Questions You Should Ask Yourself Before Purchasing Farmland
January 9, 2023
The idea of owning farmland appeals to many investors, whether they are simply looking to diversify their holdings or have a personal interest in participating in the agricultural sector. Both motivations are valid, of course, and you may be attracted to farms for multiple reasons.
However, those who lack experience in farmland will want to ask themselves some key questions before making their first purchase.
Before you can consider a particular piece of property, you’ll need to take stock of your finances to determine how much you want to make available for farmland investment. As noted by North Carolina State University, you have to keep in mind what your initial payments will be along with future financial requirements, such as making improvements and repairs.
Is the farm doing well financially? That’s a primary question to ask, per the Manitoba Agriculture page. After you review the cash flow documents and other key facts, you’ll be in a position to see how your assets will fit into this piece of agriculture. You may need to consult with specialists to evaluate the forecasted revenue.
Do you want to own a farm that you live on with your family? Will you be doing the work yourself, or hiring farmhands to take care of much of this effort? You might be the type of investor who wants to live in a city and leave the farming work to professionals.
It’s also worth giving serious thought to what kind of agricultural concern interests you the most. For example, perhaps you are attracted to the flower market, or you are more motivated to invest in organic fruits and vegetables. Some farms grow commodity crops like corn that are used to feed animals or turn into ethanol for fuel. Others focus on niche vegetables or are more interested in raising livestock rather than putting their efforts into endless rows of crops.
Are you looking for a small farm, or are you more in the market for 100s or 1000s of acres of land?
For some investors, it makes sense to participate in fractional farm ownership, since you don’t have to put up the whole amount, and you are sharing an investment with others.
The answer to this question depends on whether you want to live at or near your farm, and whether you have a desire for your farm to be particularly close to certain markets, for better logistics in getting products to the stores.
After considering these questions, you should be in a better position to make an investment. There’s no time like the present to start putting some of your assets into agriculture. Ideally, you will partner with seasoned professionals who can help you discover and evaluate new farmland offerings as they become available.
At FarmFundr, our experts are devoted to facilitating farmland investments. For newcomers to agriculture, we can advise you on the merits of fractional farm ownership, for example, or assist you in accessing the latest opportunities to invest. Our focus is on farms in California, but we work with holdings across the country. To get started, open a complimentary FarmFundr account today so you can see what your investment options are.
