“ Real estate cannot be lost or stolen,
nor can it be carried away.
Purchased with common sense, paid for in full,
and managed with reasonable care,
it is about the safest investment in the world.”
--Franklin D. Roosevelt (1882 – 1945)
I recently ran across this quote and thought how true this has been over time.
The only problem with it now is the "paid in full" part. However, this has always been a problem no matter what generation we talk about. My dad still tells me stories of how my grandpa had the chance to buy ground for $800 per acre and turned it down. In today's world that sounds crazy, but is it? With land in Central Illinois selling for over $9,000 per acre acre should we buy it up or wait for prices to fall. We have taken such a huge jump in appreciation the last 5 years one would think that it would have to have some type of correction.
However, with the world demand at record levels and lots of cash available to buy land it makes the competition very fierce when a farm comes up for sale. A 4% return paid on $9,000 land is possible this year, but with input costs already rising for the 2012 crop year it really makes a good return questionable for future years. With that said farmland has historically provided a 3%-5% return and had tremendous appreciation in value which would still lead me to believe that it is a solid investment. That is one of the things I enjoy the most about farming is the uncertainty and the challenges it presents. Although it is extremely risky and would probably make most peoples stomach upset there is an un describable satisfaction knowing that my family and farm is prepared to take on and succeed at these challenges.
Below is a picture of my grandpa Harry Martin loading a truck the "old fashioned way".