Triple Net Farm Land

Where is the land (LA delta/Midwest/hill dirt), is it irrigated (or capable of being irrigated), what is the price-per-acre, what crops have been/will be grown on it, what are the base acres, and how much are you looking to put down on it?

It’s a terrible time to buy, fyi. With all cash and no borrowing it’ll be hard to beat 3%.

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returns of 2-3%

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I cannot fathom this. There are other “safe” investments that easily net double that.

I haven't been keeping up with farm land prices, still high as eagle snatch?

I figured prices would be falling by now and that there would be some foreclosures to pick up.

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It’s a diversification of assets away from equities.

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It’s a concentration of assets with a big bet made on weather.

Ive found farmers tend to be the most risk averse clients, yet they are investing in one of the most risky asset class.

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Getting snatched up by cane guys, who are actually making money apparently

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Not if you ask them though

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Land is in the MS delta, it is irrigated (too irrigated right now due to the high river seepwater), crops are cotton, beans and corn. 160 acre tract. They want a little over $5k/acre.

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I don't think I have seen any land in Mississippi that gets 2-3% at over $5,000 an acre. I could be wrong. I have been calculating 2-3% on some $3k pieces.

GSE bonds will net more than that

Municipal lower floaters with the LC that guarantees the bond will pay more than that we

Both with almost zero risk

There have been several quality bond offerings the last 36 months that have little overall risk.

Of course there are tax free / exempt municipal bonds - if you conduct your due diligence, there are solid opportunities available.

There are still covertibke bond hedge plays out there that have little risk but offer solid returns.

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Please name some then.

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That’ll be the frickin day

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Land is in the MS delta, it is irrigated (too irrigated right now due to the high river seepwater), crops are cotton, beans and corn. 160 acre tract. They want a little over $5k/acre.

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If it’s close enough to the levee to have serious seepage I’d assume we’re dealing with primarily silt loam soils then. For prime irrigated land in the delta that price is pretty standard (though not a deal).

23% across all crops is interesting. In most leases down here you typically see 25% for grain and 20% for cotton (due to cotton grossing more) so that could potentially be a plus.

If you aren’t borrowing any money and are using post-tax dollars you’ll need ~$160 an acre to achieve 3%. That wouldn’t be difficult with prime, irrigated land. He’d likely need to average at or over 1,100 lb of cotton, 185 bushels of corn, or somewhere in the 70’s on soybeans.

Obviously if you’re borrowing the money these numbers get much worse very quickly.

Also, by “base acres” I’m referring to what the historical crop mix has been on the place and thus what crops you could potentially be paid on if there is a government program. You should check on that either at the local FSA office or with the seller. It’s important. Pro tip: the more cotton base acres the better. It’s historically paid more than the other crops.