Why ranches are a great investment for your portfolio.
Watching your stock market portfolio in 2020 is like riding a 50-year-old roller coaster. It’s up, it’s down, and feels like it may go off the rails any moment.
That’s the reality we live in now. And while we at Farm & Ranch are not financial advisors or experts in trading stocks, we do know a thing or two about something you may want to consider investing in: ranches.
There are two main benefits that come with ranch and farmland investment: the financial and the psychological. Let’s dive into both…
Land is a special asset that appreciates in value and is in it for the long-term.
Adjusted for inflation, the value of an acre of farmland in the US has grown from about $1,000 in the late 60s to over $3,000 in 2019. While you may not consider this “hypergrowth”, which is the sort of thing many short-term focused investors are looking for in today’s economy, it is steady reliable growth. And if you’re investing with a long-term perspective in mind, that is a very good thing.
But not all ranch and farmland is created equal…
Standard dude ranch: the emphasis here is on enjoyment of the land and horseback riding, usually. Cattle driving, and roping are also common activities done on a standard dude ranch.
Working dude ranch: this type of ranch is all about hands-on labor. Sheep and cattle operations that provide many families their living are very common. Investing in a working dude ranch may be profitable, but it’s also expensive. There are many costs to consider – equipment, feed, maintenance, and payroll if you have help on the land.
Resort dude ranch: resort dude ranches are also more expensive to operate and act as a luxury vacation spot with food, entertainment, and five-star service.
Farmland for crops: some land functions primarily as a farm for crops, not solely a ranch for cattle, sheep, and horses. This kind of investment also requires work on your part. When people invest in farmland, they need to be clear about the long-term objective of their investment. Am I growing crops for my family? Am I growing crops for others to purchase? Am I growing crops and raising animals for purchase?
At this point you may be wondering… aside from the potential financial upside, what other benefits does ranch ownership offer?
While the monetary value of ranch and farmland is always on the rise, the costs you incur as an owner of ranch land can make it hard to know exactly what kind of return you will get on your investment. But from an psychological standpoint, the benefits are clear.
Take for instance the psychological benefit of ownership. We human beings crave control. Having control and ownership over an asset helps us find our life’s purpose, learn responsibility, and become more creative.
Then there’s the benefit of space. Farm and ranch land are unique for providing space – and lots of it. Space where you can think, feel, and understand things that the media-driven world makes hard to understand.
As the New York Times puts it, “Ranch life taps into the American desire for space, freedom and a connection with the land.”
A study performed by the Norwegian University of Life Sciences also found that time “with farm animals had some positive effect on self-efficacy, the ability to cope, [and] of patients with long-lasting psychiatric symptoms, their quality of life.”
This all begs the question though: if I’m going to consider buying a farm or ranch…
There are several factors to think about when buying a ranch:
And other factors you can find in our article What to think about when buying a ranch?
One of our primary recommendations is to buy from and with someone you trust. The most profitable investments in the world of farming and ranching start with a trustworthy and fair transaction.
While we all recover from the motion sickness of this economic roller coaster ride we’re on, it may be time to consider investing your money in an asset like farm and ranch land. An investment that has proven to provide steady growth over the last 50 years.
Check out our listings of available farm and ranch land by going to https://farmandranch.com/