What You Need to Know About Investing in Vacant Land

Investing in land is a great idea, but the best type of land to invest in varies from person to person. For example, investing in farmland is great for people looking to diversify their portfolio and the ability to crop out your land for a little extra cash. Investing in timberland is great for those looking for stable, steady growth.

Investing in vacant land has its own unique set of benefits and drawbacks, which we are going to explore in today’s article.

Low Maintenance, High Rewards

Vacant land is unique from other land types in how low maintenance it is. It’s a refreshingly hands-off investment. Quality vacant land (good location, soil, and access) historically increases in value, so you don’t have to do much to see your investment grow. Not only is vacant land easy to take care of, it is often cheaper than developed land.

Your Land, Your Choice

One of the biggest factors that sets vacant land apart from other land types are the endless possibilities of how to increase the value of your investment. There are so many ways to profit off of vacant land that it can be a little overwhelming. Here are just a few examples of ways you can make money off of your land:

  • Buy and Hold. As we mentioned in our Investing in Land 101 article, the buy and hold method is exactly what it sounds like – you buy land and sell it when the land appreciates enough to be sold at a profit. It’s the safest, though usually slowest, way to make a profit.
  • Transition the Land to Its Highest and Best Use. Transitional land is such a multi-faceted and dynamic topic that we have a whole class dedicated to it. Transitioning your land to its highest and best use requires a deep understanding of the markets and different types of land, as RLI’s Marketing Manager Jessa Friedrich, MBA, pointed out in her article Transitional Land: Finding Highest and Best Use: “What makes transitional land a unique area of real estate brokerage is the fact that the ultimate use of the property might not be easily recognized. In fact, the very nature of transitional land is that the highest and best use is dynamic.“ Be sure to work with a land professional with experience when trying to identify your property’s highest and best use.
  • Lease the land. You can lease your land out for storage or to other landowners. This allows you to still make an income from the land with minimal effort on your part.
  • Add solar energy or wind. The structure of the solar farm can add value to the property and you can profit from the energy coming in. Twice the profit!
  • Forest the timber. If you’ve got timber on your property, you could have money. Find a land expert that specializes in timberland transactions to find out if you find out if your timber is ripe for the picking.

Drawbacks

As with investing in anything, there are drawbacks to investing in vacant land. One of them is the property taxes. This is something you should take into consideration especially if you are considering the buy and hold approach. Depending on your property, the property taxes might outweigh any profit the land might produce.

Another drawback is that no matter which way you choose to invest in vacant land, it’s likely that the returns will be slow. Don’t pour your money into vacant land and expect to see huge returns in a few months. It’s important to work with a land professional who knows the industry inside and out, like an Accredited Land Consultant (ALC), to get the best returns on your investment.

Investing in vacant land is the ultimate “diamond in the rough” opportunity. You have endless ways to make money off of your investment – which one will you choose?

If you are looking to invest in vacant land, check out our Find A Land Consultant tool to find a qualified land agent near you with specialised expertise in your market.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

 

The Great Fake Meat Debate

Not so long ago, the fake meat market wasn’t much more than a few packets of grey tofu dogs that no one touched at the barbecue. Now, the meat alternative industry is a $1.5 billion market. Curiously, production and consumption of real meat are also on the rise. Do these two seemingly-opposite industries have more in common than we think, and can they live in harmony?

It’s nearly impossible to ignore the rise of fake meat. From Burger King planning to roll out Impossible Whoppers by the end of 2019 to White Castle already offering Impossible Sliders, fake meat is everywhere. The sudden and shocking success of fake meat has taken many industry officials by surprise. How could a product that was so niche for so many years suddenly become so popular?

One of the main factors that led to the success of fake meat products is advancements in food science that increase the taste and texture of fake meat. Scientists can now study what makes meat taste so good at a molecular level and replicate it with plant substitutes. Not only can they make the meat taste better, but they can also make the product look more like meat, too. For example, the main ingredient in the Impossible Burger is heme, a molecule that gives blood its signature color. They also use coconut fat and potato protein to mimic a burger’s natural greasiness and texture. Other companies use soybeans, seitan, and Quorn.

Another reason for the rise in fake meat is that Americans have become increasingly health conscious. A recent study from John Hopkins University showed that over 60% of Americans are making efforts to eat less meat.

Health-oriented customers have also played a large role in the rising real meat economy. Americans hit record levels of meat consumption in 2018. According to the USDA, the average American will consume 222.2 pounds of red meat and poultry. Other animal products, such as eggs and milk, have been on the rise as well as Americans trade-in carbs for protein. As high-protein diets become increasingly popular, some adjust their diet by adding meat substitutes to cut back on red meat, while others focus on incorporating high-quality real meat into their lives. The strong economy also lets the majority of Americans afford beef and chicken despite rising meat costs.

While the two industries are both enjoying success, there is concern from the beef industry about the effects of labeling fake meat as ‘beef’ on real meat products. If the value of real meat products is impacted, this could have serious drawbacks for ranchland values. Ranchers are pushing for an official definition of beef and meat. The top priority in the National Cattlemen’s Beef Association’s list of official 2019 policy priorities is to clarify the definition of those words.

“The use of traditional beef nomenclature on alternative products is confusing to consumers and weakens the value of products derived from actual livestock production,” claims the NCBA’s 2019 Policy Book.

The goal isn’t to get rid of fake meat for good, but to make sure that the customer knows what they are buying.

“While at this time alternative protein sources are not a direct threat to the beef industry, we do see an improper labeling of these products as misleading,” said the  Policy and Outreach Director of U.S. Cattlemen’s Association, Lia Biondo, to USA Today. “Our goal is to head off the problem before it becomes a larger issue.”

Luckily, many titans of the fake meat industry seem to be on the same page.

“I think it actually could help us more than it could hurt us because it starts the national dialogue around what really is meat, and if the origin of meat really matters to the consumer,” said Ethan Brown, the founder and CEO of Beyond Meat, to CNBC.

While meat alternatives are still a relatively new concept to American markets, fake meat could have a lot to offer farmers. Since many fake meats are created from plants such as soybeans, fake meat companies could become steady clients of many farmers.

Real and fake meat are here to stay. One industry doesn’t need to fail for the other to succeed. A changing customer base, strong economy, and scientific advancements have all helped both industries become the successes they are today.

Looking to buy some land to start your own real or fake meat empire? Be sure to always work with a land expert in your area to get the best deal for your money.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

Title Insurance 101

Disclaimer: This article is not intended to be construed as professional tax advice, always consult with your tax or financial advisor for additional information on how this will impact your personal or business tax situation.

Title insurance seems to be one of those phrases that makes peoples’ eyes gloss over. While it might not be as exciting as drones, title insurance is actually one of the most powerful tools you have to defend your rights to your land. Some people think that buying a property means that they automatically own all the rights to the land. These people are in for a rude shock when old easements and delinquent bills start to pop up. In this article, let’s explore what title insurance is and why it can be your best defense against issues that lurk in your property’s past.

In a nutshell, a title is the legal record of the property’s history of ownership, rights, and easements. Title insurance protects you against any defects in the title that may have occurred in the property’s history. These defects can include (but aren’t limited to):

  • Hidden mortgages
  • Easement issues
  • Delinquent tax bills
  • Clerical errors
  • Unpaid mortgages
  • Legal claims by spouses or children of previous owners
  • Forged documentation
  • Mineral rights
  • And more

When you buy land, you also buy the legal history that comes with that land. Something as simple as a clerical error or incorrect parcel ID number can have terrible impacts on land value. Title insurance protects you from any defects in the title history that could impact your rights to the land or the land’s value.

When you purchase title insurance, the company conducts a title search. This is basically a background check on the property. The company will collect information about the history of the property, including access easements, timber deeds, mineral rights documents, power of attorney records, and more.

After the search has been completed, the attorney will issue a title option or title binder that will lay out everything that was found in the search. This document will be submitted to the title company so that they can issue a title insurance policy based off of their findings.

While most states regulate the cost of title insurance, you can expect to see massive price swings in the states that don’t. In his guest post for LandThink, Jonathan Goode, ALC, with Southeastern Land Group says you can expect to pay about 0.5% to 1% of the purchase price of the property for an owner’s title policy.

So, what are the benefits of title insurance? Having title insurance drastically reduces the risk of going to court over decades-old issues. Title insurance helps to eliminate any potential risks that can arise from issues in the defects in the title. Simply buying land doesn’t mean you automatically end the rights of previous owners. Title insurance is the only way to know for sure that you, and you alone, own the land.

People often get lender’s title insurance and owner’s title insurance mixed up. Lender’s title insurance protects the loan institution from issues relating to the property’s title. This type of insurance is required. Owner’s title insurance isn’t required, but highly recommended by many land professionals with decades of experience in land. The price for title insurance may be high, but paying a one-time fee for peace of mind is priceless, as Jonathan Goode, ALC, with Southeastern Land Group pointed out in an article for LandThink.

“Title insurance is a common-sense purchase when buying a piece of rural land. You can often obtain an owner’s title policy for about 0.5% to 1% of the purchase price of the property, and be protected from anything in the history of the title,” says Goode. “To me this is a wise investment and provides the peace of mind to allow you to use the property without worry.”

Buying land is a huge investment. Title insurance is a one-time investment that protects you against everything that happened on that property’s history. Insuring your land now is one of the best ways to help your land reach its highest possible value.

Looking to find the right title company for you? Check out the title companies that we recommend in our Technology Services Resource Center.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

Do These Old Land Rules Hold Up?

The business of buying and selling land is one of the oldest known to man. Over time, certain rules and sayings were established as the keys to success in the land industry. Some of those rules about land have stood the test of time, and some have not. For all the new land agents in the industry, we’re going to look at some of the most popular rules in the land industry to see if they still hold up years later.

1. Land Is Always A Good Investment

Yes – But Only For Smart Investors  

Investing in land has always been a great way to diversify your portfolio. Plots of land are often passed down generation to generation as a reliable investment. There are lots of great investment options depending on your level of risk and timeline, such as the “buy and hold” method or . Vacant land can give huge returns if held onto for the right period of time or improved.

However, investing in land is not risk-free, especially for people that aren’t land experts. There are more factors impacting land value (such as international trade, , and new land laws) than ever before. Unlike other investment options, land is not guaranteed to earn interest. If the land isn’t transitioned to its highest and best use or is not in high demand when it comes time to sell, you will lose money.

Many old rules about land investing, such as the importance of timing and being familiar with the market, still apply. There is a lot to take into consideration with investing in land, such as zoning, topography, taxes, etc. If you are not a land expert, be sure to work with a land professional before investing.

2. In-Person Networking Is Key To Success

Yes – But It Doesn’t Always Have to Be In-Person  

Nothing can replace in-person contact. As Jonathan Goode, ALC, with Southeastern Land Group said in his article Ten Lessons For Land Agents From A Decade In The Dirt, “20% of what we do is about land, and the other 80% is dealing with people.” In an industry where trust and people skills are the backbone of success, networking remains as important as ever.

However, for the first time in history, technology allows us to network, socialize, and promote ourselves without leaving the house. Social media has made it easier than ever to connect with people from the comfort of your couch. Platforms like Facebook, LinkedIn, and Twitter let you meet other professionals, advertise to potential and current clients, and learn about the latest land news. In-person networking might still be essential to success in the land industry, but social media allows us to stay connected as well.

 3. Timber Is A Good Option for Retirement

Yes and No

While many people generally agree on the benefits and drawbacks of investing in land in general, the rules of land surrounding investing in timberland have been much less sure. A Washington Post article called “Thousands of Southerners Planted Trees for Retirement. It Didn’t Work” sparked a debate within the land industry. The article follows a farm owner who diversifies his family farm by planting pine trees. He lost millions when the 2009 housing crash hit and resulted in the decline in pine prices.

Some read this article as a declaration of the death of timberland investing. Others argued that the article ignored the fact that the recovery of the economy resulted in lumber prices returning to their pre-crash values.

In his article “Is Pine Timberland Still A Good Investment?”, Jonathan Goode, ALC, wrote that both sides had good points. He notes the glut of timber in parts of the Southeast and that people did lose significant money, but that no investment is foolproof. People that invested in the stock market around the housing crash would have also lost a ton of money. He mentioned that even in the worst market, there is room to make money off of timber.

“The good news for small to medium-sized investors is that you can avoid some of the problems that have plagued institutional buyers,” says Goode. “Timberland Investment Management Organizations (TIMO’s) are given the difficult task of going and Finding a large package of timberland to Purchase on behalf of their client, Manage the fund for 10-15 years, and then sell with guaranteed returns.”

The meat of the Washington Post story is less about the history of timber and more about the unpredictability of the market. There are things you can do to make sure your land is safe, such as and , but there is little you can do about the market. With any investment in land or other asset, there will always be risk.

 4. Working With An ALC Is The Best Way To Buy And Sell Land 

Yes!

A lot of things change in the land industry, but some things never do. Working with an Accredited Land Consultant ensures that you are working with the best in the industry. They are land experts with an incredible network of other professionals, years of experience, top-notch education, and some of the hardest working people you’ll ever meet.  The ALC Designation has been around for decades (under several different names) and has served generations of land experts with the tools for success in the land industry.

As years pass, even the most trusted rules about land can crumble and be replaced by new ones. However, some other land rules have stayed the same for centuries. Only time will tell which rules about land from today will still hold up tomorrow.

Interested in becoming an Accredited Land Consultant? Sign up for LANDU Education Week in Denver, CO, for the chance to complete the Education Requirement portion of the designation.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

New Farm Bill Legalizes Hemp in Land Real Estate Industry

By now, most people know that hemp became legal in America after the 2018 Farm Bill was signed on December 20th, 2018. However, there’s a lot more to the new law and legal hemp itself than meets the eye. Let’s take a look at hemp, its benefits, and the details of its current legal status under the 2018 Farm Bill.

What Is Hemp?

For those of you that are green (no pun intended!), hemp is the non-psychoactive variety of the Cannabis Sativa plant. Hemp gets confused frequently with marijuana. The biggest difference is that hemp has a very low THC (0.3% or less) while marijuana contains concentrations between 15%-40%, a much more potent dose that lets users have that “high” feeling.

What Makes Hemp Stand Out?

Hemp is used for fuel, fabrics, oil, plastics, animals feed, building materials, paper, and more. You can even eat it, although the taste is unpleasant. In fact, there are over 25,000 known uses for hemp!

Hemp is a fast growing, low maintenance crop. The plant requires less water, fertilizer, and herbicides than many common crops, making it a great option for farmers looking to save a little money or reduce their carbon footprint.

Hemp is green in more than one way. Hemp takes in more CO2 as it grows and naturally rids the soil of toxins, making it an excellent crop for bioremediation. After the harvest, the remains break down into rich nutrients for the soil.

What is the current ruling?

The Hemp Farming Act of 2018 (whose provisions were included in the 2018 Farm Bill) let hemp farmers apply for federal agricultural grants, own crop insurance for the plant, and have access to the national banking system (an issue for marijuana in states even where it is legal). The 2018 Farm Bill removed a lot of hoops that hemp growers used to need to jump through. Removing the gray areas surrounding the plant and allowing hemp farmers access to the same tools as other farmers will make it easier and more profitable for people to grow hemp. 

Just because hemp is legal doesn’t mean everything is cut and dried surrounding the plant. While the 2018 Farm Bill removed hemp and products made from hemp from the Schedule 1 Drug List, the FDA still has regulatory authority over all CDB in food and drugs. Testing protocols surrounding how much THC and CBD is in each plant is still up for debate, as different testing methods can sometimes produce different results.

A recent report from the Brightfield Group expects that the United States CBD market will be worth $22 billion by 2022. If you’re considering branching out into new crops, hemp might be a great option for you.

Be sure to tune in to the Industrial Hemp- Impacts to Real Estate non-LANDU course being held by the RLI Oklahoma Chapter on May 9th with facilitator Kirk Goble, ALC.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

ALCs from 2018 LANDU Week at NLC19 receiving their pins

LANDU Education Week Attendees Awarded ALC Pins At NLC19

Once a year, the REALTORS® Land Institute (RLI) offers land professionals the opportunity to greatly enhance their expertise by taking all six courses needed to earn RLI’s elite Accredited Land Consultant (ALC) Designation in one place, at one time: LANDU Education Week. Every year, a dedicated group of agents attend that take full advantage of this opportunity, complete all the courses, and go on to proudly receive their ALC pin. Many of those who received their pin after attending LANDU Week were also named top-producing agents as award recipients as part of RLI’s esteemed APEX Awards Program.

ALCs from 2018 LANDU Week at NLC19 receiving their pins

Left to right: Geoff Hurdle, ALC; Walter Hatchett, ALC; Eric Frickle, ALC; Clayton Pilgrim, ALC; Michael Murphy, ALC; Clay McCullar, ALC; Justin Osborn, ALC; Dan Murphy, ALC; Brent Lyday, ALC; and Joey Burns, ALC.

The coveted ALC Designation pin is awarded each year in March at RLI’s National Land Conference. This year’s recipients received their pins from 2018-19 RLI National President Jeramy Stephens, ALC, on March 5th in Albuquerque, NM. Of those in attendance who were invited to the stage to accept their pin, ten of them had attended the 2018 LANDU Education Week that took place in Arlington, TX, the previous June. RLI is proud to recognize these professionals and all of the elite agents that dedicated themselves to the earning the designation in 2018.

Eric Frickle, ALC

Eric Frickle, ALC, receiving his ALC pin from RLI National President Jeramy Stephens, ALC, at the 2019 National Land Conference.

Of those receiving their pin at conference was Eric C. Frickle, ALC, CCIM, with Eric Conrad Frickle Commercial Realty in California who was also awarded the RLI APEX 2018 Broker of the Year in Commercial Land Sales. When later asked about the value that the week provided, he stated “RLI’s LANDU Education Week was a great experience. It afforded me the opportunity to complete all of the courses I needed for designation in a classroom environment. This provided a great opportunity for building relationships with fellow classmates… and it was great to see them all again at NLC!”

Michael Murphy, ALC, receiving his ALC pin from RLI National President Jeramy Stephens, ALC, at the 2019 National Land Conference.

Also receiving their pins in Albuquerque were Dan Murphy, ALC, and Michael Murphy, ALC, Broker/Owners of the M4 Ranch Group in Colorado. If their names sound familiar it’s likely because they tied to be named the RLI APEX 2017 Top National Producer, the program’s most coveted and prestigious award, at NLC17. When discussing his experience at the 2018 LANDU Education Week, he recalled “We attended LANDU Week in 2018 and this is by far the best way to complete a majority of the ALC classes and make connections for life. Great classes and great instructors but the friendships created were a perfect bonus!”

Dan Murphy, ALC

Dan Murphy, ALC, receiving his ALC pin from RLI National President Jeramy Stephens, ALC, at the 2019 National Land Conference.

His brother Dan also raved about the week saying “LANDU is the best way to accomplish the goal of attaining the highly coveted ALC Designation. The best part is surrounding yourself with the true professionals in our industry. While the education and convenience of LANDU is outstanding on its own, the contacts and friendships greatly outweigh the learning.”

Geoff Hurdle, ALC

Geoff Hurdle, ALC, receiving his ALC pin from RLI National President Jeramy Stephens, ALC, at the 2019 National Land Conference.

The star-studded line up of ALCs that were handed their pins in Albuquerque doesn’t end there. The RLI 2018 APEX Wrangler Award winner also spoke about what an honor it was to receive his pin after having completed the courses at the 2018 LANDU Education Week. Geoff Hurdle, ALC, of Hurdle Land & Realty in Tennessee with the APEX 2018 Wrangler Award for largest number of transactions closed in 2018; Geoff had over 181 closed transaction sides in 2018! Reflecting on the experience he mentioned “I knew that LANDU Week was the only way I was going to get in the education requirements for my ALC without it taking me years to complete. To have done that all at once sounds like a time-suck but, in actuality, it was a time-saver! LANDU Week also saved me money from a lot of travel. I am so, so thankful for LANDU and how it all worked out! I highly recommend LANDU Education Week. Besides, you meet a bunch of people after the same thing that become great friends!”

Walter Hatchett, ALC

Walter Hatchett, ALC, receiving his ALC pin from RLI National President Jeramy Stephens, ALC, at the 2019 National Land Conference.

On connecting with one other 2018 LANDU Education Week attendee that went on to get his pin at the 2019 National Land Conference, Walter Hatchett, ALC, of Kohler & Associates in Georgia said “Having the opportunity to attend the 2018 LANDU Week in Dallas and listen to and learn from top land real estate professionals was a great experience for me. The networking and knowledge gained was priceless, as well as making friendships that will last a lifetime. It was truly worth the investment, to me, to have all the classes needed in one location and timeframe to assist in obtaining my ALC Designation.” Walter was also recognized as part of the RLI APEX Awards Program as a RLI 2018 APEX Top Twenty Producer.

If you are thinking about earning the elite Accredited Land Consultant (ALC) Designation, make sure to check out the 2019 LANDU Education Week taking place in Denver, CO, from June 2-10. We hope to see you receiving your ALC pin at the 2020 National Land Conference (NLC20) in San Antonio, TX, from March 29 – April 1 — and maybe even receiving one of our esteemed RLI APEX Awards after all that expertise makes you a top producer!

Jessa Friedrich, Marketing Manager, REALTORS Land InstituteAbout the Author: Jessa Friedrich, MBA, is the Marketing Manager for the REALTORS® Land Institute. She has served in her current role in the land real estate industry since March 2015 overseeing all matters pertaining to the organization’s marketing and communications.

What Does the Future of Agriculture Look Like?

What will the farms of 2100 look like? Will they be completely unrecognizable from the farms of today? Will they be autonomous? Will the type of crops farmers grow be similar to those we grow in 2019 or can we expect brand-new grains and vegetables to feed the ever-growing population? There’s no way to know for certain, but in this article, we take a look at current trends in farming and technology to hazard a guess about the future of agriculture.

Wired in

Technology already plays a huge part in agriculture and its role on the farm will only continue to grow. Drones, telematics, crop sensors, and precision agriculture technologies all help farmers increase productivity on their land while cutting back on physical labor. Although it seems like these land technologies are already a staple on many farms, the technology is still relatively new. Much like the computer or telephone, we can expect to see better, faster, and more affordable versions of these technologies in the future.

Precision agriculture technology has been extremely popular in the past few years. This technology can do everything from monitoring, giving each plant in a crop individualized care, and efficiently dispensing water and fertilizer. Precision agriculture technology is key to reducing food waste, which may be why the industry is expected to grow to $2.42 billion by 2020. You can expect precision agriculture technologies to play a huge part in the farms of tomorrow.

Another technology we can expect in the farms of the future is swarms of tiny robots. The University of Applied Sciences in Germany is already exploring a concept called MARS, which stands for Mobile Agricultural Robot Swarms. Groups of anywhere from five to one hundred bots would plant and tend each seed’s need. This specialized care can cut down on food waste and create healthier crops.

More Mouths to Feed

According to the United Nations Department of Economic and Social Affairs, the world population is expected to boom to 9.8 billion in 2050 and 11.2 billion in 2100. This means that food production is going to need to increase dramatically. With demand high, we might see an increase in people joining agriculture or large investments in farm technology to help make enough food to feed the masses.

The Changing Consumer

The American diet is evolving. Compared to the 1970s, people in modern day eat much more grains, oils, and sugars, and have cut back on dairy products, vegetables, and eggs. Just as the farmers of today had to adjust their crops for the changing times, the farmers of tomorrow will do the same.

graph pulled from the Pew Research Center

We can predict what the consumers of tomorrow will want based off the consumers of today. The demand for organic food has steadily risen for the past decade, as well as the demand for farm to table. The consumers of today are more health-conscious than ever before and the farms of tomorrow will have to accommodate for that.

Better Fake Meat

A few years ago, fake meat looked like limp tofu “hot-dogs” that no one touched at the barbeque. Nowadays, fake meat like the Impossible Burger are similar to meat in texture and taste. As more companies compete to create a more realistic plant-based burger, we can expect more and better-tasting fake meat products.

This could create a huge shift not only in raising real meat, but also in corn and soybean production (much of which is used to feed crops).

Don’t panic, beef farmers – the number of vegetarians and vegans actually hasn’t increased much over the past few decades. This means that at least in the near future, there is still a market for real meat. The current legal battle surrounding what can and cannot be called meat could help preserve a consumer base that demands real meat.

A New Kind of Farm

Vertical farms, a type of farm where crops are grown on vertically stacked structures, may be a staple for the future of agriculture. With the population expected to boom, the ability for vertical farms to take up less room than a traditional farm could make them more popular.

They also used a tiny amount of water compared to the great outdoors.

There is no surefire way to predict the future of agriculture. We have no idea what laws, natural disasters, cultural shifts, and new technology are waiting just around the corner. However, there are plenty of clues in the farms of today that can help us predict the future of agriculture.

No matter what decade you are in, land education is key for knowing the ins and outs of the land industry. Check out RLI’s upcoming courses to stay educated and ahead of the curve when it comes to future land trends you need to know.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

How and Why To Invest in Farmland

OVERVIEW: INVEST IN FARMLAND

From the beginning of time, farmers have been an integral part of feeding the public. Many technological changes have impacted the farming industry, from the invention of the plow to more modern advances, such as GPS technology, irrigation, and drought-tolerant seed varieties. Many facets have changed but one has not, the dirt. Investing in land is a “simple” process of purchasing property and creating value through: revenue, appreciation, or tax benefits. Although it sounds that many “simple” investors don’t understand the difficulty in selecting properties that make sense for their investment goals when they invest in farmland, for example investing in farmland for retirement.  Listed below are a few short items to look at before investing in farmland.

FIND A PROFESSIONAL

 

Many investors both large and small make the mistake of not employing a professional that has the knowledge of the industry/market and can care for their money. Many times, throughout my real estate career, investment experience and as a farmer myself, I have seen investors not use the correct professional with knowledge of the land. When looking to diversify with farmland, seek a real estate professional with historical and proven confidence in the area.

Accredited Land Consultant land transaction expert farmland

Typically, land professionals are part of organizations like The Realtors® Land Institute where land is the single most asset class, they deal in. To go further, Accredited Land Consultants are trained and accomplished in the industry, of which only a few hundred agents have acquired the designation worldwide.  I use the quote, “I will not go to a heart doctor to get my hip replaced.” A Realtor® who sells homes in an urban area would not have the specific expertise to know the farm and ranch industry and understand the investment quality of a property. A farm and ranch real estate agent would not know about condominium prices in downtown. Use the Find A Land Consultant tool and look for an ALC Designated agent (see why) to make sure you are using a qualified land professional.

BENEFITS

One of the best benefits known to investors is the ability to have land as a tangible asset when you invest in farmland. This is especially important when a portfolio is heavily invested in the stock market.  Another benefit we see in farmland is the tax deduction in relation to depreciation.  Many farms contain improvements that depreciate such as grain storage, irrigation pivots, shops, barns and etc.  An owner can depreciate some of these assets each year to offset yearly taxes.  Always ask your favorite CPA for more information.

invest in farmland

“The United States has some of the best potential farmland for investment…”

Another great benefit to owning farmland is the ability to lease, farm, or share crop your property, to make money.  The value of farmland has increased over the last several years due to an increase in demand for food and fiber globally.  The United States has some of the best potential farmland for investment because of our democratic government and the infrastructure it possesses; ie, railroads, rivers and highways. Other countries have very fertile soil but have no roads to deliver products to a port, and it makes for a hard harvest.  Also, some foreign countries have great land to grow crops but have a corrupt government and/or the state owns all the ports of exchange.  Not all international investments are bad, they just can be more volatile than the U.S.

SELECTION

When selecting a farm to purchase an investor needs to keep three simple points in their process.  Do I have the capital to make the investment? Do I feel comfortable in a long-term project? Can I leave emotions aside when purchasing/selling?

  1. Knowing your buying potential, aka how much can you spend, is key when purchasing farmland. Some investors move capital into property with no debt and many move some capital and acquire debt through lenders.  Lenders are everywhere and, in my opinion, choose a lender that understands farmland and its characteristics.  There are options for government loans through the USDA and other government entities as well.  Consult your land professional to direct you to lenders that can help.
  2. Farmland investing for the most part is a long-term project. Many investors buy land and hold it for extended periods of time to get the most return.  Many large investors may hold land for as long as 10+ years to see the returns.  The farm economy goes in cycles much like the economy, which as a whole goes up and down.  To see real potential in farmland, one must be ready to hold on through at least 5+ years.
  3. Emotion is always on the table when it comes to tracts of land. Throughout my career I have fallen victim to getting emotional towards a piece of property.  This is a definite thing to remember when it comes to you and your family’s financial future.  Leave emotions at the door.  The phrase, “time is money”, can go both ways. Waiting two years to purchase because it makes more sense financially or selling now because you have a willing buyer, may factor into your decision. Remember, “A Bird in the Hand is Worth Two in the Bush”.

“To see real potential in farmland, one must be ready to hold on through at least 5+ years.”

DIVESTING

After the asset has reached potential or maybe you are ready to buy a new investment, it is time to liquidate. When you invest in farmland, selling the property is as important as the day you purchase. I cannot express the importance using a qualified professional. Visit the Realtors® Land Institute to find a qualified agent when it comes time to sell your investment. The right professional can elevate your sales price, alleviate hassle, and supply you with confidence to the day of closing. When selling farmland, a land professional must qualify buyers and must advertise to the masses. This requires a tailored marketing program and someone with whom has the skill set to vet buyers and make sure qualified candidates can meet or exceed the requirements to get to the closing table.

CONCLUSION

Investing in farmland is very rewarding, if done correctly. The key to remember is to surround yourself with qualified people to help you make decisions. This is your money and your future, happy hunting!

About The Author: Clayton Pilgrim, ALC, is a licensed real estate agent with Century 21 Harvey Properties in Paris, Texas.  Throughout his career he has been in production agriculture from on the ground operations to large scale management.  Pilgrim is involved in private investing in farms, ranches, and recreational tracts throughout East Texas and Southern Oklahoma.  He is a member of the Realtors® Land Institute, an Accredited Land Consultant and on the board of the Future Leaders Committee.  He resides in Paris, Texas, with his wife, Kristy, and daughter, Caroline.

2018 Land Markets Survey

Top Four Takeaways from The 2018 Land Market Survey

The highly-anticipated Land Market Survey is out! Every year, REALTORS® Land Institute and the National Association of REALTORS® Research Group conduct this survey for land professionals across America to use as an informational resource. The land industry faced many challenges (such as natural disasters and uncertainty on the long-term effects of the current trade war) and many victories (such as the WOTUS ruling and an overall strong economy). Let’s take a look at some of the biggest takeaways from the 2018 Land Market Survey.

1. Land Prices Are On The Rise, But Slowly

Average land prices across America rose, but at a slower rate than previous years. Land prices rose 2% in 2018, compared to 3% in 2017. This slower gain could be a result of rising interest rates and depressed commodity prices.

2. The Price of Land Bought and Sold Went Down

Across all land types, the median price per acre decreased to $4,500. The amount of land being bought and sold also decreased to a median of 53 acres. However, some land types actually saw higher sizes and prices in 2018. Agricultural irrigated land, timber, recreational, and ranch land all increased in price per acre over the year, while agricultural non-irrigated, timber, residential, and ranch land increased in property size.

3. Financing Was The Number One Issue Facing The Land Industry

49% of respondents said that financing was an issue affecting the land industry. Local zoning, federal zoning, state regulations, and tariffs were also mentioned as top issues.

4. Land Is Being Sold Faster.

While some land types struggled in 2018, the median number of days a property would sit on the market decreased from 95 in 2017 to 90 in 2018.

As with any year, 2018 was a year of many ups and downs for the land industry. It’s impossible to predict what will happen next, especially in this industry. However, the data from the Land Market Survey can help us plan for whatever 2019 has in store for us and help make it the best year yet.

Want to learn more about the current state of the land market? On January 23, Scholastica (Gay) Cororaton, a research economist at the National Association of REALTORS®, hosted a survey going into the nuts and bolts of the Land Market Survey. The live webinar quickly sold out, but don’t panic! You can still watch the recording for free on our webinar archive page. The recording will be posted the week of January 28th.

We wanted to give a big thank you to everyone that participated in this year’s survey. We had the highest participation rate ever!

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

What does RLI Have In Store For 2019?

The start of a new year is a time for fresh ideas, getting motivated, and setting new goals. If your New Year’s Resolutions include growing your career, networking with other land professionals, and learning more about land, check out what the REALTORS® Land Institute has in store for 2019.

2019 National Land Conference

The biggest networking event in the land industry is right around the corner! Join hundreds of other land professionals in Albuquerque, New Mexico, on March 3-6, for four days of networking, amazing speakers, Break Out Sessions, and more!

This year’s opening keynote speaker will be Dr. Mark G. Dotzour, a real estate economist who worked as the Chief Economist of the Real Estate Center at Texas A&M University. His research has been used in The Wall Street Journal, Business Week, USA Today, and more. He will be informing attendees about how current economic conditions are impacting the land industry. You’ll also hear from expert industry speakers like Steve Apfelbaum, Amber Hurdle, John Newton, and Russell Riggs on topics such as the ecological value of your land, personal branding, the New Farm Bill, and the latest on land laws.

In addition to gaining expertise from these amazing speakers, you’ll be able to:

You can reserve your spot for NLC19 here. We hope to see you there!

Updated Classes

Our classes have been upgraded to include the most up-to-date information and the latest industry best practices. In addition, our new VILT (Virtual Instructor Led Training) courses foster engagement with and hands-on participation in the course content as well as networking with fellow participants. We are still rolling out these new classes, so if you don’t see a class you’d like to take, check back later in the year on our  , and we’ll most likely have it scheduled.

LANDU Education Week

LANDU Education Week is an amazing opportunity to finish all six required courses for the Education Requirement towards earning the Accredited Land Consultant Designation in one week.  This year’s LANDU Education Week will take place in Denver, CO, from June 2-11. We sold out quickly last year, so be sure to register early! We’re still polishing the final details, but will be opening registration in early April.

Great New Webinars

Want to dive deeper into the Land Market Survey? We have two free webinars coming up that go into the nuts and bolts of the survey’s results. Scholastica (Gay) Cororaton, a research economist at the National Association of REALTORS®, will lead the Digging Into the Land Survey: Top Market Trends webinar on January 23. Then, Jay Wittistock will take a closer look at land surveys in general with The Dirt on Land Surveys on April 10.

Didn’t get to watch a webinar live? No problem! You can watch recordings of them here.

With all these great events, classes, and webinars coming up, 2019 is shaping up to be an exciting year for the REALTORS® Land Institute. We hope it is for you, too!

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.