Well, to start, it’s the foundation of our food supply. This is an asset class that can feed your wallet (and your body) a healthy return. Not only that, it’s a hard asset that is not tied to vicious stock market cycles, and it is a surprisingly effective hedge against inflation.
But farm ownership isn’t all fresh eggs, carefree hayrides, and blushing milkmaids. And there is a way to do it with none of the work and all of the returns, but we’ll get to that later.
If romantic notions of bucolic farming life have you thinking of signing on the dotted line for a big purchase, there are five things you should consider before putting your hard-earned dollars to work.
1. Your goal
What appeals to you about buying a farm?
Are you a green thumb with dreams of expanding a backyard garden into a larger hobby-farming operation? Or maybe you’re a self-reliant, living-off-the-land type? Or, perhaps you just want a career change and to try your hand at earning a living by farming?
None of these are right or wrong answers. Rather, the point is that diving into a farm purchase without a clear purpose and awareness of the challenges (think blood, sweat, and noisy roosters) involved is asking for trouble.
An old farmer’s adage goes, “In order to live off the land, you need to be able to sell something every week.” It’s a bit of hard-earned wisdom worth keeping in mind before buying a farm.
2. Type of farm
If your heart’s desire is an honest to goodness working farm from which you aim to earn a living—what kind of farm will it be? While some farms are multipurpose crop-growing and livestock-raising endeavors, as a newcomer dipping your toes into farming for the first time, you’ll want to opt for one or the other, not both.
Let’s say you settle on food crops. Great choice! Next question—row crops or permanent crops? What’s the difference, you might be asking?
Row crops refer to things like wheat, barley, and corn, which are planted yearly or seasonally. As the name suggests, these crops are machine-planted in tightly spaced rows. Row crops are reliable, become productive quickly, and are flexible to changes in market demand. However, competition in the row crop market is fierce, which means lower margins.
Permanent crops, unsurprisingly, refer to lasting, long-term crops such as coffee, coconuts, avocados, and citrus fruits. These need time to develop before they yield useful (and lucrative) harvests—up to several years, depending on the crop. Once mature, however, permanent crops are solid, steady money-makers for 40-60 years straight. What’s the downside? Permanent crops can be capital intensive at the outset and often require patience before you see returns.
So what’s the answer to the row crops versus permanent crops question? It’s a trick question, actually. A diversified blend of both row and permanent crops hits the goldilocks zone of agricultural ownership—resilience, productivity, and profitability.
3. Location and size
Next up is finding that perfect plot of land. Anyone familiar with an airplane’s view of the U.S. heartland could be forgiven for mistaking its vastness for availability. Unfortunately, prime agricultural land in the U.S. is expensive, and you are probably not going to live in Latin America, where the real farmland opportunity is today.
But if you are set on the U.S., according to the USDA, in 2020 the average price per acre in the corn belt was $6,350. With an average farm size of 448 acres, that means a representative corn-producing operation will run you a cool $2.8 million.
And that’s just for the land. If those numbers are inducing sticker shock in you as a prospective buyer, that’s understandable. But keep in mind, you’ll need somewhere to live and sleep on this property, too—which brings us to the next consideration.
4. Accessibility and amenities
While that rustic, paint-chipped farmhouse and barn might look romantic when you’re breezing by on the highway at 70 miles per hour, even hardworking farmers want some creature comforts, and poor accessibility could hinder business. Things to consider include:
- What condition are the buildings on the property in? No matter how productive the land is, if the house is a shambling mess, the cost of repairs and maintenance alone could prove prohibitive.
- How much of the property is lowlands? Access to water is essential for farming, but only in the right amounts. Flooding is a concern, too.
- How will you move your product to market and generate income? Are you near major highways? While certainly a business convenience, proximity to a noisy interstate might prove incompatible with any notions of a “quiet” farming lifestyle.
5. Farming is hard work
Last but certainly not least, farming is hard work. Can you imagine yourself sowing crops, plowing fields, mending fences, baling hay, feeding and milking livestock, hauling your product to market, hiring laborers, and negotiating prices and contracts? It’s an honest living—and a potentially lucrative one—but it’s not easy, and it’s not for everyone.
If mending fences and negotiating barley prices is the appeal of agriculture for you, more power to you! But—and be honest with yourself—if it’s really the business potential that has you considering buying a farm, versus the farming itself, then stop right there.
The alternative is to own the farm without being the farmer
Our turnkey LOTs (Land Ownership Titles) system can help you build a steady and reliable annual income stream while your land appreciates in value over time.
We do all of the work, starting with an advanced data-driven approach to identifying the most productive farmland in Latin America, where returns are forecasted to be significantly higher than in the U.S.
We then purchase it and offer it as small subdivided plots (the LOTs) to individual owners. And while it’s your land, there is no sweat equity involved. A third-party expert team (one that is overseen by your Farm Owners Association – think HOA but for land) manages everything from seed to shelf including land development, property management, harvesting, packing, and sales.
Then the profit is distributed back to you, the LOT owner. It’s all of the benefits with none of the hassle.
Want to learn more? Just fill out the form below to get started on your journey to becoming a successful farmer without any of the work (or roosters).