Whether you are in the market to sell or just curious, land-owners often wonder how much their farm is worth. There are many factors that make up a farm’s value. Property location, type of crop, soil, and physical condition of the land will all be taken into account, so it can be overwhelming to try and put a dollar value on your land. Not to mention, family farms have a certain sentimental value that should also be taken into consideration. Luckily, there are a lot of different ways to approach evaluating your land’s market value.
There are many tools available online that can give you an idea of what your land is worth on the market without the hassle and expense of getting someone to come out to your land and appraise it. Modern data collection, imagery, and analytics have made these tools possible. A good site for this is The People’s Company, which makes the process simple by entering in your county and selecting your land from a map.
Once you have an idea of your farmland’s value, you will be able to compare it to other land on the market. This will give you a good starting point when deciding how much to list your land for, or if you want to stay on it, how much equity to sell to investors. As an alternative to taking on more debt, you can allow experienced investors to buy a portion of it in exchange for a share of your profits. The cash received in exchange for the equity can be used to increase the quality or quantity of necessary inputs for your farm’s success.
In-person appraisals are the more typical route to farmland valuation, and also tend to be more accurate. These appraisals are performed by a state-licensed professional who is an expert in assessing agricultural property values. The appraiser will take into consideration the location, amenities, and physical condition of your land.
Of course, a professional appraisal will cost money. If the land is to be sold, appraisals are required by the lender and the fee will be covered by the closing proceeds. However, if you are bringing in outside investors, the fees are usually reimbursed in the fund raise. Once you know the overall value of your land, you can start to decide how much equity would be appropriate to sell to investors.
How much is it worth to keep farming in your family?
It’s not uncommon for farms to be passed down from generation to generation, kept in the family for hundreds of years. So when a farm has a difficult few years, foreclosure can be absolutely devastating to a family’s identity and tradition. How do you monetize the moments your family has shared on the farm?
When evaluating the value of your land, there is a sentimental cost that should be factored in as well. This can apply to not just your direct family, but your community as well. Your surrounding neighbors and friends have gotten used to seeing your farm there, they would probably be pretty unhappy if one day it was leveled and turned into a Target or Walmart. Something else to consider is that this is you and your family’s job. Farming (quite literally) keeps food on the table. So what would you do if you had to find another form of work?
If you are ready to not only maintain your land, but grow it as well, let us work with you. Harvest Returns connects farmers with motivated investors who want to invest in tangible land equity. Working with outside investors can give you access to the resources you need to increase your land’s value without taking out a big bank loan. How much is your farmland worth to you?