The economy is currently rather unstable and investors are looking for safe places to put their money. They are drawn to commodities because these represent physical items, not intangibles. These have some intrinsic value even when economic conditions are poor. The real estate market is another smart investment at this time because properties are undervalued. One way to combine an investment in real estate with a potential investment in commodities is to purchase farmland.
Farmland represents a viable alternative to the uncertain stock market (even gold stocks) because it provides a way to earn high returns. Purchasing and subsequently renting the land to a farmer will result in an annual return equivalent to three and five percent of the rental income. Experts recommend that the land be held for at least five years in order to get the most benefit from the investment.
Investing in farmland requires that an individual first gain knowledge of the different types of properties, their sale prices, tax rates, and reasonable rental rates. There are tracts of farmland available for sale online and some Web sites match sellers of investment farm properties with those who are interested in buying it. These sites feature properties not listed elsewhere that provide decent cash flows during the lifetime of the investment.
Some real estate agents specialize in farm properties and using one can be especially helpful to a new investor. Farmland purchasing decisions involve a unique set of considerations such as the location of the property in terms of production viability and the presence of a water source. Specialty agents can provide buyers with a list of items to assess when reviewing farmland available for sale.
An investment in farmland requires the purchase of a high-quality tract of land and its consistent rental. There is a limited supply of good land because farmers usually elect to retain the property and use the rental income to sustain themselves. The average investor will be able to afford a small tract of available farmland and mortgages are available to cover up to 60 percent of the land value.