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n. Illinois | We have entered the late stages of the asset inflation bubble folks. Values have zero to do with the earnings ability of the underlying asset.
The conventional wisdom is that land prices will never ever go down. Too much old money just sitting there waiting to buy up anything that comes for sale. too much off farm money being invested into farm ground, They aren't making anymore of it, Too much non farm development going on. i could go on for hours and we have all heard this before and every time there is a giant popping sound somewhere in the near future and the whole thing collapses back to where it can cash flow based upon sustainable repeatable income streams. There are at least two generations that have never ever seen land values go down substantially Just as the 1930's was history to me and didn't apply to me because we would never be so stupid again. The 1980's is nothing but history to two Generations now.
That farm dad overpaid for in 1998 at $5000/ac is now worth $18,000/ac see how much a genius dad was. (no one asks why does dad still owe $4500/ac on it?)
Can you still buy overvalued assets?
Sure if your operations cash flow can afford to subsidize it for the next 5-10 years and maintain the same level of living expenses and capital investments in your rolling stock go for it. Just remember it's lowering your overall Return on Investment and sooner or later that can bite you. | |
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Buying land economics
