Posted 11/27/2012 12:14 (#2719569) Subject: Land investors returns
east central ND
Just heard the results of an local 80 that an "investor" bought. They way they are buying up land in the area, they MUST have some idea that the grain markets are going to stay where they are or go up in the next few years. Are the investors trying to get the old reliable 5% return on their money? Even with insurance, it looks to me like 1 more year of short rain (little crop to sell), or if he US has good crops and the crop prices drop 20%, a rent of 5% to 6% would get the guy farming it down to break even or maybe a very, very small profit (like $25 an acre) IF you try to pay a rent to get the investor his 5%. I know politics, stock market, and interest on savings is not worth talking about, so are they looking to stick money in the least volital investment??? Are they figuring the rent income to tide them over until the land appreciates in value some more??? I as a renter am sure trying to sharpen my pencil, but when is the last time the small farmer got approached by an out of area investor to farm some of his ground? And what is the new fair rent on ground, 5% of the last local sale price??? The last couple of sales have been on average farm ground and brought top $$$$ . Are investors thinking the rent should be the same for average ground as the top shelf ground that they may think they bought??? I want to keep my landlords happy so they do not jump to the sell the ground. But like many, I know I can be in the ballpark on rents, but do not have the deep pocket to be at the buying table.