PPP is the biggest winfall in american History. Millions and millions of additional profits.... and for many they were staying open anyway.
Some buddies of mine were all chatting land & a lot still reference the prices or “steals” of 1990’s & early 2000’s. Like any stock that went up like crazy “shoulda bought more!”
& I disagreed to a large extent that some of them lost their window to buy and find “good deals”....,
One thing that’s important to remember .... interest rates on land were 6-8% in that time frame. Compared with a lot lower now.
& that 6-8% is coming out of the 80’s crash that had double digit interest rates!!! So- if ur rate & then payment on land is 2-3% higher - that’s a HUGE deal!!! Made it much harder to buy! Plus commodities, crp, rental rates & ROI was also much lower during that time.
compared to other investments - land has not actually ballooned up to an “insane level”. Think of a stock u could have bought that was $5 and now it’s “$200” & some folks still think it’s a sensible buy... land did nothing like that.....
Let’s use the “7 year double your $ investment” for example.... “a good investment that doubles in value every 7 years” - that would be a very solid 10% increase each year. Very solid. With that model or rate....
Let’s say u bought rec land or combo hunting land in 2000 at $1,000 per acre....
2007: $2000 per acre value (at a 10% increase).
2014: $4,000 per acre value (at a 10% yearly increase)
2021: $8,000 per acre (at a 10% yearly increase)
*if u bought land for $1k per acre in 2000... most that land is not worth any bit close to $8k. Most of THAT land would be $3500-4500 now.
Can do same for high end tillable for
2000: it was about $3k an acre for extremely high end tillable. What happens if it went up 10% per year??
2007: $6k per acre on 10% return
2014: $12k per acre on 10% return.
2021: $24k per acre on a 10% return.
Is high end farm land selling for $24k? CLEARLY NO! Maybe $9-13k depending on where. So, a far lower increase in value vs other “great investments”. Bottom line on that, IMO - I personally feel like tillable or combo land at current rates is reasonably good investment. If it goes bananas a lot more- maybe not - unless inflation pushes past any price peaks. It’s not over priced and it’s not over valued like many other investments IMO... based on the last 21 years of results in growth.
2 wild cards...... interest rates locked in @ record lows now- that would be attractive to buy land. Inflation- locking in land now - if we have a major rise in inflation- sure like to see my $ in income/commodity producing assets. Im repeating self a bit but 2 important considerations.
2nd repeated bottom line, IMO- income type land or mixed with income, bought “reasonably priced” & locked in at lower rates is still a great opportunity. U didn’t “miss out” 20 years ago.
interesting times ahead!!!! Still wouldn’t want my $ to be in record high stock market built on a good bit of funny $ but that’s just me.
.
& I disagreed to a large extent that some of them lost their window to buy and find “good deals”....,
One thing that’s important to remember .... interest rates on land were 6-8% in that time frame. Compared with a lot lower now.
& that 6-8% is coming out of the 80’s crash that had double digit interest rates!!! So- if ur rate & then payment on land is 2-3% higher - that’s a HUGE deal!!! Made it much harder to buy! Plus commodities, crp, rental rates & ROI was also much lower during that time.
compared to other investments - land has not actually ballooned up to an “insane level”. Think of a stock u could have bought that was $5 and now it’s “$200” & some folks still think it’s a sensible buy... land did nothing like that.....
Let’s use the “7 year double your $ investment” for example.... “a good investment that doubles in value every 7 years” - that would be a very solid 10% increase each year. Very solid. With that model or rate....
Let’s say u bought rec land or combo hunting land in 2000 at $1,000 per acre....
2007: $2000 per acre value (at a 10% increase).
2014: $4,000 per acre value (at a 10% yearly increase)
2021: $8,000 per acre (at a 10% yearly increase)
*if u bought land for $1k per acre in 2000... most that land is not worth any bit close to $8k. Most of THAT land would be $3500-4500 now.
Can do same for high end tillable for
2000: it was about $3k an acre for extremely high end tillable. What happens if it went up 10% per year??
2007: $6k per acre on 10% return
2014: $12k per acre on 10% return.
2021: $24k per acre on a 10% return.
Is high end farm land selling for $24k? CLEARLY NO! Maybe $9-13k depending on where. So, a far lower increase in value vs other “great investments”. Bottom line on that, IMO - I personally feel like tillable or combo land at current rates is reasonably good investment. If it goes bananas a lot more- maybe not - unless inflation pushes past any price peaks. It’s not over priced and it’s not over valued like many other investments IMO... based on the last 21 years of results in growth.
2 wild cards...... interest rates locked in @ record lows now- that would be attractive to buy land. Inflation- locking in land now - if we have a major rise in inflation- sure like to see my $ in income/commodity producing assets. Im repeating self a bit but 2 important considerations.
2nd repeated bottom line, IMO- income type land or mixed with income, bought “reasonably priced” & locked in at lower rates is still a great opportunity. U didn’t “miss out” 20 years ago.
interesting times ahead!!!! Still wouldn’t want my $ to be in record high stock market built on a good bit of funny $ but that’s just me.
.
I looked at some discussions in history on here- stuff into the 2000’s. Interesting little “time capsules” of thought & prices....
iowawhitetail.com
Cwd & land values, was in 2012...
iowawhitetail.com
2010:
iowawhitetail.com
^^^^^yes, this knucklehead was still learning a lot. 11 years since then & just interesting how much knowledge or learning develops with seeing cycles & following all the dynamics long term. Learning never ends but it’s funny seeing stuff u wrote when younger.
2016:
iowawhitetail.com
Big farm for sale in 2011. Some Folks laughing at the price then. Interesting.
iowawhitetail.com
Property pricing
I have been looking at several different realtors for about a year now in SW Iowa, I live in Council Bluffs and most hunting properties for sale seem to start a $3500.00 an acre. I found that ISU extension office releases a farmland value twice a year and in my area they value timber at about...
iowawhitetail.com
Cwd & land values, was in 2012...
CWD and Land Prices
Something I have been wondering.......... With trophy deer hunting having driven land prices up in different parts of the state (mostly southern and NE) for land that would historically have been marginal pastureland at best, what happens if/when CWD becomes established in the herd? Do all the...
iowawhitetail.com
2010:
CSR and Land Value
I am looking at a farm to purchase and had a few questions for the farmers out there. 78 acres, 53 in CRP for one more year (one more $5300 payment coming this fall), asking $2740 an acre in eastern Iowa. Its been in CRP for 20 years and I was told by the assessors office it has an average CSR...
iowawhitetail.com
^^^^^yes, this knucklehead was still learning a lot. 11 years since then & just interesting how much knowledge or learning develops with seeing cycles & following all the dynamics long term. Learning never ends but it’s funny seeing stuff u wrote when younger.
2016:
Are WRP properties good investments?
What do you guys know about Wetland Reserve Programs? I have read and researched about them but I can't seem to find specific numbers for how much they pay with certain contracts.
iowawhitetail.com
Big farm for sale in 2011. Some Folks laughing at the price then. Interesting.
Jay Gregory's farm for sale
The 80 for 14k per acre had to be all tillable, correct?
iowawhitetail.com
So adding to above points, unlike stocks, land is leveraged. So thats how I analyze dollars.
Simple example.... buy 200k farm with 30% down. 60k investment. Assume holding costs are cost neutral with income. Farm goes to $260k in 7 years. Thats a 30% rise is value, but a 100% increase in your investment as your 60k has now doubled.
Simple example.... buy 200k farm with 30% down. 60k investment. Assume holding costs are cost neutral with income. Farm goes to $260k in 7 years. Thats a 30% rise is value, but a 100% increase in your investment as your 60k has now doubled.
Agree. & I know nothing is apples to apples. & agree on the gains actually higher. Without that at basic levels for example - with land, if other costs are kept low.... if ground is spitting out 3% after taxes (which most farms run the huge range of 1-4%, more on some occasion. Less on some occasion)..... if ur interest rate is 4% for example - u r only out of pocket 1% per year and that’s even tax deductible. U r also out payment EQUITY after that (paying down principle though).
so- if u had a farm like that - if it appreciated 1% per year- u would be “breaking even” if u wanted to look at it like that.
No matter how u slice or dice it.... the folks that stuck through the tough times of mid to late 80’s.... those folks that did get their farms paid off in “20 years”. Those folks are sitting great. And folks who start NOW & have their farms paid off in “20 years” - be sitting good then as well. 20 years is a long time but if u like it - not a bad way to spend it. & 20 years is way faster than guys in 20’s preparing for retirement at 65 or whatever. Which thank goodness- I ain’t ever thinking of retirement cause I love farm stuff.
20 year paid off farms for the average guy who enjoys it- IMO- smart move or better move vs many other plans & options out there.
Spot on above with gains on 100% of the asset if a guy put 30% down.
so- if u had a farm like that - if it appreciated 1% per year- u would be “breaking even” if u wanted to look at it like that.
No matter how u slice or dice it.... the folks that stuck through the tough times of mid to late 80’s.... those folks that did get their farms paid off in “20 years”. Those folks are sitting great. And folks who start NOW & have their farms paid off in “20 years” - be sitting good then as well. 20 years is a long time but if u like it - not a bad way to spend it. & 20 years is way faster than guys in 20’s preparing for retirement at 65 or whatever. Which thank goodness- I ain’t ever thinking of retirement cause I love farm stuff.
20 year paid off farms for the average guy who enjoys it- IMO- smart move or better move vs many other plans & options out there.
Spot on above with gains on 100% of the asset if a guy put 30% down.
interesting article on land cycles. Some applies, some doesn’t. Clearly it’s meant to be a bit basic but still worth a read. Read the #1 through #5 bullet points of the cycle they are referencing.
www.propertygeek.net
Understanding the 18-year property cycle | Property Geek
The 18-year property cycle is the most powerful concept you can know about as a property investor – and once you understand it, EVERYTHING makes more sense.
www.propertygeek.net
Hardwood11
It is going to be a good fall!
The bank gets interest, but the landowner/investor gets the income and the appreciation. That’s powerful over time.
sep0667
Land of the Whitetail
Where do you think we are in the cycle? I would think if we are not at the start of 4 then why are at the tail end of 3.interesting article on land cycles. Some applies, some doesn’t. Clearly it’s meant to be a bit basic but still worth a read. Read the #1 through #5 bullet points of the cycle they are referencing.
Understanding the 18-year property cycle | Property Geek
The 18-year property cycle is the most powerful concept you can know about as a property investor – and once you understand it, EVERYTHING makes more sense.
interesting article on land cycles. Some applies, some doesn’t. Clearly it’s meant to be a bit basic but still worth a read. Read the #1 through #5 bullet points of the cycle they are referencing.
Understanding the 18-year property cycle | Property Geek
The 18-year property cycle is the most powerful concept you can know about as a property investor – and once you understand it, EVERYTHING makes more sense.
Interesting article. I'd say we are firmly in the explosive phase on rec ground, at least in the midwest. Many don't even get listed before they are sold.
The question is how will rec farms be affected during the recession stage? They did not go down in North MO when everything went pear shaped in 2007 ish, more like sideways. What did you guys see? I bought a farm in North MO in 2008 and sold it in 2012 for a few hundred/acre more than I paid and rolled it into another. The new farm has appreciated nicely then literally exploded in the last few months.
I'm glad I got in when I did.
Hardwood11
It is going to be a good fall!
It’s hard to understand this cycle as we’ve never had a time where so much government money has been floating around.
Smart guys/long term investors that I know, are not even sure where this goes?
Smart guys/long term investors that I know, are not even sure where this goes?
No one knows for sure. Printing money leads to long term major inflation and higher interest rates. Inflation raises property prices, higher interest decreases it. Do they offset? So many questions. I have some pieces I have considered selling but its a very hard call. Things could continue to rise and miss out on gains and with so little inventory getting stuck on the sideline is a concern.
One dynamic I really am strong in my opinion is the land ownership related to hunting access. ie.... it is going to be harder and harder to get quality access if you do not own the ground. That's just the reality of where I think things are headed long term. There are lots of reasons as to why that could fill multiple pages. So there are all sorts of considerations beyond what may make sense financially related to quality access for myself, family, and my kids.
BJohnson
Well-Known Member
My financial advisor (me) is recommending to sell - my mental health counselor (also me) is recommending we keep the land for my long term sanity (due to an ever increasing shit-show called the USA). So far my mental health counselor is winning the debate in my head.
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Exactly! Haha that's great
scottonbuck
Well-Known Member
Brent,
Do you, your financial advisor, and your mental health counselor ever sit down and discuss these things? Id like to watch these conversations.
Reminds me of that old Poem. "Roses are Red, Violets are Blue. I'm schizophrenic and so am I".
BJohnson
Well-Known Member
James,
Most often these "conversations" take place when walking the dog so no humans are around to witness the mental carnage. However, every once in awhile even the dog looks back and gives me one of those "what the hell is wrong with you" looks...………...
madplotter
PMA Member
Since I finally got my password reset, I missed this thread back in March.
A couple of my personal thoughts...
1. The US population in 1990 was 250M in 2020 is was 331M. The amount of land is not increasing.
2. These hunting "reality" companies are sharp. They are well financed speculators and they understand land value and income potential. These guys miss nothing and they have the ability to get the word to many clients in a matter of minutes thanks to technology.
Case in point, a friend was promised a crack at his grandmothers farm, which was surrounded by wealthy NRLOs. A known CRP contractor knocked on her door with a lucrative CRP maintenance contract to manage the CRP for a reasonable price. At that time I told him that contractor was connected to a well known "reality" firm and that land is as good as gone. Sure enough, 18 months later she told him he had to remove all his stands and blinds as the new land owner was taking possession in 4 months. I'm certainly not insinuating any wrong doing but rather offering my opinion that the game has changed and these speculators have moved themselves into the mix as middlemen. I had a person known for buying and selling tell me once that when you develop an emotional attachment to the dirt, you'll never make money. It's too late for me, i'm attached...
I have accepted that I will never sell my land willfully. That said, if we continue down this rathole of "progressive/liberal" or whatever we want to call these garbage economics theories and thought processes, we may be forced to sell out due to property taxes and big insurance. There is a sense of pride and accomplishment in owning dirt that cannot be replicated and I hope all young folks on here get that opportunity.
A couple of my personal thoughts...
1. The US population in 1990 was 250M in 2020 is was 331M. The amount of land is not increasing.
2. These hunting "reality" companies are sharp. They are well financed speculators and they understand land value and income potential. These guys miss nothing and they have the ability to get the word to many clients in a matter of minutes thanks to technology.
Case in point, a friend was promised a crack at his grandmothers farm, which was surrounded by wealthy NRLOs. A known CRP contractor knocked on her door with a lucrative CRP maintenance contract to manage the CRP for a reasonable price. At that time I told him that contractor was connected to a well known "reality" firm and that land is as good as gone. Sure enough, 18 months later she told him he had to remove all his stands and blinds as the new land owner was taking possession in 4 months. I'm certainly not insinuating any wrong doing but rather offering my opinion that the game has changed and these speculators have moved themselves into the mix as middlemen. I had a person known for buying and selling tell me once that when you develop an emotional attachment to the dirt, you'll never make money. It's too late for me, i'm attached...
I have accepted that I will never sell my land willfully. That said, if we continue down this rathole of "progressive/liberal" or whatever we want to call these garbage economics theories and thought processes, we may be forced to sell out due to property taxes and big insurance. There is a sense of pride and accomplishment in owning dirt that cannot be replicated and I hope all young folks on here get that opportunity.
deep woods goat hunter
PMA Member
madplotter
PMA Member
I am one of the fortunate ones, we were able to secure our land several years ago.