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| Commercial properties over all are more of a risk and it has gotten worse since COVID. During COVID a lot of people worked from home and also a lot of businesses closed due to lack of business. As far as farm rent goes. I think a good portion of people renting out land are not getting the high cash rent that people talk about. Most people in today's times are only getting a 2% to 3.5% max return rate on their money from cash rent. Of course the farm land has went up a lot in value but you only see that money if you sell it and lets not forget about the taxes owed. In my opinion land prices, versus land rent, vs machinery cost, and other inputs is way out of wack. A guy buying land today just to rent it out is not going to make it cash flow by what he receives in rent I can assure you that. It would even be almost impossible to break even if he pays half down on the land. Around my area to only buy 100 acres is going to cost you at least 1.2 million. That amount of money really does not have any buying power. As an example my dad bought his first farm in 97 for 800 an acre. At that time 1.2 million could have bought you roughly 1,500 acres and at that time he could actually make his payment to farm credit and come out with a little profit after it was all said and done. I just bought some ground last year that the owner of the land was only receiving $75.00 per acre rent and I know many others in the area that are receiving low rent and this is on good productive ground. I tend to see this low rent with older people and also people that inherit farmland with no experience as to what to charge for the rent. I tend to think the cost of machinery, seed, fertilizer, the price of corn, the price of soybeans, etc., are more of a bigger worry for most than the cost of rent. Some people do get the high cash rent but I tend to think it's greatly exaggerated how many people actually do receive the high rent at least around here. You would be surprised how many people own say 50 to 200 acres that bought it years ago or inherited it that have hardly any other money besides what the farm is worth. I'm kind of shocked more of them don't sell out. Say they are getting 200 an acre for rent on 100 acres which is $20,000. That is not much money when you consider what the land is worth. Taxes are supposed to double around here. I can see why some switch to solar, wind turbines, subdivisions, etc. Ag has a lot of issues in my opinion. I fear that as the younger generations get this land they will sell it for quick, easy money.
Edited by fieldman12 1/4/2025 22:03
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Cash rent vs commercial properties
