The IOWA FARMLAND rush continues on...........

[Fishhead24]

Sniper-I guess it will have a negative impact for sure on ehtanol. But keep in mind a couple things here.......

1. There is more to rising Iowa land prices than just ethanol.

2. Iowa farmland in my opinion for the next 1-2 years at the very least will continue to be a great place to invest money..........and all the while getting a chance to own a part of Americana.

[Sniper]

Fish,

1. In a well diversified long term port, what percentage allocation would you deem appropriate for Iowa Farmland?

2. How much acerage do you need to make this worthwhile? (ie whats the minimum investment?)

3. What costs are associated with renting out the land for farm use? and how does one go about making this happen?

4. What are the major risks?

[Fishhead24]

[ QUOTE ]
Fish,

1. In a well diversified long term port, what percentage allocation would you deem appropriate for Iowa Farmland?

2. How much acerage do you need to make this worthwhile? (ie whats the minimum investment?)

3. What costs are associated with renting out the land for farm use? and how does one go about making this happen?

4. What are the major risks?

[/ QUOTE ]


1. No more than 33%

2. Most land is sold in 80 or 160 parcels(160 being a quarter section). There are oppurtunities where you can find 40 acre parcels and calling a land broker can find these for you. You than can get into this investment by purchasing 40 acres(currently a $200,000 cost based on 5,000 per acre).

3. You can ask around and find yourself a good farmer in the area to rent the land to. You can do this by asking around or hiring a farm manager(which you don't need). Say you cash rent your 40 acres for $200 per acre, that will generate you 8,000 before costs which amounts to only insurance($80-120) and real esate taxes($600-800). So you net income before taxes would be around $7100 using the CASH RENT method. If you would like a tad more risk/hassle, you could also custom farm or take half the crop yourself and this would in most years produce a better return. If you are serious on investing in Iowa farmland, contact a good farm manager in the area your thinking of investing. A very good management team that I use is Hertz farm management and you can do a search on them and see what they have to offer. CONTACT THEM AND ASK THEM TO SEND YOU THEIR FREE NEWSLETTER, THIS WILL BE A GREAT LEARNING TOOL FOR YOU. ASK FOR A COUPLE PAST ISSUES AND TELL THEM YOU ARE LOOKING AT INVESTING IN FARMLAND.

4. The major risks are you buying property for 5,000 and having it decline by whatever margin. Again, ask the above mentioned farm managers I told you about in answer #3 and they can give you detailed info. Land is doubtful to go down in the next two years. If it does, in my opinion, it would be very unlikely for it to go below 3,000 anytime in the next 3 years. Some believe this land is going to 10,000 per acre, not me. However, I would bet on it going to 10,000 before it going under 3,000. Make sure you get a very good farmer to rent your ground. Your biggest risk would be getting a farmer who doesnt give a crap about your land and how to take care of it. Most farmers are very good and there are very few bad apples, at least in NW and NC Iowa.

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
Fish,

1. In a well diversified long term port, what percentage allocation would you deem appropriate for Iowa Farmland?

2. How much acerage do you need to make this worthwhile? (ie whats the minimum investment?)

3. What costs are associated with renting out the land for farm use? and how does one go about making this happen?

4. What are the major risks?

[/ QUOTE ]


1. No more than 33%


[/ QUOTE ]

LOL!!!...but to be fair, i dont think you understand the term "long term portfolio" nor "diversified" so given that, your guess makes more sense...especially if by "not more than 33%" you meant "not more than 5-7.5%"

[ QUOTE ]

4. The major risks are you buying property for 5,000 and having it decline by whatever margin.

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REALLY??!! are you sure?? you mean THE major risk is buying something and having it decline in value?

whew, thanks for that!!

Barron

[Fishhead24]

dcifrths--you must have some built up torment for missing the tremendous gains in this investment over the last few years(most noticably the past 9 months) to represent yourself with such sarcasm on such an informative thread for many. I know you will be the first to knock this investment on its first downward cycle in 2-3 years(if that happens) and ignore what has happened from 1995 to the present which has seen Iowa farmland rise from around $1500 an acre to $5000 all the while earning its owners an additional 3-8% gain through renting the land.

[DcifrThs]

[ QUOTE ]
dcifrths--you must have some built up torment for missing the tremendous gains in this investment over the last few years(most noticably the past 9 months) to represent yourself with such sarcasm on such an informative thread for many. I know you will be the first to knock this investment on its first downward cycle in 2-3 years(if that happens) and ignore what has happened from 1995 to the present which has seen Iowa farmland rise from around $1500 an acre to $5000 all the while earning its owners an additional 3-8% gain through renting the land.

[/ QUOTE ]

a) thread is informative. like an infomercial in some respects.

Good facts: iowa farmland is overlooked as an investment opportunity by many on this board. price appreciation in farmland is likely to continue based on current trends and downside risks aren't huge due ot govt. action or large economic swings required to really tip it down.

bad facts: it is not easy to immediately get into it (i.e. you have to do the research, speak with farmers to rent out the land, possibly arrange a mortgage or buy it up front with a large amt of cash that could go elsewhere). taxes are unknown (does govt allow you to deduct mort interest on iowa farmland?)

you are pushing this like it is the end all be all and the "up to 33%" is truly laughable. sniper's questions are good because they show the lack of understanding you have for portfolio construction and risk factors in investing in the land.

the investment may be great, fantastic even, but there ARE risk factors and some downside risks (Although not many as you've mentioned in the very short term).

but overall, land/real estate etc. are good long term investments, with a max of maybe 7.5% in a portfolio (and that is a hugely optimistic allocation).

that is a very brief recap.

my sarcastic comments are made for my enjoyment in this case. it is hilarious how you phrased the opening sentence of "what are the risks?" you answered by saying "the risk is that you could lose money." WOWWWWW, really?!?!?! lol.

anyways, the thread was informative and if a person managing their money has an interest in this i'm sure it would be extremely valuable to them so i don't mean to knock the investment...just your approach to the selling of it.

Barron

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
dcifrths--you must have some built up torment for missing the tremendous gains in this investment over the last few years(most noticably the past 9 months) to represent yourself with such sarcasm on such an informative thread for many. I know you will be the first to knock this investment on its first downward cycle in 2-3 years(if that happens) and ignore what has happened from 1995 to the present which has seen Iowa farmland rise from around $1500 an acre to $5000 all the while earning its owners an additional 3-8% gain through renting the land.

[/ QUOTE ]

a) thread is informative. like an infomercial in some respects.

[/ QUOTE ]

[Sniper]

[ QUOTE ]
sniper's questions are good

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LDO [img]/images/graemlins/wink.gif[/img]

ps... Barron can you put your research skills to good use and determine if any REITs have significant IOWA farmland investments?

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
sniper's questions are good

[/ QUOTE ]

LDO [img]/images/graemlins/wink.gif[/img]

ps... Barron can you put your research skills to good use and determine if any REITs have significant IOWA farmland investments?

[/ QUOTE ]

i just did an internet search (nareit, ncreif, google etc.) and nothing came up for agricultural reits. they break it down by apartment, resi, comm, specialty, composite (like the NAREIT index), and a few others. farmland doesn't appear in either one of them.

i dont have access to a BB terminal at home though so i can't do a thorough search (BB has every single reit traded and i can search a variety of ways). next time i go to the library i'll check it out though.

Barron

PS- i JUUUUST now got what LDO means lol.

[Fishhead24]

Barron-you are one sharp cookie.......and one funny poster.

LMFAO!!

By the way, here is my current percentage on investments......

IOWA FARMLAND------50%
GAMBLING BANKROLL..20%
SAVINGS............10%
MISC...............20%
SAVINGS