Returns on rural land

[fritz423]

Responses seemed to have diverged into two categories: "Is rural land a good invest" or "Can you survive on rural land after SHTF". Here's my 2c:

You can make a small fortune ranching, if you start with a large one.

Read the accounts of the German settlers in Texas around 1850ish. They thought they were going to live off the land too, but left a trail of corpses from the gulf coast to Fredericksburg..

I have been raising cattle in Texas for 20 years.

[RAE]

Quote:

Originally Posted by brewer12345 So there is a limit to what you can do to hedge the truly awful scenarios. If this stuff worries you, make what preparations you can without becoming financially burdensome or changing your lifestyle, but also make your peace with the idea that in many of these ugly situations you will not be around very long. And I say that as someone whose hobbies are really just a collection of post apocalyptic survival skills: hunting, gardening, foraging, camping, fishing, hiking, trapping, candle/soap/beer making, etc.

Yes, I agree. And we enjoy all of the pursuits you mention also - not so that we can survive the apocalypse, but because we want to maintain a direct connection to the land and the resources it provides. We find the lifestyle to be very rewarding and satisfying, in many ways.


Sorry if I hijacked the thread.......

[meierlde]

Quote:

Originally Posted by RAE Yes, I agree. And we enjoy all of the pursuits you mention also - not so that we can survive the apocalypse, but because we want to maintain a direct connection to the land and the resources it provides. We find the lifestyle to be very rewarding and satisfying, in many ways. Sorry if I hijacked the thread.......

In particular if you have a chronic conditions, and after the event medicine is non existant, how long you would last is unclear.

[daylatedollarshort]

One consideration for investing in rural land would be are hydroponic farming in warehouses and lab grown meat the next big things?

World's Largest Indoor Farm-
https://www.afoodieworld.com/foodie/...st-indoor-farm

Kimbal Musk's Container Farm -

https://www.youtube.com/watch?v=VxRNoSSkLkE

A big disaster would have to be worldwide for people with means to not be able to invest internationally and just pack up and move to a different country.

[brewer12345]

Quote:

Originally Posted by meierlde In particular if you have a chronic conditions, and after the event medicine is non existant, how long you would last is unclear.

On the contrary, it is quite clear: not long at all.

[audreyh1]

I’m not interested in prepping for the kind of survivalist scenarios that require hoarding food and ammunition or making a living off the land. If things go to hell like that - we’ll just have to live by our wits and I’m sure we’ll have plenty of company. We’re too old now to care.

Quote:

Originally Posted by Texas Proud Also, if it gets so bad that I would have to scrounge for food etc. and it is an all out downfall of society I might as well just pack it up and die... I have lived a decent life and am not young where I could do what is necessary...

Exactly!

[audreyh1]

Quote:

Originally Posted by brewer12345 Unless you are extremely prescient on timing or location, I suspect raw land will at most offer you an inflation type return. As a lifestyle choice or disaster hedge, I suppose it could make sense but your aims in what the land has might be different than what makes a good investment. As for SHTF considerations, it is best to be realistic. No man is an island. If we are talking about, say, a pandemic, unless you are not in contact with many people from day to day your are fooling yourself thinking you could successfully bug out, etc. If that happens, I will simply fill every container I own with potable water and hole up for as long as I can. I live at the edge of what has become a major metro area, so that is unlikely to be for very long before the breakdown of law and order causes problems. If an EMP knocks out the grid, well, I would hang on as long as possible at the house, but ultimately we would see a lot of violence via desperate people and a large die-off. So there is a limit to what you can do to hedge the truly awful scenarios. If this stuff worries you, make what preparations you can without becoming financially burdensome or changing your lifestyle, but also make your peace with the idea that in many of these ugly situations you will not be around very long. And I say that as someone whose hobbies are really just a collection of post apocalyptic survival skills: hunting, gardening, foraging, camping, fishing, hiking, trapping, candle/soap/beer making, etc.

Totally! And my survivalist skills are extremely rusty, and I don’t intend to retrain at this point.

[audreyh1]

Quote:

Originally Posted by Newventurer BTW - people that scoff at the thought of SHTF scenarios do not recall the mood in 2008 when the Money Markets almost ‘broke a buck’ as well as everything else going to hell, it felt like we could have been weeks away from martial law in normally very civilized neighborhoods.

Huh? Did not experience this at all.

[googily]

Quote:

Originally Posted by meierlde In particular if you have a chronic conditions, and after the event medicine is non existant, how long you would last is unclear.

I don't yet have such a condition, but I am instead hoarding the sort of medications that would allow for a quick end if/when my interest in sticking around in a SHTF scenario wanes.

Though, if the SHTF scenario is a nuclear attack, I live smack dab in the middle of one of the likeliest targets, so I'll just never know what hit me and instead leave y'all to go Mad Max. [emoji16]

[racy]

Quote:

Originally Posted by mrWinter ....My question is about how such rural and/or agricultural land performs as an asset class. ... Do rural properties tend to appreciate as well as urban and suburban properties?...

My family has farmed in Nebraska for over 100 years. It's currently pivot irrigated and produces corn and soy beans. I left the farm for my career but have been privy to the financials since my parents retired from farming and hired a farm manager about 5 years ago.

So, some numbers:
The value of the farm did not change for between 2013 and 2016, but decreased 2.5% in 2017. Net cash flow, after mgmt fee and property taxes, as a percent of land value averaged a little over 2%.

[brewer12345]

Quote:

Originally Posted by googily I don't yet have such a condition, but I am instead hoarding the sort of medications that would allow for a quick end if/when my interest in sticking around in a SHTF scenario wanes. Though, if the SHTF scenario is a nuclear attack, I live smack dab in the middle of one of the likeliest targets, so I'll just never know what hit me and instead leave y'all to go Mad Max. [emoji16]

Yeah, the Palmer divide is between me and Cheyenne Mountain, but I would guess that it would make little difference if the bombs fall. If that didn't do it, communicable disease, lack of clean water, violence from desperate people, etc. would do it. You pays your money and you takes your chances.

[brewer12345]

Quote:

Originally Posted by racy My family has farmed in Nebraska for over 100 years. It's currently pivot irrigated and produces corn and soy beans. I left the farm for my career but have been privy to the financials since my parents retired from farming and hired a farm manager about 5 years ago. So, some numbers: The value of the farm did not change for between 2013 and 2016, but decreased 2.5% in 2017. Net cash flow, after mgmt fee and property taxes, as a percent of land value averaged a little over 2%.

Out of curiosity, how much did the manager charge as a percentage of the property value? Corn and beans are highly cyclical like most farming, so if you don't catch the really good years it can be hard to survive the bad ones.

[omni550]

Quote:

Originally Posted by googily I don't yet have such a condition, but I am instead hoarding the sort of medications that would allow for a quick end if/when my interest in sticking around in a SHTF scenario wanes.

Not having researched this...but wouldn't something simple like rat poison be effective and easier to amass than hoarding life-ending meds?

omni

[luckydude]

A bit late to the discussion but here’s my 2 cents.

Acquired 1,500 acres spread across 10+ properties over the last 10 years 1 hour’s drive north of major metro area in a “very big” state in the South. Properties leased out for cattle ranching, farming, etc. Have also explored other uses such as wind farms, oil/gas exploration (where mineral rights exist), CRP enrollment, with mixed success. Said state has ag exemption so property tax is close to nil. Overall net around 1% return in the form of rental income on capital (i.e. land value) annually. Properties are in the path of growth as the said metro area continues to sprawl northward, with the closest suburb now 15 miles away.

Original investment objective was land banking with a long investment horizon of 30-40 years with the expectation that land would eventually be sold for development by heirs. Strategy has panned out thus far with per acre price doubling to tripling on average.

In my view there are three types of rural land investment:

1. Pure farming/forestry land with no development potential; this only makes sense if one has economy of scale, the financials and management/technical expertise.

2. Recreational land (often in remote locations) with no development potential and no visible means of monetizing the land; examples are hunting properties; note that it’s possible to lease hunting land out but game management expertise is required and it’s often not worth the trouble. In general properties in this category are cash flow negative.

3. Land with development potential; IMO this is the best type of land investment, although the holding cost may be substantial (depending on investment horizon, cost of purchase/finance, and whether property can generate income in the meantime).

I also have a property that falls into #2. Bought the small parcel (only 16 acres) a couple of decades ago on a whim and for a song, and after all this time, it’s still worth only a song. Been trying to sell it for 3 years now and no takers.

Bottom line is what one buys depends on one’s investment objective. I personally would only invest in #3.

Lucky Dude

[racy]

Quote:

Originally Posted by brewer12345 Out of curiosity, how much did the manager charge as a percentage of the property value?....

0.3% as a percent of farm value.
What they actually do is base it on a percentage of cash rent: 8%