Is Farmland a Good Investment?

Investing in farmland is a big commitment. Not only is farmland one of the largest types of properties you can buy in terms of acreage, but it requires a big lifestyle change if you’re planning on living there. However, if your long-term goal is to make money off of your investment, you should know that farmland can be extremely profitable – especially with the help of an experienced real estate agent who is experienced in these types of transactions. In this article, we take a look at what makes farmland a good investment, and what you should consider before investing.

What to Know Before Investing in Farmland

No matter how lucrative farmland can be, there are several things to consider before making this type of investment – and that doesn’t just include the financial side. Before investing in farmland, it’s important to consider the significant lifestyle change that comes along with it, as well as possible environmental factors that could affect your crops. 

Realtors Land Institute tells us more on what should be considered before investing in farmland:

“Purchasing land is not as easy as securing a mortgage for a home. A land loan typically needs to be paid within 3-5 years, and both the down payment and interest rates are higher than that of a mortgage as well. Experts recommend paying cash for a land purchase if you are able. It’s also important to note that a farmland investment is different than a regular land purchase. You’ve got to have the knowledge and experience to be able to properly maintain the site for maximum profitability (or at least the ability to hire someone who possesses both).”

Why It’s a Good Time to Invest in Farmland

It can’t be denied that it’s a good time to invest in farmland, if for no other reason than the fact that our population is constantly growing. Whether or not you’re planning on using your farm to grow and sell food, the value of this type of land is only going to go up. 

It can’t be denied that it’s a good time to invest in farmland, if for no other reason than the fact that our population is constantly growing. Whether or not you’re planning on using your farm to grow and sell food, the value of this type of land is only going to go up. 

The Conversation tells us more about the benefits of our growing population in their article “Canada’s farmland is a wise investment — during and after the coronavirus”:

“Today, there are more than seven billion people in the world. It is estimated that by the year 2050, there will be more than nine billion people. It’s also been predicted that 90 percent of existing arable land will be used to produce as much as 70 percent more food to accommodate this growth. This will invariably raise the value of global farmland.”

Simple economics suggest that if demand increases while holding supply constant, prices will rise. That means increased demand for food and constraints on arable land will lead to appreciating farmland values.

How Does Farmland Look in the Overall Portfolio?

If you’re looking at farmland purely from an investment point of view and are wondering how it will look in your portfolio, then farmland is an excellent purchase. If you have an experienced real estate agent on your side with knowledge of the farming and agricultural industry, then they will be able to provide you with more information on the expected value of your property in years to come.

Forbes.com tells us more on the benefits of adding farmland to your investment portfolio:

“Farmland is an excellent addition to any investment portfolio. It is inflation-resistant and contra-cyclical to many conventional equity investments. Most importantly, it is a real asset that will always maintain some level of intrinsic worth. I will be putting my parents’ and grandparents’ savings into our products and sleep soundly.”

Is it time to purchase your very first farm or agricultural property? With over 30 years of experience representing buyers and sellers in the British Columbia market, we can help you find the perfect investment property for you. Contact Cascadia Pacific Realty, Ltd today to get started!