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Central Texas | Be sure and remind him it is a long term deal. If he's not ready to stay hooked for 20+ years it could be a disappointment, like the investor deals you mentioned. I have personal experience in that department. In early 1980 a relative with land in Castro Co, about 50 miles from you, died. Near the end of corn harvest a local BTO offered the estate $1,000/acre for the place which was a good price for the time but he wanted to close after he finished cotton harvest. That year was a wet fall and the cotton grades/price went to crap and he was unable to close the deal but the heirs had their hearts set on that price. Never found anybody willing to pay that price and finally in 1983, my brother and I bought the place for $750/acre. In 2004 an adjoining tract was for sale and we bought it for $800. In 2006 another tract brought $1,000 so we have come full circle in only 26 years. That being said, today that land would bring somewhere between 2-3000/acre. After 30 years it has been a good investment, but the first 20 was a slow grind. However can't complain about the rent it has paid over the years. Has given 7-10% cash return against the current value for each particular year. Income has more than kept up with inflation.
If he can find a place that will make it's own payment with rent based on today's grain prices it should work, but will probably take a big downpayment for that to happen. | |
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I have a relative wanting to invest in farmland, what do I tell him?
