Following record sales in 2021, the rural land market is continuing to surge this year. This offers opportunities for both sellers and buyers of farm, recreational, and other rural land.
Alex Gyllstrom, marketing director for Whitetail Properties, says low property inventories resulting from last year’s strong market point to land values remaining high for sellers. Rising interest rates this year could suggest reduced demand, but he notes that is only one factor.
“It can be projected that rural land values will stay at the higher end of the market because of current inflation across our economy, as well as volatility in the stock market,” he says. “This will help maintain or even increase the value that sellers can potentially receive.”
Gyllstrom adds that while these factors create a sense of urgency for those looking to sell land, they also present an upside for buyers. “Eventually, we anticipate more inventory becoming available due to current economic factors, creating more buying opportunities.”
And, although the Federal Reserve has rolled out a series of rate hikes incrementally, with more projected over the course of 2022 and likely into 2023, he notes that potential land buyers can benefit from interest rates that are still relatively low, at least at the current time.
“We expect this year’s rural estate market to continue at a strong pace, rewarding both sellers and buyers,” Gyllstrom says. “Land is, and forever will be, a limited resource, and the rate of appreciation over time continues to make it a solid and safe investment. The mindset of buyers will continue to factor in the increasing interest rates, but we expect the demand to sustain as long as rates don’t get too out of whack.”
Below are several recommendations for those considering selling or buying rural land.
For sellers
- Provide curb appeal – There is only once chance to make a good impression. Pick up trash along the road leading to the property, fix fences, hang a gate and make the driveway attractive with white rock or new gravel. Digging a pristine-looking fishing pond or creating a mature stand of white oaks are some more long-term improvements that create curb appeal.
- Document farm value – For farm sales, provide soil fertility records, production history and recent farm improvements, such as drain tiling, irrigation systems and conservation projects that add value to the operation. Prospective buyers will also want to know about any tenancy agreements if someone is operating the farm other than the owner.
- Get leases in writing – If you have a farmer renting the crop land, write up a simple contract both parties can sign. If you lease the hunting rights, make sure there is a written lease in place. Also, a seller can show potential buyers the extra income they’ll be able to make through leasing out the farming or hunting rights.
- Build a photographic portfolio – For hunting properties, trail cam photos are an important sales tool to show food plots and demonstrate the quality of deer, turkey and other game animals on the property.
For buyers
- Work with a rural lender – Many of these offer tailored lending options and customized packages for rural properties, including a fixed interest rate, low down payment and fixed monthly payments.
- Think longer term – Despite current economic challenges, avoid weighing only the short term impact of 2022. Land ownership is a longer-term investment. Things could swing one way or another in 2023, but waiting to purchase land is not likely to produce more favorable results.
- Consider a partnership agreement – One of the common ways of purchasing a large hunting property is through partnership agreements, such as limited liability company. This enables a group of individuals to work together to own property, making it more affordable for each.
For more information on selling and buying rural land, visit WhitetailProperties.com.
