INVESTMENT DIVERSIFICATION THROUGH AGRICULTURAL REAL ESTATE
SOUTH EAST KANSAS OFFERS STRONG BUYING POWER & EXCELLENT ROI
Where?
South East Kansas is currently offering lower price per acre and equal ROI as other Mid-Western grain belt states such as Missouri, Iowa, Illinois and Indiana. This lower per acre price provides an excellent starting point for new investors to agricultural real estate or a new investment opportunity for experienced investors who are looking for expanding their acreage holdings.
Why?
The first of the following two 20 year trend chart illustrates the price trend in Kansas agricultural land and the second is a 20 year chart of the upward trend of the price in soybeans.
Kansas Average Price Per Acre Trend
Investment Example
If an investment in farm land with 80 acres of tillable land had been made twenty years ago with a purchase price of $44,000 (80 x $550/acre).
Applying the rent metric of 11 bushels soybeans/acre (11x80) =880 of bushels of soybeans for cash rent.
Cash rent income in 1994 would be of 880 x $6.25 a bushel (approximate soybean bushel price in 1994) yielding $5500.00, representing an approximate 12% gross annual yield.
Today, 20 years from 1994, that farm land asset has appreciated 340% to $152,000 (80 acres * $1900/acre) and annually yielding 24% or $10,780 (880 bushels x $12.25 bushel).
Future prices of farm land and agricultural commodities are anyone’s guess, but examination of historical trends is useful of developing your own conclusion.