Why buy a farm?
Lots of people have a desire to own their own land, or, more specifically, their own piece of farmland. I think this is a great idea. Currently, California farmland is still undervalued in many places. People don't always see the value in a farm, as opposed to, say, a subdivided piece of land with curbs and rain gutters and the like. To me, this just says opportunity is a-knocking! We all know that home prices are on the rebound and land is going to follow that trajectory. As I write, today, there are still tracts of land in very desirable areas that have been sitting on the market for a year or more, with the old price tags to go along side.
I think the upside of farm buying or "banking" is terrific.
1) You own land
2) You can improve the land with a viable farm crop
3) You can depreciate the capital improvements (trees, irrigation, wells, tractors etc)
4) Crops and labor are deductible expenses
5) Great tax write offs for the "gentleman farmer" or anybody else with a big IRS bill
6) Possible home improvement, rental property or subdivision
So I love the multiple revenue income stream potential we've got with a farm. How many investment opportunities offer so many options? Not many! You've got to look at the big picture, because farming is a long term project and it is well known to be subject to the whims of supply and demand, invasive insects, water shortages, labor shortages and the like!
A grove or farm that has been abandoned, neglected or is in poor shape can be priced as vacant land, with some improvements such as electricity and water. There is a great upside to rehabbing an old grove, although it is a lot of work.
There is currently a movement across the nation for foreign nationals to be buying up farmland. The main players are from Asia, which, as a global region, is enjoying unprecedented prosperity right now. The farm and ag magazines have been talking about this trend for years-- all through the real estate slump, purchases were quietly taking place over and over again. So, when are the locals going to get on the bandwagon? Hopefully soon!
I love the bumper sticker: "If you ate today, thank a farmer". Food production -- everybody has to eat!