Drought affected farms?

I have had mind blowing returns paid $90 an acre in 1989 and was laughed at, prices fell briefly to $45/acre in about 92, now I am getting $45/p/a rent and it's under market value lease expires in 2 years, but wll be signing new leases for 2023 shortly for perhaps $60/acre. The land value has been going up buy about $200p/a p about 120%p/a on purchase price so add on over 100% yeild quite good returns.

 

It was a cheap negative idiotic comment just for the sake of being neative. The same can be said for any property the comments are even more applicable to residential property. The leasee is responsible for up keep and all expenses

 

And being an accountant you should know the advantages of sharefarming. Share farming can be hands off merely a method of cashflow, financing and taxation control. It depends on strategy and objective.

 

Let's look at it like this - farming is a commercial venture ie a business, land is a passive asset. @Paul@PFI has commented on that basis, even vacant there are statutory obligations & I agree.

Whilst a return can be earned from the land, be it rent or derived from the land itself by primary production, then it's being utilised whether at it's maximum potential or to a lesser degree (eg functionally obsolete improvements getting market rent for the type and age of the building).

 

Speculating on farm land to resell sounds like a thing a city person would do. And be the town joke. Its OK, one of the locals will buy it from you for a low price when time comes. My mates farm was bought by a city guy for $2m or so. He asked to put super down before it settled. No rain was predicted. Everyone was intruiged why he dropped $100K of cash on dry soil... and ploughed across tracks and removed some fences and contour banks. He wanted to get it good for share farming he said. The guy who sharefarmed it previously didnt want a bar of him. Sharefarming is a partnership not just a rental of the land. Three years later it still hadnt rained. But he built new dams and three new water tanks and a new house for his mother. Still no crops. He sold last year - 6 years later. Nothing had grown due to drought. The new owner has a incredible crop this year (Canola / rapeseed). He bought for heaps less than the other guy paid.