Seller Services - Land Investment

Goodwin & Associates Real Estate, LLC Seller Services for Illinois farm, commercial, development, residential real estate

Investments in land have offered an attractive, highly competitive return on investment in the 2000s. You can choose between commercial/development land and farmland.

Commercial/ Development Land

Commercial/ development land typically offers both a higher return and a higher risk.

A higher return because of:

  • Well selected commercial/ development land can appreciate more quickly than farmland.
  • The hold period often is shorter.
  • When sold, the appreciated value does not need to trigger a capital gains tax liability. Through a properly run IRS 1031 tax deferred exchange, funds from a land sale can be reinvested tax free.

A higher risk because of:

  • The higher purchase price commercial/ development land commands.
  • A lower annual return. The rental rate will likely at the agricultural use level.
  • More active asset management.
  • Land selection can be more challenging.

Farmland

High-quality farmland has been recognized as one of the world’s most valuable assets since the beginning of production agriculture. The number of acres of farmland nationwide continues to shrink and will likely never increase.

Individuals invest in farmland because:

  • This long-term asset has outperformed all other asset classes -- stocks, bonds, commercial property -- with the least amount of risk.
  • As a tangible, physical asset, farmland gives you something to show for your investment. It also produces food, fiber and shelter, which other asset classes cannot. And land never goes out of style as it provides a greater sense of gratification than stocks or bonds.
  • Farmland offers an attractive place to park cash. Some of the largest fortunes in the world have been made with land investments.
  • Farmland offers diversification in an investment portfolio.
  • Farmland provides a hedge against Inflation.
  • Demand for land continues regardless of the state of the economy
  • Only so much land exists. As the population continues to increase, the amount of available land per person continues to decrease.
  • World demand for food is increasing. The world’s population is expected to exceed nine billion people by 2050 with a rapid rise in the middle class in other parts of the world. Demand for food and fiber should increase.
  • Farmland is comparatively easy to purchase. A professional land broker can make land purchases easy. Land can also offer ease of management and flexibility.
  • When sold, the appreciated value does not need to trigger a capital gains tax liability. Through a properly run IRS 1031 tax deferred exchange, funds from a land sale can be reinvested tax free.

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