Adding Land to Your Investment Portfolio

Adding Land to Your Portfolio

I often hear people talk about what a great investment land is for numerous different reasons. When you consider appreciation, tax benefits, income from farming and/or hunting leases, Government programs like as CRP or the value of simply having a place where you can spend quality time with your family, buying land can be a solid investment vehicle.

APPRECIATION: Supply and demand are major components of appreciation. The thing about land is that we can’t make any more of it so as populations continue to grow the value of land increases. In rural settings where crops are produced on the land the demand becomes even higher since growing populations require more food to be produced.  More recently, demand for land has increased because people from urban areas want to find a place away from their daily lives where they can retreat to relax or spend time hunting, riding horses or just enjoying the peace and tranquility of nature.  Because land is a finite commodity the demand for land will always be increasing.

INCOME:  Annual income from farming leases, hunting leases, pasture rentals and Government conservation programs provide landowners with the potential for multiple income streams on rural properties.  I regularly talk with potential land buyers who are either completely unaware of these revenue streams or who are unfamiliar enough with them that they hardly factor into their decision to make an investment in rural land.  Wildlife Properties assists landowners with realizing and capitalizing on these revenue streams.  A well thought out and well managed tract of land can typically cover your annual expenses such as property taxes and hired management and in some cases the revenue streams can provide a landowner with a nice annual return on their slice of paradise.

LAND vs STOCKS:  Stocks and other mainstream investment vehicles are easy to buy and sell and they are easy to watch go up and down.  Publicly traded companies are required to distribute quarterly reports and there are a number of rating agencies and analyst out there to tell you how good or bad an investment is.  Land on the other hand is more difficult to research from a financial standpoint so the tendency for investors is to take the “low hanging fruit” when it comes to investing. According to the University of Pennsylvania’s Wharton School, stocks show an average gain of seven percent a year when the data are controlled for inflation. This average works when looking at hundreds of stocks over many years but how many of us really have the time and resources to capitalize on a spread of investments to get that kind of return.  Farmland values on the other hand have increased an average of 13.5 percent from 1998 to 2007. For my money, I would rather invest in land to achieve my personal financial goals while at the same time; I now have that retreat which I can physically enjoy with my friends and family.  Can you take your son your daughter out for a weekend retreat on your shares of Wal-Mart stock?

FAMILY VALUES: People rarely think about an investment in land as an investment in family values.  What I mean by that is when you have a rural property and you head out for that weekend hunting trip with your brother or your kids, you are taking time out of you busy schedule to relax and enjoy the company of those around you.  It’s so easy these days to get caught up in work, extra-curricular activities, video games, television and everything else that distracts us from spending time with those people that we really need to spend time with.  I make it a point to ask outdoor enthusiast what it is they enjoy about their passion and in almost every response they tell me it’s the “time” they get to spend with their friends and family and the escape from their hectic lives that keeps them doing it year after year.  That response alone makes me feel good about connecting people with properties.

About the Author: Nick Rhodes is the President and Co-Founder of WILDLIFE PROPERTIES as well as a weekly contributor on The Revolution where he provides advice and information on habitat improvements and real estate topics. Nick is a licensed real estate broker in Kansas as well as a member of the Quality Deer Management Association and Quail Forever Habitat organization.

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