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Senior Contributor

Re: Comparing the stock market and Iowa land values: A question of timing

My computer does not reveal the chart nor source of your data.

In central pa, land was 200 in 1960, now 5000/A. Equities have done way more than that.

 

I don't think too many sit around thinking stks or land, largely if they have ability to fram more, they acquire more land.

 

US equities capture inflation and scientific progress, thus have very high returns over time.

 

Thise who can't add in bear mkts, when stks look good, should own CDs.

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Senior Contributor

Re: Comparing the stock market and Iowa land values: A question of timing

pritchh- below is the link to the research paper. Again, it has not been updated since 2009, but from 2009 to 2012, Iowa farmland has increased in value by over 100% in these 3 years. I bought my farmland in 1986 for around $1,000/acre and recently a farm down the road sold for $14,000/acre, and my land is probably a little better than the farm that sold for $14,000 as measured by the Iowa Corn Suitability Rating. Also in 2012, my $1,000/acre land I bought in 1986 returned a net profit of over $800/acre. However, when you figure $14,000/acre land with a net profit of $800/acre, it is only a 5.7% rate of return, nothing to write home about. However, it appreciated in value by 30% in 2012, so 5.7%+30%= 35.7% total return.

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Senior Contributor

Re: stock market and Iowa land values: Link to the Research Paper

Here is the URL Link to the Research Paper

 

http://www.extension.iastate.edu/agdm/articles/duffy/DuffyJan10.html

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Senior Contributor

Re: Comparing the stock market and Iowa land values: A question of timing

Yes Farmer46. I got lucky and purchased most of my land in 1986 at the end of the farm crisis for $1,000/acre, now 26 years later it is worth 14x this amount and producing an $800+/acre net profit in 2012. Farmland Investing has done a super job supporting my family. Of course it took me 15 years to pay off the Million+ Dollar loan to buy the farmland in the 1986 to 1989 time period, but now the 15 year term loans are paid off, Thank God!!!!!

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Senior Advisor

The truth is Kay a house does not produce income unless you rent it out.

If you buy a farm it will throw off income forever if managed properly. While it may not cash flow it may well produce significant income that you can subsidize with income from  other sources to pay for it. Each dollar of principal paid is a dollar saved and eventually the principal will be eliminated.

 

One that parcel is free and clear it is able to help pay for the next parcel. Once people get enough paid for the next purchase is self sustaining along as you continue to direct their profits in that direction. It's about commitment to specific goals and the discipline to carry it out,

 

As for the house commitment, for get not that that type of investment can throw off huge rewards in that it may make the little woman a content wife. In our case the new house was postponed way too long.

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Honored Advisor

Precisely my point

Tax policy favored too readily the " flip this house" mentality.  Few were smart enough to buy at the same or smaller size when making a move, bankng the gains from a previous sale.  

 

Almost universally, people opted to move up in size and price.  People fell into the trap of thinking that they were great investors, when most were suckers.

 

Somehow, we have ended up running a handful of rental houses.  I told Mike earlier this week, with them all rented this year, we would never have to worry about any tax or insurance bills on everything we own...and the houses are a minimal fraction of our real property, net worth wise.

 

I am probably not as concerned with " house" as many women are...my taste is not as girly on that account.  

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Veteran Advisor

Re: Comparing the stock market and Iowa land values: A question of timing

Frontline on PBS today really sums up the situation of the big financial mess the country finds it self in---" watch it if you dare" --- due diligance is a real interesting concept "

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Veteran Advisor

Re: Comparing the stock market and Iowa land values: A question of timing

 
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Senior Advisor

Re: Comparing the stock market and Iowa land values: A question of timing

If you consider the minerals 1000's of feet below the surface, I bet there are a few parcels of land in my area that will put Iowa to shame.  One farmer has received $2.5 Million from the oil pumped from his ground since 2011.  The producer across the road is well over $3 million.  Pencil that into ROI.  Just guessing, but I bet that ground was purchased some 30-40 years ago for about $100/Acre.  Iowa isn't the only golden investment!

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Senior Contributor

Re: Comparing the stock market and Iowa land values: A question of timing

congrats--never arguing tht farm land has not boomed again..

 

will prices hold when corn hits 4?

 

and could this be another early 80s set up.

hopefully not..

 

individual situations or corse can be grand,,

many stks fm 1986 are up 20 40 60 fold..

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