Are Investors Buying Farmland? 

      As a farmland and recreational land real estate brokerage we get the question often, “are investors buying land?” The answer is, yes they certainly are! In fact, from our last 11 farmland auctions 7 different investors were last to raise their hand prior to the hammer drop and the farm being sold. 

      With that being said, usually the follow up question is, why are investors buying farmland right now? There isn’t one good answer why investors are buying farmland but there are several different reasons why investors are seeing farmland as a good investment. 

Below are reasons why investors are being triggered to buy farmland

 Unstable Stock Market

It seems the number one reason investors are buying farmland more today than before is our unstable stock market. It’s one thing to have an unstable stock market but it’s another thing to have an unstable stock market while it’s touching record highs. There are a lot of uncertainties in the market and investors don’t want to leave all their eggs in one basket. Farmland has backed off from it’s all time high in 2012 roughly 19% – 23% across the state of Iowa. Investors know eventually land prices will peak again and it’s one asset if bought with cash they know they’re guaranteed 1.8% – 4% ROI through annual farm income.

Most Farmers Are Short On Cash Or Are They Really?

      It’s all people talk about in rural Iowa, farmers are not making money. It’s not only people in rural Iowa talking about it it’s all over the news, internet, newspapers, etc.. Most farmers aren’t making money and they haven’t been making money for some time now. The only farmers making money right now are the ones that own land free and clear and don’t have high farm equipment bills. Investors are licking their chops, they THINK blood is on the streets so they’re jumping in. Investors feel blood is on the streets and once commodity prices turn around farmers will be back more aggressive than ever before.

Interest Rates Are Low

      Interest rates are low which means one thing, cheap money. It surprises us, more investors than not are borrowing money to purchase farmland. Investors that are buying farmland with borrowed money are taking advantage of low interest rates. Right now investors feel like they can make more money with their cash in other investments then park it in farmland so that’s what they’re doing. 

They’re Not Making Anymore Land 

      Lastly but arguably most importantly investors realize they’re not making anymore farmland. Every single day another backhoe digs another hole to start construction of some sort and investors know as this world grows the demand for farmland will always exceed supply.

Does this mean Farmers are not buying farmland?

      Absolutely not! Blood is on the street in some farming neighborhoods, counties, and regions across the state. However, there are more extremely liquid areas across the state than not. More areas than not north of Interstate-80  investors struggle to get farmland purchased because local operators are sitting in good shape and jump on good dirt that comes available when it’s close to what they already farm. It’s important when looking to sell farmland you understand if your farm falls in one of the “rich regions” of the state or not.

      If you’re considering selling farmland, reach out to one of our Land Brokers at Iowa Land Company. It’s important to first understand your farms current value, take a look at how aggressive the local operators are within your farms location is, and then come up with a plan how to yield the absolute most value out of your farm. To get the process started contact Iowa Land Company headquarters at P: (515) 962-5048 or E: info@iowalandcompany.com