"We are receiving more and more interest from investors in ranches and farms for sale, rather than actual ranchers and farmers, mainly because of the lease potential, especially in crop farms. It is not uncommon to see a return of 5% – 6% net return offered on a 5-year lease-back when shopping farms for sale in the Southern Plains states.", says Rancher, Farmer and co-owner of Southern Plains Land Co., Kalin Flournoy.
"A decent net return can be obtained from some cattle ranches for sale, only if a very experienced hands-on land brokerage and a good cattle operator structure the deal. The lease value of cattle ranches is typically more consistent and longer term than farm leases, as cattle futures have been more stable in the last few years than grain futures; however, cattle ranches cannot compete in net returns for a buyer in today’s market like crop farms", Flournoy said.
Typically, when investing into land for sale, especially agribusiness investments, the aggregate value of a buyer’s initial investment is much safer than retail commercial property. The purchase value is typically vested in the land for sale and not so dependant on the strength of the tenant and lease portion of the sale, as it is in most commercial properties. Vacancies are not an issue with ranch or farm leases, as ranchers and farmers will actually compete for leases, according to Flournoy.
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