Do you farm to support your land addiction? If so, this is not an intervention. While there are a lot of good reasons to buy land, not every parcel is created equal. With land prices sky-rocketing and more and more land coming for sale, it’s important to be disciplined and know what’s worth chasing after.
Here’s how we define a “slam-dunk” land opportunity:
1. THE PARCEL ADDS OPERATIONAL EFFICIENCIES
Whether it’s a piece of ground next to the shop or the storage bin, land that reduces your farming radius can save you valuable time planting, scouting, and harvesting – helping you protect yields and grow your top-line revenue. Case in point, many studies have found that farmers typically have 2 weeks to get their crop in the ground after their area’s optimal planting date; otherwise, they risk a 2% to 5% yield penalty each week thereafter (Purdue, Iowa State, Pioneer Seeds). Adding acres that expand your radius at the cost of your efficiency risks stunting your growth.
2. THE PARCEL GETS YOUR FOOT IN THE DOOR
New parcels that help build new landowner or landlord relationships are key to winning the next land sale. These relationships can build your brand as a trusted partner and put you in the know to take advantage of the land opportunities before they hit the market.
“Every little interaction over a lifetime adds to this reputation. Just as important, if not more important, is to guard this reputation with as much discipline as cash flow management for the operation,” says Steve Conaway, a real estate appraiser and analyst in north Kansas.
3. THE PARCEL FITS YOUR BUSINESS MODEL
Do you contract land improvement services like irrigation or tile drainage? Buying, improving and flipping that land is a great way to boost your bottom-line. With tile investment adding a 10-20% improvement in land valuation, it’s a slam-dunk – so long as the improved drainage is reflected in the parcel’s yield history (Farm Progress).
IS A DOWN PAYMENT HOLDING YOU BACK FROM A GOOD OPPORTUNITY?
Access more capital with Fractal, a long-term investment partner that helps you tap into your equity while keeping you in control of how you farm. Learn more
Note this is not investment advice. The information contained should be used for informational purposes.
Harrison Rogers is the Marketing Lead at Fractal Agriculture
Steve Conaway is a real estate appraiser and analyst, and farmer of corn, beans, wheat, and grain sorghum in north Kansas
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