Questions to consider when buying farmland:
- Have I thought about what I really want to buy? There are several investment parameters to consider when purchasing a property. These include: total dollars to spend, number of acres, soil quality, targeted rate of return, desired location, time frame, etc. Knowing what you want and can afford in advance will make the entire process much easier.
- Do I have the expertise to analyze all available properties? Farmland is a specialized asset that requires knowledge of soils, drainage, fertility, weather patterns, the government farm program, locational characteristics, rental rates, and current land prices. Not understanding the impact of one or more of these variables can be extremely costly. Remember… the broker or auctioneer representing the seller is under no obligation to educate you.
- Do I have the time to find and look at all available properties? The property that best meets your interests or investment parameters may be located hundreds of miles away. Do you want to look at each potential purchase, or would you rather have someone investigate these properties for you?
- Do I need a farmland specialist to represent my interests? A broker that understands the nuances of agricultural or transitional properties, and who works exclusively for you, can be a very valuable asset to have. This person can educate you about the investment, protect your interests, and minimize the risk of a “bad” purchase. After all, the seller typically has someone (a broker or auctioneer) representing their interests, so why wouldn’t you?
- Does my agent buy and sell farmland on a regular basis? Anyone with a real estate license can assist you. But if this person typically sells more residential properties than agricultural ones, chances are high that they don’t have the expertise you need. Ask for their credentials and references to insure you are getting an expert.
- How much is a farmland specialist really worth to me? Fortunately, most agents representing a farmland buyer are paid by the seller’s agent as part of a commission sharing arrangement. However, if this isn’t the case, realize that it’s quite easy to overpay for a property by 10–20%, simply because you don’t understand all of the issues listed above. So, how much is it worth to you to make sure you don’t make a 10–20 % mistake?
If you can't answer "yes" to all these questions, contact Loranda Group and we'll be happy to help you weigh your options.