2015 rec land prices

[bwoods11]

I agree with 80-90% of what you have there Jake, and I love owning land/buying parcels and fixing them up with habitat improvements etc... One thing I will say though is the money is made at the time of purchase. You have to buy it right or things may not work out so well. For instance, I have seen several land owners buy parcels with easements on the farm for around 1500-2000 acre. Some of those farms are now worth less than $1000 an acre, and they cannot sell the farm (no income).

Farmers west of me that paid $10,000 an acre have seen the value of those farms drop to 5-6k per acre---since corn dropped in half.
According to one source that I have, some of these guys are being watched closely by their lenders already!

Since I am self employed and also in real estate, I watch the land market very close. In many states. Low corn and soybean prices will have an impact on prices. In MN... ND and SD they are parcels sitting on the market because the owners can't accept that their farm has dropped.

Like the stock market, real estate is and up and down market. It is great investment with excellent tax benefits, but you have to buy it right..... personally I prefer a parcel that produces a yearly income!

 

[bwoods11]

On a side note regarding stocks......If you have not seen the oil stocks lately, take a peek. I have some that have been cut in half. Time to buy more, some are producing a dividend of 15% or more. If oil prices come back, which they will. You will be sitting on a nice hefty income producer.

 

[West Branch]

Is real estate a good investment? here is an example of not:

In 1626 the Dutch explorers purchased Manhattan island from some Indians for trade goods worth 60 guilders at the time which has been translated to roughly $24. Manhattan island is now some of the most expensive real estate on earth with a value of over $3 trillion in 2014.

Did the Indians get a bad deal? If they went and traded off the goods received for other items such as furs and came back and kept on trading with the Dutch in following years and managed to avoid smallpox blankets and kept building their business into other areas that ended up earning a 7% average operating return over all of those years they would have over $6 trillion in 2014, over double the value of Manhattan island!

Of course my cherry picked numbers make it look pretty good to not have the real estate. But if the Indian's return only averaged 6% the Indians would only have $158 billion, which would look pretty crappy on their side. The power of compound interest!



I still watch real estate closely in a lot of areas of MN and Iowa and want to be ready for a purchase if something appears like a good investment and has an actual return like farmland or rental property. But the only reason I would buy land in our area of MN would be as recreational land that I probably wouldn't sell, unless the #s look too good to be true. So it would be all speculation.

There is hunting land in our area that is listed at 800-1000 an acre that has easy road access and 50%+ hard land and hasn't sold for many months. With a mild winter or two some of those places could be ok hunting. The best hunting areas still have land listed for 900-1,400 which could be ok hunting for MN if you had at least 160 acres with a couple mild winters.

 

[foggy]

I was kind of shocked to hear what folks are paying for rec land in some areas of MN today.

I think some of what I may have stated could be out of context. The guy with land to the north of mine has thrown around some high numbers based on his ideas that that land is in the "city limits" and that it could have value for a home sub-division. Both ideas are highly unlikely for the time being.....but his group (lawyers) has developed a number of small, rural subdivisions in the past.

MOST of the hunting properties sell at prices from as low as $1200 / acre up to $2,200 an acre - if its choice stuff with utilities and good access, etc.

Those types of properties (with 5 acres in the woods) are still in pretty high demand around this area for home building sites. They may be working on some of the utilities tho....as I saw a gas-line survey has been done (?? o_O)

Demand in the "lakes area" remains somewhat high.....and prices for similar land just 30 miles away may be 40% less - or more. This is a great place to live.....but the entry costs are high. Come over to the lakeshore where I live if you want to be shocked!! It's insane.....but it is a nice place to be.

In this area, high priced homes are being built and the building companies are sold out for a year or more ahead. Busy Busy. Low priced homes?.....not so much.....and those low prices are really mid-level prices just 30 miles away. Hard to figure. Location, location, location.

 

[Freeborn]

I agree with 80-90% of what you have there Jake, and I love owning land/buying parcels and fixing them up with habitat improvements etc... One thing I will say though is the money is made at the time of purchase. You have to buy it right or things may not work out so well. For instance, I have seen several land owners buy parcels with easements on the farm for around 1500-2000 acre. Some of those farms are now worth less than $1000 an acre, and they cannot sell the farm (no income).

Farmers west of me that paid $10,000 an acre have seen the value of those farms drop to 5-6k per acre---since corn dropped in half.
According to one source that I have, some of these guys are being watched closely by their lenders already!

Since I am self employed and also in real estate, I watch the land market very close. In many states. Low corn and soybean prices will have an impact on prices. In MN... ND and SD they are parcels sitting on the market because the owners can't accept that their farm has dropped.

Like the stock market, real estate is and up and down market. It is great investment with excellent tax benefits, but you have to buy it right..... personally I prefer a parcel that produces a yearly income!

Agree you need to buy at the right price, it lowers your down side. I also want income on a property I buy. It doesn't have to be huge income but if it covers your taxes and provides an annual operating income it can cover your plotting expense and adds to your enjoyment of the land.

 

[shawnv]

Unless you are paying with cash up front, look at it as in investment as a place to make memories and whatever financial gain there is after taxes and interest consider it a bonus.

As far as Northern WI goes, it is not all equal, from Ashland County West you can find more deer and better bucks than you can heading East. Douglas County has traditionally ranked pretty high for large bucks. That is where I would be looking to buy in Northern WI.

 

[foggy]

For most folks.....land is a long-term investment. Land speculation can keep you holding property for a long time...if your on the wrong side of a price move. I've done quite well on a few deals....but not so well on short term plays. Lately, it's doubly hard.

I can remember when GOOD south/central MN farmland sold for $200 an acre, then $500.....then on up to $2000 before plummeting to under $1000 again in the 70's and 80's. In the LONG TERM it's always going up.....but long term is quite relative to your age.

Recent sales have been in the area of $10,000 for the same land that sold for $200 back in the 50's. But a 50% swing on 10,000 is ALLOT of dough these days. And the swing is going the other way at this point in time.

The stakes are definitely higher as the price goes up. Then too.....I passed on some land that sold in the $2200 to $2500 range....in hopes it would sell lower in the following years. Didn't happen. I'd be an investor rather than a farmer......so anything north of $3500 for high-quality ag land seems too full of downside to me (at this point in time). AT some age.....a long term investment does not seem reasonable. I fear I've gotten to that point in time.

In my 20's my family made a "play" on some land on the edge of town. Really turned into a great deal. Sold it on CFD....got it back.....sold it again for much higher numbers each time. Pretty slick.....but took a long time to materialize to its intrinsic value.

The price of land may be going higher.....but the price of good stocks has also been good.....and may compete quite favorably against land. :)

I like a more "sure" ROI than land speculation provides. I've become comfortable with financial investments over time. Liquidity and flexibility is a good thing. :) Land remains a long-term play for most folks.

 

[SD51555]

On a side note regarding stocks......If you have not seen the oil stocks lately, take a peek. I have some that have been cut in half. Time to buy more, some are producing a dividend of 15% or more. If oil prices come back, which they will. You will be sitting on a nice hefty income producer.

Oh $h1t have I taken it in the shorts on BBEP. I didn't think it was possible for a stock to lose 18% a day four times in six days. At least each day it goes down 18% more the dollar amount of the fall is smaller o_O This is worse than when I got into gold stocks before they dove 40% after diving 60% off their 2011 high. Been a hard year for commodity investments. Why can't this happen to land?

 

[bwoods11]

Bbep

I have that stock too. Ride it out! Buy more

Oil will always be in demand, plus BBEP is a natural gas company too.

 

[foggy]

.....or, sell it....write-off your loss and buy a similar stock. Or, buy the same stock back 30 days later (to avoid a wash sale).

 

[SD51555]

You're both right. I picked up a bunch more BBEP when it hit the $11 range. It really hurt to watch it in single digits for a few hours. What most don't know is that BBEP has almost all of their oil production sold through 2016 at a price of about $90/barrel. They can weather this for a long time before we have to start talking about distribution cuts (watch me jinx myself now). I also traded my ESV stock for CVX. Took the tax loss on ESV but picked up the equivalent upside in Chevron which is a far better company.

 

[SD51555]

So you are trying to out think multi trillion dollar hedge funds with all that?

I'm just trying to catch a crumb that falls off the table.

 

[SD51555]

I'll make a 80 small buys in a year, and less than a half dozen sells. The only time I really sell is to harvest some gains to re balance the portfolio, or in this case upgrade to a better stock in the sector when opportunities open up. I'm not a trader. More of an asset allocator. I can't pick to save my life so I get low and wide and keep buying the opportunities and harvesting gains. I've been waiting to get into KMB for two years and haven't even gotten close to what I'd be willing to pay.

 

[Freeborn]

I'll make a 80 small buys in a year, and less than a half dozen sells. The only time I really sell is to harvest some gains to re balance the portfolio, or in this case upgrade to a better stock in the sector when opportunities open up. I'm not a trader. More of an asset allocator. I can't pick to save my life so I get low and wide and keep buying the opportunities and harvesting gains. I've been waiting to get into KMB for two years and haven't even gotten close to what I'd be willing to pay.

The indexes have provided a very good return historically and in particularly sense 2009. How are you doing vs. the S&P? The indexes are going to do very well over the next 40 years as US muliti-nationals take advantage of the growth that will occur internationally. You have many years of these markets maturing and the growth from these markets will provide dependable returns for many years.

Sounds like you have some diversification but you are not very nimble. Depending on your beta you can expose yourself to allot of downside. I try and keep the number of investments in my portfolio down so I can manage them and take advantage of market corrections. Most of my investment dollars are in indexes.

Your young and in your lifetime you will probably see 3-4 serious market corrections that unless your nimble you will have a hard time taking advantage of. Common wisdom is to do dollar cost averaging which is fine during moderate market fluctuations or reasonable business cycles but absolutely the wrong approach with large market corrections. I like indexes mixed with a few investments because it allows me to be nimble while getting good returns. For example, the housing crash was probably a once or twice in a lifetime event that if you’re a market watcher you could see occurring and take advantage of.

 

[dipper]

What does this have to do with land?
Rec land has tumbled in central wi the last 10 years. I know many aren't going to understand this, and I still really don't. Guys in central wi were buying up the old tigerton lumber company land for $3000/acre, but tigerton lumber retained all timber rights. So if you bought the land, you couldn't cut , hinge or clear any trees. I just laugh at those people. Rec Land was also going for $6000/acre. Many guys bought too, plus their property taxes got jacked even further due to the outrageous sale price. Rec land is still holding in the $3000-$4000/acre range.

 

[SD51555]

I wonder if prices won't come down in the border counties of SE MN? That land was $3000-4000 ten years ago already.

 

[shawnv]

What does this have to do with land?
Rec land has tumbled in central wi the last 10 years. I know many aren't going to understand this, and I still really don't. Guys in central wi were buying up the old tigerton lumber company land for $3000/acre, but tigerton lumber retained all timber rights. So if you bought the land, you couldn't cut , hinge or clear any trees. I just laugh at those people. Rec Land was also going for $6000/acre. Many guys bought too, plus their property taxes got jacked even further due to the outrageous sale price. Rec land is still holding in the $3000-$4000/acre range.

What !? They bought for that price and the logging company can come in later and clear cut it all? The desire to shoot a buck with a large rack will make people do foolish things.

 

[foggy]

You have not taken anything in the shorts until you sell! Don't sell and you are only down on a piece of paper!;)

Tell that to the guys that are holding stocks like Poloroid or Kodak or the B&O.. There are times to cut your losses. Same with sitting on 12,000 / acre land. You may wait a long time for the "greater fool". ;) Trees don't grow through the sky. Just saying.

 

[bwoods11]

In late 90s I put some money in Palm hand computers. If wasn't much maybe $1000.
Palm basically went to---0

I remember at the time that Apple was $4 per share. Split adjusted it would be close to $1000 now ..... Hind sight!!

Fortunate to have bought Apple at $200 it is now split adjusted $700 since then, but didn't buy enough to make me home free!!

The reason I bought Apple is because my kids loved the products.

 

[dipper]

What !? They bought for that price and the logging company can come in later and clear cut it all? The desire to shoot a buck with a large rack will make people do foolish things.

Everything was select cut before sale. Only top grade oak and hard maple was left standing. The logging company will come in and collect its beautiful logs that "land owner" has been growing and paying taxes on for decades. They are outrageous taxes compared to what many of you pay.
The hunting isn't that good anyway. 95% of bucks never see their 4th bday. The harsh winters have really impacted antler growth on those few older bucks.