|
|
east central ND | After a few chilled beverages last evening a buddy and I were discussing what would be a good place to park extra money if available before inflation hits big. You know, if we had not sold most all the crop a couple months ago.....
Put down extra fertilizer, a rental property, get that younger tractor, better iron, maybe a bin (too late on that, already gone up), etc, etc, were some ideas tossed about. Stock market sounds scary right now, watch out below?
We couldn’t decide if overpaying/ or paying a premium for farm ground today would be a good idea or not 20 years from now. Dirt might have a 3% return, but if the value isn't higher in 20 years you probably could have done better elsewhere. But with the up shot in prices due to weather, will land values bump a bit for the next 6 months? And how much of a premium would a guy be willing to spend over this past year? 5% 10%. So hard to say as good dirt seems to get a higher % bump than poor dirt when things do go up. |
|
| |
|
IL near StL | Following. This a very interesting discussion all around, not just the land but the other options you discussed and probably countless more. If inflation begins and in my humble opinion, it's not a matter of if but when, everything will be going up which will squeeze the margin on the newly found price levels for not just ag but all business. I am starting to recall a conversation that I had with a few people 6-12 months ago where I posed the question, "Will we look back on this time and say that was the time to buy a farm or build more bins or whatever you want to insert here?" Won't know til we know I guess. |
|
| |
|
Central North Carolina | You are not going to lose much regardless, if your time horizon is 20 yrs. If inflation fears are your main concern, land is as good as it gets in addition to being an integral/necessary part of your business. Can't be rented away right when you need it most. I say yes if you don't need a lot of debt to make it happen. Saving on rent is like a dividend
Comparison for iowa:
Land vs. S&P
Edited by Douglas 1/13/2021 13:26
|
|
| |
|
| * |
|
| |
|
SE MN | As a farmer, dirt keeps you in the game.... |
|
| |
|
SW Ontario | Even if you do require debt, rates at ~3% locked in at 20+ years gives you a predictable and manageable cashflow situation. I don't see land being worth 50% of today in 10 years, at least in Ontario. There are some crazy numbers being thrown around. |
|
| |
|
NorthWest Mississippi | I passed on an adjacent property within the last year.I thought the asking price was 2x worth.45% good ground,65% worthless crap to pay taxes on.I have wanted to own it since I was a teenager,just because it joined us.Might have worked at today’s prices but they would not work at prices that were being paid for grain at the time it came up for sale.Investors bought it at $300 less per acre than asking and $700 / acre more than I was willing to pay.I will probably not live long enough to get a chance to buy it again and I do not care.It was not feasible at the time and I am good with that.At this point in my life if it does not cash flow,I am not interested. If I were 30 years younger that may not be the case. |
|
| |
|
| If you are concerned about inflation going significantly higher, then you should short sell the long end of the treasury curve... the ZN, ZB, and Ultrabonds futures contracts. (Or buy puts on them)
The long end of the treasury curve is very sensitive to inflation expectations. So if inflation is going to be a problem, then the bond market will show that potential outcome in long bond prices (long bond prices should go down, and yields should go up
|
|
| |
|
Central North Carolina | The problem i have is that land seems about more than a investment. Can't take a nice quiet long walk in the spring time on most investments. The best therapy ever. Land around here is mostly trees.
Edited by Douglas 1/14/2021 08:12
|
|
| |
Beverages and land markets
