford. It's way closer to buying a toy than an investment for me. But I also won't do it if I can't afford it - period.
Thinkin Rut
PMA Member
No one has mentioned the element of time. Not only do you have to sacrifice all the unneeded luxuries, save it and invest it, you have to let it cook, maybe even as long as 20 or 30 years. Religiously. It's no ones God given right to own land. You really do have to pay your dues. Unfortunately, land is not the vehicle to get you where you need to go. You don't retire then work your remaining years nor do you borrow a ton of money on Rec ground only to sell your dream so you can retire or worse, pay for your long term care. You'll get there, some sooner than others and some not at all.
jflournoy
Active Member
Yep, no different than Californian's moving to the Rockies states and Texas and buying houses and land that seem "cheap" for their income and what they were used to in California.
Windlooker
Well-Known Member
I’m originally from PA. Rec ground prices have never been 10k. In the county I’m from it’s presently 3k maybe , with many tracts less. There’s no 2 for 1.
What drove your(our) numbers are the resident Iowa video stars that reached out nationally. Of course guys from the rest of the country want to hunt / own in the best state. Blame our own.
What drove your(our) numbers are the resident Iowa video stars that reached out nationally. Of course guys from the rest of the country want to hunt / own in the best state. Blame our own.
CottonwoodCanyon
Active Member
Agreed, and it's coming for KS next
Back to Iowa, I just don't see a huge correction coming unless something unforeseen happens. We were looking forward to an upcoming auction and found out today that the auction was cancelled because multiple people came in with cash offers above what the seller wanted out of the auction and he penned a contract. The demand is still outpacing the supply in Iowa, by a lot.
deerdown
Well-Known Member
Same thing happened recently on some ground on the Ia/Mo border that was to be auctioned. There was 174a on Mo side and 100a on the Ia side. Sold pre-auction Maybe the same auction you are referring to.. Auction was supposed to be tomorrow if I recall correctly.
Hardwood11
It is going to be a good fall!
I know there are guys flying in to see properties in Iowa & Missouri so the hot market is not over yet !
However, I’ve seen some rougher farms, steep tillable ground, like an old pasture mix, sitting on the market and not getting offers .
However, I’ve seen some rougher farms, steep tillable ground, like an old pasture mix, sitting on the market and not getting offers .
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letemgrow
PMA Member
CottonwoodCanyon
Active Member
I guess I assumed (dangerous, I know) they were cash offers for the seller to take instead of going through with the auction but I can't confirm that.