JAC THEELEN REALTY

Jac Theelen Realty

What should I pay for farm land?      June 20 2013

 

If you are considering to buy farm land and don't know if you should add this to your farm because of the current high value consider the following:

 

Can this land pay for itself buy total of net-crop returns + added income from rental home/oil revenue

Do I have enough equity for a down payment

Can the farm effort to pay down the debt over a reasonable time

 

When you say no the  first one, really what you do is subsidize that farm land with your additional holding.

This might be good if this is a rare opportunity, but economically it might be a bad investment.

 

Historically, land has going up, but with big fluctuations.

So make sure you can hang in there even when the income from your land drops, due to higher input cost or lower returns on crop.

 

Buy or not to buy, that's the question!

 

 

 

 

Jac,   What's going on with land prices?

 

The last little while, you see prices for farm land creeping up, and there seems to be no end to it.


Is this normal: I don't think so.


It has a lot to do with what is happening in the world economy.  It is a save haven for capital investment.

Those who have money in the bank, want to park it save, and options as the stock market, the bank, or others don't look that great.

 

We could see a revered thing happening, when prices get to high, and interest goes up.

This would immediately trigger a drop in prices as  investors want to get there money out.

 

My crystal ball is somewhat cloudy, but history could repeat itself (did it in 1980).

 

Farms and land are a great investment.

Anything along the corridor Hwy 2 Alberta is a great investment, but... when you buy on speculation, it's that, speculation.

 

For those interested, I feel that buying land or farms, is a great way of investing your money. Buy it for a reasonable price, don't over extent your financial possibilities, and listen to your inner voice.

 

Nobody can borrow themselves out of debt!

 

Vraag 't uw makelaar! / Ask it your agent!