Is now the time to buy a farm? Maybe not, but it is definitely the time to make serious progress towards buying hunting property. Here are some ideas to get you started.
If you want a to own your own hunting land, you must have the means to buy it and you probably won’t get enough money to buy a farm by putting money in your savings account or buying stock!
Why not? If you put money in savings or buy stock, you’ll have to use after-tax money to buy your farm. The government will take 15-25% (or more) of the return you get on your earnings. So, unless you have a huge income, you’ll not be able to come up with enough buying power, or at least it will take longer to do so.
Consider purchasing investment real estate, you will likely be able to transfer your equity from real estate investments to the farmland you choose and defer the taxes indefinitely.
There will be a tax obligation, but you won’t have to pay it until final liquidation of the farm. If you own the farm until you die, the tax consequences will be irrelevant in your lifetime.
We’re in a buyer’s market. Now is a great time to purchase real estate investments.
If you are a young aggressive investor with time on your side, look for vacant land that has future development potential. Try to purchase with very little cash and use the time to seek development approval before having to come up with significant money.
If you are flexible about where can live, use your buying power for a personal residence to purchase a home that has surplus property attached to it. Down the road the surplus property could be subdivided off and used to generate funds for a farm purchase or other real estate investment.
Look for small residential properties that have investment bonus potential. Some properties have the potential to blossom as investments as time passes and neighboring properties come available. Often these properties sell for prices that do not reflect the “bonus” aspect.
Keep looking for hunting property. You may find a farm or a small ranch that has enough hunting potential for you and also a couple of friends. Then as you accumulate more buying power, you can expand or combine funds from the sale of the smaller hunting property with other equity to purchase a larger tract.
By purchasing any high quality investment real estate, you are getting closer to owning farmland. When the right farm appears, get it into contract and sell your other property. By using the IRS 1031 Tax-Deferred Exchange rules, the equity can be transferred to the farm along with your tax obligation.
These are a few ideas to help build up buying power, but don’t stop with these. Use your own creativity to make your investments successful. Make good decisions and seek professional advise; our Land Specialists have the tools to help.
Once you get to the point where you can own recreational property, you have an investment that gives you a continuous source of personal enjoyment and long-term income potential for your future should you decide to sell.
The first step is to get started and todays buyer’s market is a good time for that!