By Caroline Kirby
Over the last year, you may have seen articles, interviews, reports, and even friends talking about swapping the city for rural areas. Whether that’s because their jobs are now allowing for more flexibility and the option to work remotely or they simply want to get out of the crowded cities, there are plenty of obvious reasons why heading out of town and into the country is a good idea.
However, pandemic or not, there are tons of benefits to moving to a rural area or at the very least investing in rural property. Curious if this is the right move for you? Here’s a quick look at some of the top benefits of buying rural property.
Should you invest in rural property?
Smaller populations, more space, slower pace of living, and greater accessibility to nature are some of the most common reasons people cite for looking for rural land. Here are some of the benefits you may not have considered:
1. Greater flexibility for developing: When you compare property development restrictions found in big cities, it’s a no-brainer that you have more flexibility to develop in rural areas. This means you could list your property without the headache of strict listing regulations, or you have more options when it comes to extending land.
2. Cheaper price points: Although admittedly, the COVID-19 pandemic may have led to a spark in the purchasing of rural properties, it certainly won’t cost you near as much as urban properties. This could allow you to even be able to purchase multiple properties.
3. More bang for your buck: It likely goes without saying, but the acreage you can purchase in rural areas is well over anything you’ll find in a more populated community. Your investment money can go a long way with rural properties.
Investing in rural property requires special considerations.
While there are many advantages to investing in a rural property, if it’s your first time buying land out of the city, you should be aware of some critical factors. While it’s nothing to be worried about, there are some characteristics of rural properties that may influence your decision.
• Pay special attention to the area’s economy. Depending on what you’re purchasing your rural property for, you will want to do your research on what the local economy is like. Is the area only supported by one industry? If so, that may be a risky investment.
• Get familiar with local pests and diseases. If you are hoping to purchase rural property to raise livestock or build a farm, you will definitely need to be aware of what the disease and pest management situation is in the area.
• Get a feel for the surrounding community. Again, depending on what you hope to do with your property, you may want to take some time to do your research on the local community. While some rural areas have strong and active community centers, events, and a sense of sharing, other areas are more reserved and may feel “sleepy” compared to what you’re used to.
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The average value of an acre of land in the United States is roughly $12,000, USA Today reports. Before selling your rural land, there are a number of changes you can make to effectively increase its value and make it especially appealing to prospective buyers.
Ways to Increase the Value of Your Rural Land Before Selling
By tidying up, improving access, and focusing on the effectiveness of your utilities, you can make your land more lucrative for buyers and maximize your return.
1. Tidy Up: Improving the appearance of your land is a simple yet effective way to boost its value. Buyers will pay more for cleared land requiring minimal work while uncleared land will inevitably drive the cost down. The more acres you have, the bigger a job this will naturally be. Start by walking through your land and making a list of necessary tasks. For example, you may need to remove garbage and debris, pull out weeds, overgrown shrubs and grasses, clear brush, mow the grass, and prune trees. Big and small landscaping jobs can be performed easily with a skid steer. Solid tires for skid steers are especially important in navigating rougher terrains with balance and stability. A deep tread design provides better traction over difficult surfaces. If you’re short on time or correct equipment, hire a reputable landscaper to complete the job for you.
2. Improve Access: If your land doesn’t include access or is difficult to access, your property will attract a limited number of buyers, decrease in value, and become much harder to sell. You’ll need to put a legal agreement in place with your neighbors regarding road access and road maintenance; this is a relatively quick, easy, and inexpensive thing to do. However, meet with a real estate broker and title company to ensure any agreement made is legally binding. If you need to do construction, an asphalt or concrete driveway leading to your property is ideal, while gravel is a cheaper alternative. If your land already has legal access, make sure it’s free from impractical and unsightly roadblocks like potholes or overgrown brambles and trees.
3. Run Utilities: 73.6% of buyers say electricity is their number one logistical concern when looking for land in a rural area. Although adding utility lines to rural land can be expensive and time consuming, it makes your listing much more attractive to buyers and can boost its value significantly. Running utilities in a rural area will likely require obtaining permits, a percolation test, installing a septic tank, and drilling or driving a well, as well as paying for electricity lines. Before deciding to go ahead with installing utilities on your land, make sure it’s cost effective for your situation. The resulting increase in value should cover the cost of running the utility lines.
Before selling your rural land, make sure you’ve done everything possible to increase its value. With these smart tips, you’ll ensure your land attracts buyers and sells for the highest price possible.
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by Laura Mueller
There’s something magical about the hustle and bustle of the city. But live there long enough and you might find yourself craving a change of pace — and a change of scenery.
With the pandemic in March came the Great (and impromptu) American Migration of 2020, which saw a surge of city dwellers opt out of their cramped urban spaces for the fresh air, privacy, and personal space of rented or owned rural homes. And even notwithstanding a virus that thrives in overpopulated areas, people have long seen the appeal of ditching bright lights for big sky.
There are lots of good reasons to invest in your own personal rural getaway from the city, and thanks to historically low interest rates, there’s never been a better time to do it too. Here’s what you need to consider as you seek out your countryside escape.
1. Know your market
With any increase in demand comes higher prices, and in many states, that appears to be the case with rural land and properties. That doesn’t mean that you can’t score a great deal, but it does mean that you’ll want to do plenty of research to ensure that you have accurate expectations for your budget.
Hire a local real estate agent in the rural market you’re interested in purchasing in, instead of opting for an agent who works out of the city. A local agent will have the most insight on market trends and what constitutes a good deal, and they’ll also be able to help you better navigate the purchasing process.
2. Focus on infrastructure
It’s one thing to escape the city, and a whole other to escape the grid entirely.
When deciding how remote you want your property to be, keep in mind that the further out you go, the less access you’re likely going to have to certain amenities. In some cases, this may include things like indoor plumbing, trash pick-up, and road service, so it’s important to understand exactly what you’re getting into.
Go into your search with a clear idea of what infrastructure you’ll need. And if you find a rural property you love that doesn’t offer the basics, contact the local building and planning department to find out whether it would be possible to bring those services in — and what it would cost.
3. Look up zoning rules and building restrictions
If you’re buying land to build on, then you’ll need to have a complete picture of what the zoning regulations are on your desired property and whether they allow for your vision. It’s also a good idea to do some research on how the area around a property is zoned, since you don’t want to buy a secluded oasis only to see a massive residential or commercial development go up around it a few years down the line.
Your real estate agent should be able to assist you in securing the information on zoning and restrictions that you need, but contact the town board yourself too to inquire about any possible upcoming projects that could affect your investment.
Ready to say “so long” to the big city? Check out our land listings to browse rural land for sale and find the perfect place to escape to.
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Whether you own a small farm or vast commercial farm land, there are many ways to turn this land into a side income worth protecting.
What’s more is that you don’t have to dedicate this land strictly to farming, own farming equipment, or spend your days doing all of the heavy work.
With a different point of view of what the land can be used for and some unique approaches to generating income, you can optimize your land for what works best for you.
Traditional Farming Fallacy
Farm land doesn’t have to be ‘farm land’!
This fallacy often robs people of potential profits and even the lifestyle they wish they had. Start by reassessing what your acreage can be used for and you’ll successfully convert your land into a money making machine that works for you in more than one way.
If diving into a different industry is too risky or you, consider taking a different approach but focused still on farming.
Specialty Crops & Organic Only
Small quantity purveyors of unique and/or organic crops can do quite well under the right circumstances and with the right relationships.
Working directly with chefs & restaurateurs can help repurpose your farm acreage to suit the needs of these local or regional foodies. Small chain grocery stores, farmers markets, and co-ops are also great sales channels to consider.
The list of specialty crops that can be successfully grown is quite extensive. They give the opportunity to grow field crops that may produce popular produce but that which has not as yet flooded the market.
Solar Farm Leases
10 acres of solar panels could provide up to 330 homes with electricity. And of course give you a nice chunk of passive income.
There are plenty of hurdles to jump over before diving into your own solar farm, but the leg work ahead of time could be quite lucrative. In one of our previous posts on solar farm land we give some additional details surrounding potential profits and downsides, but this option could still remain viable.
‘Agrihoods’ Growing In Popularity
This option is dependent on multiple location factors, but leasing a portion of your commercial farm land for the purpose of residential growth could be another lucrative venture.
Suburban residential developments have been sprawling amongst farmland over the past decade, giving families access to healthy food options grown a stone’s throw away.
With over 200 existing agrihoods already started across the United States, perhaps it’s time to dig into this trend even further?
Bee A Good Neighbor
This option wouldn’t use very much space on your property but the environmental upside and potential profits are certainly worth the effort. Colony collapses are threatening bees around the world, which has major implications for our environment, food supply, and well being.
The cost of beekeeping is quite inexpensive and selling the honey won’t be difficult. We recommend Beepods as their beekeeping systems for farms and ranches are a great fit regardless of the size of your property.
Small Grain Growing
With the surge of new roasting grains and the supported health benefits, it won’t take much to turn your commercial farm land into a grain growing profit center.
Some uses of small batch grain growing are; salads, toppings for dishes including desert, nutrition bars, and even beverages.
For more on this alternative land use be sure to read our post on how small grain growers can cater to roasted grain enthusiasts.
Congress has given land owners a reward for their donation toward conservation easement.
Here are some details:
- Donor can deduct 50% of their adjusted gross income up to the amount of the gift.
- Allows qualifying farmers and ranchers to deduct up to 100% of their income.
- Allows a donor to carry the deductions forward for up to 15 years.
These can be quite lucrative over time, so reach out to an attorney and your financial professional to assess whether this option will work for you.
With a little bit of research, some imagination, and of course some hustle, commercial farm land can be turned into multiple passive income profit centers, giving you peace of mind and perhaps the lifestyle you’re looking for.
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by Dmitriy Fomichenko
Solo 401k Expert
Sense Financial Services LLC
“Buy land. They’re not making it anymore.” ~ Mark Twain
Did you ever imagine being a ranch owner? Wouldn’t it be nice to spend your retirement peacefully on your own piece of land?
If you already own a ranch, all of these possibilities are real but if you’re living in a city with a job that requires your presence every day of the week, this could be a distant dream. Further, if you’re a first-time homeowner, buying rural land in addition to your current mortgage payments could be a challenge. According to the data provided by the Federal Housing Authority, $190,000 was the average size of an FHA mortgage in the US in 2016.
How would you like to purchase rural land with your retirement plan?
Sounds uncommon, right!
The good news is that the IRS allows purchase of real estate through qualified retirement plans. However, it doesn’t require retirement plan providers to offer real estate as an investment option mandatorily.
Let’s take a look at the most popular retirement plans allowing real estate investments:
- Self-directed Solo 401k plan
- Self-directed IRA
What is a self-directed Solo 401k retirement plan?
Self-directed Solo 401k retirement plans are targeted towards self-employed professionals and owner-only businesses. The two requirements of opening a Solo 401k retirement plan include the presence of self-employment activity and absence of full-time employees.
- Annual contributions: up to $60,000 in 2017 (inclusive of catch-up contributions of up to $6,000)
- Investment options: real estate, precious metals, private equity, personal lending, mortgage notes, tax liens, tax deeds, and regular stock/bond investments
- Features: participant loan, checkbook control, investment discretion, Roth contributions, and UBIT exempt on leveraged real estate
What is a self-directed IRA?
A self-directed IRA is a regular retirement savings plan with the option to choose your investments. It comes with a wide range of investment options, allowing you to add alternative investments to your portfolio.
- Annual contributions: up to $6,500 in 2017
- Investment options: private business, real estate, private lending, tax liens/deeds, precious metals, and stock/bonds/mutual funds.
- Features: alternative investment options, investment discretion (requires custodian consent)
Step-by-step process to purchase rural land with your self-directed retirement plan
- Open a self-directed retirement account: Start by opening a self-directed retirement account, and fund it with qualified rollovers or regular contributions.
- Choose a rural land for investment: Much like any other investment, choose a rural land that qualifies your investment criteria.
- Use of non-recourse financing: If you run short on funds, make sure to use non-recourse financing The IRS allows the use of non-recourse financing. Further, the usage of such financing keeps the creditor’s claim limited to the collateral, rural land in this case, only.
- Title of the property: The key is to hold the title in your self-directed retirement plan’s name. You will sign on behalf of your plan as the plan trustee.
- Maintenance of the land: Any maintenance cost associated with the land must be paid directly from the plan. In addition to it, any income generated by the property will go directly to the plan itself.
3 Things to know when using retirement money for real estate investing
- Prohibited transactions and disqualified personnel: The IRS defines prohibited transaction as ‘any improper use of an IRA account or annuity by the IRA owner, his or her beneficiary or any disqualified person.’ Make sure that you do not involve disqualified person in any of your deals.
- Use of retirement income for personal gain: It is prohibited to use retirement income for your personal gain. The same rule stands for the use of any property held within the plan. Any income generated by the property belongs to your retirement plan only, and similarly, any expense incurred on the property comes from the plan alone.
- Non-recourse financing: Only use non-recourse financing for the purchase of the land. The IRS prohibits the use of personal funds for the purchase or maintenance of the property.
When you retire you are allowed to take the entire property out of your retirement account as “in-kind distribution”. At that point it becomes your personal property and you can now start using it for your personal benefits and enjoyment.
Buying rural land is a sound investment strategy in itself. The key is to understand the ins and outs of the investment, and when in doubt, consult a professional.
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by G. Kent Morris, ALC, RF
I was recently asked by a client to assist him in thinning his 15 year old Loblolly Pine plantation located in Talbot County, GA. The tract was +- 208 acres in size. The area with the planted pines consisted of 173 acres. See the following aerial photograph.
The stand had an initial basal area of 135 feet of basal area. The planted pines were genetically improved Loblolly Pines. The pines were planted in rows which helped with the mechanized thinning operation. The following photograph shows the planted stand prior to thinning.
The harvesting operation consisted of conventional equipment including a feller-buncher, skidder, knuckle-boom loader and trucks.
The soils were average for the area with site indexes ranging from 74-93. See the following soils map.
Talbot County was heavy farmed years ago with the predominant crop being cotton. As a result, many of the soils are just average in productivity. You can look up this type information for your property using the following link…. Web Soil Survey
The target basal area for the residual stand was 70 feet of basal area. See the following picture showing the stand after thinning. We removed every 4th row and did some thinning in the remaining rows to hit our target basal area.
We ended up thinning 4,633,tons from the property, averaging about 26.78 tons per acre. Some of the areas had poor survival and an abundance of hardwood competition. Of course the amount harvested per acre varied depending on soil productivity. The better soils generated 35 tons per acre and the poorer soils generated 21 tons per acre.
If you own timberland, manage your trees and by far planted pines will yield the highest ROI. There has been lots of genetic research done on Loblolly Pines so there are some really great trees available to the public. Grow them quickly and thin often! Put your land to work for you!!
G. Kent Morris
Accredited Land Consultant
Associate Broker, Bickerstaff Parham Real Estate
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