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Is This the Time to Move Investment Money to Land?

In some recent discussions with colleagues and clients, I have noticed a topic that seems to be trending – is this the time to pull money from the stock market and re-invest in land? The consensus in these conversations seems to be that the stock market has been consistently bullish for so long, 11 years and counting, that it’s due for a major correction based on historical performance. Some research shows that there is actually no close historical parallel to the current stock market.

Many of the clients we work with in the ranch real estate world are staunch believers in land as a primary investment strategy, some of them put no money into the stock market at all. Speaking strictly from personal experience, I have witnessed a vast majority of our clients make tremendous returns on their investment when they sell their land. A good ranch can appreciate in value at a faster rate than the market all while the owner(s) have the opportunity to enjoy use of the land through cattle operations, hunting, fishing and other recreational opportunities. Many of the investment ranches we broker create enough income revenue to offset their operating and tax expenses and often times can even put some money into their bank accounts as net profit. Deferred maintenance, improvements and other expenses also offer tax write-offs, helping to create even greater returns.

Purchasing property requires more initial capital than investing in stocks, mutual funds or even real estate investment trusts. However, when purchasing property, investors have more leverage over their money enabling them to buy a more valuable investment vehicle. Putting $250,000 into securities buys $250,000 in value. Conversely, the same investment in real estate could buy $1,000,000 or more in property with a mortgage and tax-deductible interest. A savvy buyer in the right circumstance may also purchase land under market value creating instant equity and gains. Stocks and securities don’t offer similar opportunities.

For many prospective investors, real estate is appealing because it is a tangible asset that can be controlled, with the added benefit of diversification. Real estate investors own something concrete for which they can be accountable.

So is this the time to move some investment dollars from the market to land? It very well could be. Real estate has historically served as an effective inflation hedge. Demand for land grows because America’s population is increasing and the top one-third of our income distribution has discretionary cash.

We do a great deal of work with clients’ investment strategies utilizing 1031 Exchanges, Opportunity Zone investments and more.

Real estate and stocks both present risks and rewards. Make sure to consult a qualified investment specialist before making any big decisions.

Written by Travis Driscoll

Beaverhead Outdoors Ranch Group