Investing in Land

INVESTING IN LAND

LAND IS ALWAYS A GOOD INVESTMENT. THERE IS ONLY SO MUCH OF IT. ONCE YOU’VE DECIDED TO MAKE THE INVESTMENT, THERE ARE MANY POSSIBILITIES OF WHAT YOU CAN DO WITH YOUR PURCHASE. LET’S LOOK AT JUST A FEW OPTIONS ON HOW THAT INVESTMENT CAN MAKE YOU ADDITIONAL INCOME.

AGRICULTURE

When looking for a property to invest, one option would be to find a parcel that has tillable acres. These acres can either be farmed by the owner, or rented out to a local farmer to produce income. A couple of options for renting would be a rate per acre, or crop sharing, where the landowner gets a portion of the crop after harvest. Of course there are some variables when it comes to farming. The soil type is one consideration as is the soil productivity index. The more fertile the ground, the more the rental will bring. Also the types of crops that are grown in the area are to be considered. The local Farm Service Agency office can assist with in determining soil types and rental rates for your area. There are also websites such as Acrevalue.com, that will help in determining soil types, crop history and values.

CONSERVATION PROGRAMS

Another option when looking for a land investment would be a parcel that had or has the potential for conservation programs. The Conservation Reserve Program (CRP) is the program that most people are familiar with. It takes marginally productive farm lands and restores the land back to native grasses and forbs. There is quite a process to get your property enrolled, but it is certainly one option for landowners to look into and recently, rental rates have increased as well. Another program available for conservation is the Conservation Stewardship Program (CSP). This program pays the landowner for different conservation practices, whether it benefits the farmer, rancher or wildlife enthusiast. These programs, along with many others, are implemented through the Natural Resource Conservation Service. A consult with their office will get you pointed in the right direction on what you are looking to do on your land.

SUSTAINABLE FOREST INCENTIVE ACT

This program is through the State of Minnesota, and is meant to protect forest land from development. If you have a tract that is 20 acres or larger, you may qualify for the SFIA program. As with any government funded program, there is a process that needs to be followed to enroll, starting with a Forest Management Plan. There are several forestry consultants that provide this service. These forestry consultants will meet with you and discuss your goals and objectives for the property. They will write an in depth plan on how to meet those goals, whether it be for wildlife habitat, forestry management or both. Once you have a plan for your property, this will need to be submitted and approved by the Dept of Natural Resources. A covenant will be placed on your property for a determined number of years, 8, 20 or 50 years. The longer the covenant the higher the payment rates per acres. Another option under the SFIA, would be the Class 2C managed forest land. This process is basically the same as the SFIA, but the 2C program gives the landowner tax incentives vs a payment per acre. Please consult a local forester to determine which program is the best option for your land.

LOGGING

If you decide to purchase land that is mainly forested, along with the above options, another option would be to consider logging. Once again, consulting with a forester will be valuable. Whether you are looking to enhance wildlife habitat or make a profit, your forester can put you in touch with the best resource for your needs.

This is just a very brief list of options that may be available for your property. I would be happy to assist you with finding a property that is right for you and providing further assistance in having that property meet your financial goals. ▪

Mike Brown | Land expert and avid hunter