Whatever your reason for purchasing agricultural land, owning farmland can be a lucrative investment for many people. However, before rushing in to begin a property search, it is essential to know if the investment is wise and well thought out.
Here are our top tips to the pros and cons of buying farmland.
By far the biggest advantage of buying farmland is that it can generate anything from a modest to a sizable income, depending on the type and success of your business.
This is because you can obtain income from selling crops/produce, by leasing land to a farmer for him to run his own business from your land, or by building property on your land and then renting it out.
Nevertheless, there are a number of other advantages to purchasing farmland. These include:
Tax exemption is a definite perk of becoming the proud owner of a few acres (or more!) of farmland. Income generated from land cannot be subjected to wealth tax, a type of tax that is sometimes levied on incomes created from property ownership.
If you own your own farmland, there is nothing stopping you from planting your own crops. You can also apply for government grants to do so. You may also be able to raise your own livestock, another possible food source as well as reliable income.
If you have plenty of space on your land, you might even want to consider renting out land to other farmers for a share of their profits, a low-effort way to boost your income.
Although there is no guarantee that every farmland investment will help you to build equity, studies show that in the past decade, agricultural land prices have increased in many parts of the country. In some locations, they have almost doubled, meaning that you can make money by simply having your name on the deeds to the land.
Buying farmland is not for everyone, and someone who does not do sufficient research and preparation before signing on the dotted line could be making a risky investment.
Therefore, one of the biggest disadvantages of buying farmland is that it is a different to a standard property purchase. For this reason, we always recommend that you use a realtor, like those at Walla Walla Sotheby’s International Realty, who are familiar and experienced in dealing with this type of purchase.
Other disadvantages to choosing to buy farmland include:
To get the most out of your farmland, it is essential that you have the business insight to be able to maintain the value of the site and ideally, turn a reasonable profit. However, since farmland is a specialist type of land, plenty of knowledge and understanding is needed before purchasing it.
Whether you are living in a property on your agricultural land, or you are needing to travel to site on a regular basis, becoming the proud owner of farmland is a total lifestyle change, especially if you have previously been living in the city. You may be miles away from schools, stores, or hospitals, so you should take proximity to the amenities you need into consideration when you make your purchase.
People encroaching on to your land is a somewhat frequent problem across farmland in the United States. Unless you are lucky enough to live close by, you may need to take proactive steps to protect your land from encroachers.
If you intend on leasing land out to another farmer, the revenue that you enjoy will depends on the standard of the crops grown, something which can be affected by many, unavoidable external influences, such as the weather, the soil type and quality and the amount of water you provide. These factors may also affect the likelihood of you being able to rent your land out, and the percentage of profit that you will reap as a result.
If you are considering purchasing farmland and would like more information about the advantages and disadvantages that you may be facing, our highly knowledgeable, friendly team would be happy to assist you. Call Walla Walla Sotheby’s Realty today at 509-876-8646 to discuss potential agricultural land purchase and available farmland in the area.