Money in Bank vs Owning land? I think the tides have turned.

[SASKFARMER3]

Wife and I just had a meeting last week with RBC wealth management to discuss some thing and move cash around. USA account was a good idea years ago for home in Florida.

I hated private banking at the beginning but agree let the specialists handle your accounts less risk and greater returns. You are still in control. Yes that’s why farmers should have Accountants, lawyers, financial planners, Bankers etc. They work for you and you still make the decisions.

Now today’s topic land ownership and this investor bullshit thing going on right now. I’ll use a scenario we were presented with for discussion purposes. No I’m not selling the home base. No it’s not forsale. This is about other property and a scenario.

Example a half section rent vs new rev generating investment .

Land value example 325000 x 2 = $650,000.00 under a single persons capital gains so no taxes off.

Rent on property as example 50.00 I know I’m using a low rent but 70 and a 100 will be used later in example. This is what locals would pay.

320acres x 50 x 5%Gst = $16800.00 what local renter would pay any one.

320 x 75 x 5% = $25200. Out of area guy looking for extra land would pay.

320 x 100 x5% = $33600 BTO or wanna bee need dirt to keep getting bigger.

Minus land taxes and pay gst if can’t right off.

Your income and you use a smaller land base to right off. Or pay taxes but for this we’re leaving the accounting part out.

Now use the sale of the land and put in the investment I talked about yes risk involved but so is getting paid from last two examples.

Scenario investment.

Take the $650,000.00

Two checks a year spring and fall paid to you of 5% or $16250 spring and fall as income yes pay the taxes but again for this equation it’s a example.

If the investment makes 11 plus that adds to your pot you still get the 5%. If the investment has a bad half the 5% could be lowered to 4 adjusted yearly. But for this example just leave it at 5%.

Why land isn’t a good investment any more is my comment.

You basically get more in 6 months than your buddy the local guy is willing to pay for yearly rent.

You are basically getting a $100.00 a acre which is same as the BTO is willing to pay.

Ah am I missing some thing. Don’t think so.

Simple example that I think makes real good sense. What are others seeing for investment opportunities. Land vs investments.

[farmaholic]

We have to consider the appreciation of the land asset. Personally, I feel the big appreciation(the parabolic increase we've seen since about 08{in Sask}) is now off the table(out of the equation). If anything there is always a chance the land will flatline or slightly correct as well.

If I had a crystal ball that worked I wouldn't be having this conversation.... besides needing a functioning crystal ball, "balls" are needed as well!

[macdon02]

At this point I'll say appreciation in the asset will be linked to devaluation of the currency. Sell the dirt buy asset in USD (DIA etf) and ride the circus pony. We are shifting from public to private, bonds have peaked and rates going up. Watch for an '85 ish peak in USD to sell. Likely looking at picking up 6x over holding anything CAD.

[farmaholic]

I have one word....

LEAGUES!!!

bush, little, big....

[foragefarmer]

" Land vs investments. "


Both, investing 101 "diversification" What's to discuss?

[AlbertaFarmer5]

Just trying to understand how it is that you have a wealth management issue after 15 consecutive years of floods, and now 2 years of droughts? I would have thought that those years would have managed your wealth for you quite effectively.

[checking]

How much money do you really need?

Getting rid of inside perimeter that you can't stand people, is priceless!

[Klause]

We have to consider the appreciation of the land asset. Personally, I feel the big appreciation(the parabolic increase we've seen since about 08{in Sask}) is now off the table(out of the equation). If anything there is always a chance the land will flatline or slightly correct as well.

If I had a crystal ball that worked I wouldn't be having this conversation.... besides needing a functioning crystal ball, "balls" are needed as well!

That's a given. Not a chance.


50% drop in value coming.


That's not necessarily a drop in $/ac.

[bucket]

A 50 percent drop in value puts a lot guys under water on their asset sheet.

Then because its a open market they walk into an office that writes their loan down 75 percent and they carry on.....as if nothing has happened.....

[SASKFARMER3]

Not going to happen this time on the write down. Some big dogs will be gone. Some BTOs will be gone.

Some opportunities to pick up lots will happen.

[grassfarmer]

......50% drop in value coming......

There are families that have sat out of the land market for decades or even generations saying that - they're still waiting.

[Klause]

There are families that have sat out of the land market for decades or even generations saying that - they're still waiting.

Bullshit.


This isn't Europe.

And you haven't been here long enough to remember the early 2000s or the late 80s.(I wasn't here for the 80s either)

[grassfarmer]

I've been here since 2000 and nothing dramatic happened then to affect us one way or another.

Are you going to cash in your chips and move on before the "big crash" then?

If grain prices go down in SK due to a Trump embargo or some other crisis land prices won't halve - do you know how much Swiss guys sell land for - per square meter?

[AlbertaFarmer5]

That's a given. Not a chance.


50% drop in value coming.


That's not necessarily a drop in $/ac.

We could easily see land drop 50% in USD and still appreciate in CAD. As grass farmer points out, lots of farmers and investors will see value in that, even just as a currency hedge.

[GDR]

Been debating the asset mix myself lately. Problem is with land there is too much emotion in the equation not just economics. I would be further ahead likely to quit farming and either rent out or sell and invest but problem is i dont want too.

I have been dealing on a piece of land for a couple years and just the last few days looking like its gonna happen. All the negativity on Agriville & general news and Trump tarriff BS all gives me second thoughts but her is my thoughts:

Land likely will drop to some extent, I doubt half. But you still have the land, other than through default to thw bank no one can take it away from you and will always have decent value. Someday will be worth more than you laid of it drops.

If you got $$ in stocks and shit hits the fan the decrease in value is just gone, they may regain value if you hold them long enough but more likely some will just evaporate through bankruptcy etc.

Cash or fixed term stuff might be safe but rates are low, devaluation because of currency and inflation pretty likely.

Id rather hold land than other investments, either that or sell out completely and go where the wind takes me. I think its blowing to the land of bikinis and beer whever that is.

SF3 Use of professionals is good and important, not always easy to tell who the good ones are until its too late. I am too much of a control freak and dont do enough like you suggest. Human nature makes us beleive that anyone selling a service is taking advantage of us and our opportunity to benefit themselves and thays not usually true.