Land Investment vs. Stocks

After seeing the free-fall in the stock market over the last several weeks, many people are wondering where the safest place to invest their money is.  Many pension funds and other investment groups have become heavily invested in land to offset the wild fluctuations in their stock portfolios.

Farmland and Timberland have become a favorite “safe haven” for many investors that want to get away from the fluctuations that the stock market has been going through and are looking for a long-term investment.  In the last several years, most land prices have dropped, as has the stock market, but land remains a very stable investment.

A well-managed timber stand can give a long-term annual return of 4-7%, in addition to increased value of the land over the long-term.  Strategically located land can increase in value significantly, particularly if the highest and best use changes from timberland to a different use.

Cropland values are becoming more and more related to commodity pricing.  Speculation in this area can increase values significantly; however, they can also fall if the “commodities bubble” pops.  This is more evident with large farms in the “farm belt”.  Smaller farms that have both farmland and timberland seem to have less fluctuation in value with swings in commodity and timber prices.

Income from land varies over time depending on whether it is producing crops or timber, making it more of a long-term investment.  Crops and timber are both renewable resources.  The return from farms has put many children through college and continues to produce for the next generation leaving the land value to increase as a hedge against inflation and increase as uses change.  Best of all, you can see it, walk on it and enjoy it for its recreation and beauty.

Making a good land investment takes knowledge of the potential for each parcel of land.  Each one is unique and has different attributes and needs to be looked at separately.  Grant Massie Land Company can assist you in this process, helping you to acquire land that best meets your needs.