OK Farmland Attracting Outside Investors
This post was written by Quinton Chandler.
If you’re looking for a safe investment with healthy returns, the plains of Oklahoma are the new proverbial X on the map for agricultural investors. Despite severe drought, farmland values in the state have been on the rise for the better part of the past two years, making productive land a gold mine for local and out of state farmers.
“When we have something come up for sale, my first call is not to the local farmers,” said Adam Martens, auctioneer in Major County.
“It’s to two guys that live in Nevada, and seven guys that live in Illinois. Because I know that they’re going to pay premium dollar for land in Oklahoma, because they say its the best return on the money for any land in the United States.”
Typically farmers take home a 5-10% profit, reeling in out of state buyers. They see bargain prices relative to their home states.
“You go to states like Kansas with a lot of irrigation, you go to Illinois, Ohio, they’re paying $5,000-$12,000 an acre. So they come here to Oklahoma and they look at $1,000 to $1300 an acre and they think, I can out bid everybody sitting there ready to buy that land that’s a local person,” said Martens.
Cattle and wheat prices have traditionally been the deciding factors in land values. But this time around something else seems to stick out.
“What’s running the interest rates right now would be commodity prices and mineral income. I see that there’s a lot of cash that’s being invested into this real estate,” said Mike Schrammel, Vice President of Farm Credit Services.
Martens echoes Schrammel’s thoughts.
“Farmers that have never had money in their life are sitting on five million dollars and they don’t know what to do with it. So they’re going out and buying land. And that’s why land prices are going up so high because individuals with that kind of money have no faith in the stock market.”
Land values are not expected to appreciate much further, but they also show no signs of falling.