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Ohio | Guys that don't need a Return On Investment for years 1 through 10 are playing in our sandbox.
Some (most all) have cash from other sources. They can afford to out-bid the operation(s) that need to cash flow immediately.
Individual Example:
If a guy makes $200k as (fill in blank). He Needs only $50k to survive. He can pay tax on $150k or he can invest in land, get the interest exp deduction (equip too if he wants to get hands dirty). If he can cash flow for years 1 to 10, he'll have a "real estate asset" that , unlike a rental house or commercial buildings, doesn't require a lot of maintenance. In later years, he can sit in Florida or Arizona and ask for a per acre $ that makes (the son of the same Grower he out bid) crazy mad.
Above was a simple "individual" as an example. "Institutional investors" and to a lessor degree "foreign investors by proxy" are involved. I know of organizations that are creating funds to market to retirement funds.
Arab investors dont care if their investment goes down for years 1 to 15. They are just thrilled to own something that will not be "blown up" or "socialized" by the next regime.
I hope our government keeps foreign land owners to a minimum. But the institution investors are here.
I grew up a farm kid and still farm a little on side. I'm also a CPA and (for one year ) I worked for a fund similar to described above (until I could not stand it anymore).
If you want it, you better be prepared to pay more than it's "worth" and more than it's Cash-Flow or ROI in year 1 through 10. Personally, I'm not going to be the grower complaining about landowners asking ridiculous rent $. But I will be the grower that paid $1000 to $2000 acre more than what everyone else thought should be paid.(for the right piece of land)
Edited by lfreehauf 6/20/2015 11:26
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land sales in June
