Buying Land in North Dakota

In general, potential buyers should consider numerous factors when buying North Dakota farmland. Checking the right boxes increases the odds of a buy becoming a good investment.

“Right now, it's a highly competitive market,” said Joseph Erb, a Whitetail Properties Land Specialist in North Dakota. “To make sure it's a good investment, check the soil qualities and current rental agreements.

“If it supports sugar beets or potatoes, the land price increases substantially,” Erb continued. “If you can grow corn, soybeans, or any type of wheat or grain, then it all depends on where it's at, and what the soils are, for how much it costs.”

As with most states, certain factors are unique to North Dakota ag ground. Even though it’s part of the Midwest, this state comes with characteristics some others in the region aren’t familiar with. Notably — excellent waterfowl opportunities.

Ag acreage and recreational lands often go hand-in-hand. This translates to either recreational fun for the owner, or increased revenue through hunting land leases. And waterfowl leases aren’t cheap.

“We have a lot of waterfowl, especially in my territory,” Erb said. “I sell a lot of land to out-of-state waterfowl hunters. They're looking for a breakup of tillable land, and then a lot of potholes, ponds, and other stuff they can hunt ducks and geese on. This also drives up the price because they're competing with the local farmers on buying the land.”

Regardless of your motive, Erb encourages potential buyers to contact him and other Whitetail Properties Land Specialists.

Additionally, there are a lot of programs for land in the Dakotas. If you’re looking to purchase ground, it pays to know about these, and the current and projected status for qualification.

“For instance, you find a quarter section that is made up of 80 or 90 acres of tillable. The rest are ponds, cattail sloughs, whatever,” Erb said. “North Dakota is very good about water bank programs, or WRP. So, there's another way to generate some income off of that. They actually pay pretty well for those programs.”

Overall, Erb describes North Dakota as all flat and very few trees. So, it's either ag land or waterfowl ground. Oftentimes, it’s both.

Buying Land in South Dakota

Those unfamiliar with the Dakotas might wonder what a good piece of South Dakota ground looks like. Specifically, what are experienced people looking for? What are some of the best types of ground to focus on to ensure it will be the best possible investment?

“Location is a big part of it, and the productivity rating matters, too,” Schmitz said. “The highest productivity rating soils are typically bringing a much higher premium. And, once again, the location matters. That just kind of depends on where it is in correlation to where [farmers] usually plant, and the closest grain market.”

Another significant consideration is rainfall, moisture, and soil conditions. “In South Dakota, drainage is typically a big factor,” Schmitz said. “If the soil lays well and there's decent drainage or drain tile on the property, then there's typically a premium with that also.”

Oftentimes, optimal soil ratings are 80-plus. That said, if it’s just below that threshold, land can still generate a good price. That’s especially true with irrigation in place.

“There are some soils that have a lower soil rating, but if they're irrigated, that can make up the difference,” Schmitz said. “We've seen some soil ratings in the low 50s, but with an irrigation system on that piece, those properties sell as high as anything.”

Some investors might wonder, how does South Dakota land stack up compared to surrounding states? According to Schmitz, he believes the soil types and compositions are as good as anywhere. That said, the variability in the extremes in the weather patterns are the biggest differences, especially compared to somewhat milder climates, such as Illinois or Iowa. Even so, he doesn’t think that it’s so extreme to void interest.

Of course, even Iowa, Illinois, and other key ag states experience drought conditions. Historically, it’s been the extreme heat scenarios in summer that had potential to lead into a yield loss environment.

Things are changing, though. Schmitz says, over the past 20 years, average rainfall across South Dakota has been and continues to increase. Alongside that, the average crop production has increased considerably over the last two decades, too.

“Comparing what we're producing on an acre of crop ground versus what they're producing in more traditional corn-growing states, like Iowa, Illinois, and Indiana, we're right there with them,” Schmitz said. “Our yields are catching them. So, I think a lot of people are coming from these other states looking to invest farther west. They're seeing that they can buy land at a discount, and even though the land might be 30%-40% cheaper, the yields aren't that much less.”

Without question, buying ag ground in South Dakota is gaining traction. For buyers, now is the time to capitalize on that movement.

“You know, regarding South Dakota, the corn belt keeps pushing west,” Schmitz said. “I’ve seen that over the last 10 years, and it really increases the land value.

“South Dakota really is becoming a major production state for agriculture,” Schmitz continued. “The farming practices are improving. With the drain tile, ditching, and all those things, we’re really gaining on production, especially compared to what it used to be.”

Like North Dakota, South Dakota offers a variety of land types, too. Ashley Kurtenbach, a Whitetail Properties Land Specialist in South Dakota, says the state offers a unique mix of land types.

“We have diverse land here,” Kurtenbach said. “We have tillable acres, hay acres, grazing acres, and even recreational acres. A large part of my territory is the Black Hills. So, it's a lot of diversity, and that's what makes it really unique. In other states, you rarely have all of that in such a small area, especially in the Midwest.”

Of course, it doesn’t hurt to have inside information from the locals. Kurtenbach says the Spearfish area, and certainly Lawrence County, is growing rapidly. Additionally, the Rapid City region is expanding, too.

“When you look at the development, and how it's spreading out in this area, a lot of new people are moving to South Dakota,” Kurtenbach said. Although South Dakota is an attractive tourist area and vacation destination, people are choosing to live here, too.

“It's ever-increasing in value, and like we always say, they aren't making more of it,” she continued. “So, it's kind of like you don't want to sit on it for too long, because it’s being divided out and sucked up quickly.”

For example, if you were looking at property in the Black Hills, now is probably a good time to buy. Because it is moving, and there are more people looking at the state as a hole, even just as a residence.

That said, back to ag and rec land, it offers a diverse setting of acreages that serve multiple purposes and check a lot of important boxes. Just be sure your land purchase aligns with the intended use of the property. Of course, Land Specialists assist and help find the right property for your goals and expectations.

“It really depends on the soil,” Kurtenbach said “It can change in such a short period of time. I mean, you go from one county to the next and it's not the same.”

Fortunately, she says that a lot of landowners are aging out, and a number of properties are becoming available.

“Some people with large parcels of property have been here a long time, and they’re considering sectioning off parcels of it,” Kurtenbach said. “I think that’s a good way to get into the area.”

Overall, it’s important to keep a close eye on the market. Have a trusted advisor who lives in the area. They’re the ones who are in communication with the people with land to sell.

The Dakotas: A Hope for New Farmers?

Today, land pricing is a major barrier of entry for new farmers to break into the industry. With the skyrocketing price of land, it can seem impossible to accrue enough ground to make a living.

Additionally, the Dakotas might also be a safe haven for farmers struggling to keep their operations afloat. Perhaps this destination can provide a clean slate, and a new start, for hard-working farmers needing just that.

Schmitz agrees that, when you compare South Dakota to more established agriculture states, it offers a lower barrier to entry for new and struggling farmers. At least, that’s true in terms of land price per acre.

“There's more risk, because of the extreme weather,” Schmitz said. “But with crop insurance programs, and policies in place right now, these help mitigate that.”

You can buy ag land for $4,000-$5000 per acre, and the proven soybean crop insurance rate is for 40 bushels [per acre]. Compared to Iowa, where ground might be selling for $15,000 per acre, it might just be for 60 bushels.

“So, they're paying three times more [for land] to raise 50% more crop,” Schmitz said. “So, there’s potential there. But they have to be willing to educate themselves on the area and know that they're getting the right pieces of farmland.”

Work with the Right Land Specialist

Buying land can be an intimidating thing. That’s true for locals and out-of-state buyers alike. Schmitz recognizes those unfamiliar with an area tend to have a lot of questions (as they wisely should).

For example, maybe a piece of land is priced very cheap. Oftentimes, there’s a reason for that. Be aware of the circumstances, and study every potential buy for issues.

“If there's a property that looks too cheap, there's probably a good reason why the locals aren't looking at it,” Schmitz said. “Working with somebody who knows the area really well is a huge piece of the puzzle.”

In short, work with a Land Specialist familiar with the area. Ensure they have seen the options, reviewed the production, and continue to learn the area. That’s incredibly important, and valuable, when studying listed properties or upcoming auctions.

Done wisely, buying farmland in North and South Dakota can build generational wealth. Work with a Land Specialist to bring your dreams to fruition.