Is land in your investment portfolio?

[ctom87]

I am curious to see how many folks have land they own where at least one purpose is an investment to sell later on. Sure, you are probably hunting it or enjoying it somehow, but if you consider it an investment as part of an overall strategy, I have a few questions...

How much did you put down %-wise? Is there a number where you gain a benefit like 20% on a home saves you from PMI?

If you and hunting it also, how much was or is enough that you are content with?

How far away is it, and do you regret it wasn't closer? Would you use it more if it were closer?

What are the cons?

What is typically the best interest rate you can get on land that is not making any income or a homestead?

What are ways you can earn $ if your not living there?

What is required to keep an exemption?


We leased 50 acres last year and 50 ended up seeming small after the end of the season. Any minimum acreage you recommend?

Any other advice or recommendation? Tips?

Lots of questions, I know... but it is something I would like to consider. At the least, I think my kid and I would enjoy it.

[Johnny_Dodson]

All land is an investment whether you plan on holding it short term or long term. No pmi to worry about but land bank usually wants 20% down. Go land bank on land deal, with patronage pay back no one beats them. Our land is an hour away and wouldn’t want it much further than that as I can zip down anytime and make it back before the wife knows I left . As far as making land pay for itself good luck, outside of getting luck and having oil found your land isn’t going to really pay for itself especially as high as it’s going. That said we have section and I wouldn’t go back to leasing land. Love the freedom to do what I want, and never worry about getting kicked off. Deer improve cause we pass on your bucks and we added a pond so fishing a couple hundred yards off the back porch.
Couple years ago we refinanced the land and built a nice barndo which really made the land worth it.


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[Fooser]

Just locked in a few weeks ago at 4.6% w/ 1% patronage paid back yearly with Louisiana Land Bank. 25% down on timber/rec land. No one else was even close.

[ctom87]

I should preface the money making factor with i don't know much of anything about working the land or how to make it work for you. A few ideas...if say 30% is open field could it be turned into hay? At least something like that there is some income, although I agree not necessarily looking for it to pay for itself. Thanks for the advice folks keep it coming.

[jaspermac]

It may just be me but it’s hard to think of buying a big tract to hunt and financing it and considering it an investment. Will the value go up, probably so. Do you borrow money to buy stocks? Probably not. If it was something to buy and do some quick improvements to and sell, that would be an investment to me.

I found a place I really wanted to buy but it was 7 hrs away and my note would me $1200 a month for 30 years at 4% and I would only go there 8-10 times a year and the more I looked at it the more I realized I need to finance less money or go there more to justify buying

[BURTONboy]

My wife and I just sold our place and bought another, much larger tract, that we plan to build on. I look at land as an investment in the future. We got what we think was a great deal, and improving it will only make that deal seem much better. In the future, if we decide to sell, I think we’ll do pretty good in our returns. If not, our boys will have something to own. Land is going up, and places are being broke up, so if you can afford to buy a bigger place, loan or not, you stand to make money in the future. Buy/sell enough for profit and you will eventually be able to pay cash for a place.


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[Smoore12]

We own 26 acres an hour away. Purchased before pandemic. We had a chance to sell it for 50% more for what we had purchased for just a year prior. We chose to stick with it and pay it off as we love owning land. I do consider it an investment for retirement, 30 years from now I should be able to either build a cabin and retire on it, or sell it for much more than I purchased it for to help with other plans. Buy dirt, guys. May be hard to find it when retirement comes creeping.

[RiverRat1]

If financing you'll only "make" money in the very long run. Investing in markets have always had much better returns.

But I bought as a combo. Investment plus I don't trust Wall Street crooks. Sure if they implode we are all screwed but at least I'll have land.

Ways to make money depend on the land. Cattle lease could pay yearly taxes. AirBnB? Sell a few hunts to get back deer feed bill money. IMO there's zero chance to actually make money but possible (without financing) to break even and enjoy rising land prices over the years. Won't be cash until you sold but at least in your head you enjoy it.

[KactusKiller]

While I agree with some above ask any wealthy individual and every one of them will say borrowing money is how you become wealthy. Dave Ramsey is only wealthy because people pay for his advice and buy his books. The people he helps are still living paycheck to paycheck most of the time.
Now to clarify borrowing money to buy things like boats, vehicles, atv etc is not what I’m talking about(Ramsey is correct on this part) Borrowing money for investment type transactions is how you build wealth. But it has to be for investments, not because I want it or the hunting will be good. If your truly looking for investment reasons #1 factor needs to be location, location, location. There is a reason that the closer you are to metro areas the higher the value even if that isn’t as nice as other parts of the state. If your doing it for investment it’s a tough time to buy for that because the market is inflated on the price side but from everything I have read the prices WILL NOT go down. The rate of growth may stabilize but raw land prices will not crash say what could and has happened in the past with home prices. The market will stay hot as long as the interest rates stay low, it’s too easy to spend the banks money right now which is why IF you can find the right place at a good price then it’s still a good long term investment if your buying in the right location.

As far as being income producing, unless you already have the equipment farming/ranching will not be a real income producer unless your buying say 100+acres and even then you not going to make a living of it but just help keep the taxes low and pay the taxes.

As far as hunting you could do it on 30acres if all your neighbors are bigger and it’s a game rich location. But that all depends on the area your in and what your expectations are.

Last if your truly looking for an “investment” and hunting don’t buy one of these 10-40 acre ranchettes where they have taken a 200acre ranch and split it up in to 10-20 plots. You won’t be happy in the middle of them for hunting and the person that split it made majority of the profit already, future growth in that situation will be limited I believe.

Do some research and don’t settle.

[camoclad]

^good post. Truth

[camoclad]

And..... lands fun

[ctom87]

Great information. I appreciate everyone responding!

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[Darton]

Absolutely! A lot of it

[Darton]

While I agree with some above ask any wealthy individual and every one of them will say borrowing money is how you become wealthy. Dave Ramsey is only wealthy because people pay for his advice and buy his books. The people he helps are still living paycheck to paycheck most of the time.
Now to clarify borrowing money to buy things like boats, vehicles, atv etc is not what I’m talking about(Ramsey is correct on this part) Borrowing money for investment type transactions is how you build wealth. But it has to be for investments, not because I want it or the hunting will be good. If your truly looking for investment reasons #1 factor needs to be location, location, location. There is a reason that the closer you are to metro areas the higher the value even if that isn’t as nice as other parts of the state. If your doing it for investment it’s a tough time to buy for that because the market is inflated on the price side but from everything I have read the prices WILL NOT go down. The rate of growth may stabilize but raw land prices will not crash say what could and has happened in the past with home prices. The market will stay hot as long as the interest rates stay low, it’s too easy to spend the banks money right now which is why IF you can find the right place at a good price then it’s still a good long term investment if your buying in the right location.

As far as being income producing, unless you already have the equipment farming/ranching will not be a real income producer unless your buying say 100+acres and even then you not going to make a living of it but just help keep the taxes low and pay the taxes.

As far as hunting you could do it on 30acres if all your neighbors are bigger and it’s a game rich location. But that all depends on the area your in and what your expectations are.

Last if your truly looking for an “investment” and hunting don’t buy one of these 10-40 acre ranchettes where they have taken a 200acre ranch and split it up in to 10-20 plots. You won’t be happy in the middle of them for hunting and the person that split it made majority of the profit already, future growth in that situation will be limited I believe.

Do some research and don’t settle.

Well said

[Texans42]

First borrowing for land isn't a wealth tool it's a risk tool period. It can be a dangerous risk tool or a “safer” risk tool, but its never a “Safe” risk tool. There is no true 100% financing.

As a general rule, pure Recreational land IMO isn’t a great wealth tool unless you are building out to mark it up exponentially and sale. Example building out levee system to flood corn, or HF turn key hunting ranch, etc. Out side of that or mineral speculation it’s a interest rate dependent appreciation gain. Now it is a “good” tool, it's a forced savings, and land depreciation is almost non-existent.

And you can absolutely make money farming with out farming. Crop share out on 1/3’s, CRP, cash lease etc. All are risk diversification tools.

Now my ideology doesn’t fit for everyone, as my land holding are very much non-recreational as a whole but I don’t look at debt as a wealth tool, it's a risk tool. You true wealth tool is your ability to save your income. When land is paid off it becomes positive income generating not a cost factor trying to out run interest costs.

With all this said, I've amassed a few a acres, using same ideology and Im 100% debt-free. Well, until I find some more land I can't pay cash for, then my other land becomes it's payment vehicle as I've done over and over again.

Everyone's risk and saving level is different, no one perfect answer.