In this post we’ll be exploring an alternative investment that can be leased to provide you with a reoccurring payment much like a stock dividend. Unlike shares of a company this alternative investment cannot usually be liquidated quickly like stocks. However it has many characteristics to like, it’s less volatile than the stock market in general and it can also be used as a hedge against inflation. The alternative investment were talking about is farmland and ranch land.
Both farmland and ranch land are valuable in that they provide real property on which to grow food and raise cattle for the community while also providing for the livelihoods of the farmers and ranchers. Over time large land tracts used for agriculture purposes have been bought up by developers and turned into housing developments. Agriculture land has also been bought by state and county governments, then used to construct highways and toll roads. The continual purchase and alteration of land once used for agriculture has the effect of increasing agriculture property values over time.
There are several qualities that make both farmland and ranch land investments attractive. The land you purchase, once farmed can provide food for your family. You can lease the land to a farmer, bringing you monthly income. Property values usually rise over time, some more than others depending on location. Land is a solid investment that you can literally stand on and work with. You can live on the land. You can defer taxes when you sell the land by using a 1031 exchange.
All things considered agriculture land is a unique and timely investment when bought in a good location and used to it’s potential. Another way to add farmland and ranch land to your investment portfolio without actually buying real estate is to buy shares in a real estate investment trust (REIT). REITs are owned and managed by a company that in turn pays dividends to it’s shareholders. If you find that you don’t want to allocate time to finding and managing land, REITs can be a good alternative.
Two REITs focused on farmland in the US offer an opportunity to invest in farmland without actually owning the land itself. Farmland Partners is one such REIT, buying and operating farmland based in North America. The company was founded by farmers and shares can be purchased under the NYSE: FPI symbol. Gladstone Land Corporation is another REIT focusing on buying and leasing farmland to farmers in the US. Shares in Gladstone Land Co can be bought under the NASDAQ: LAND symbol.
A new method of investing in farms has attracted attention and investment funding, it’s called crowdfunding for farms. Steward Farm Trust has created a way to fund small farming operations by crowdfunding, giving farmers the capital they need to buy or expand their farms while providing an investment opportunity online. There are many different ways to invest in alternative income sources that can provide for a diversified portfolio. Farmland and ranch land is an important alternative investment that can provide dividends in the years to come.