1/11/15: Dirt to Dollars – Investing in Raw Land that Cash Flows

Best-selling author James Rickards (Currency Wars and The Death of Money) recommends land as a place to store and protect wealth from the dangers of paper currencies.

A falling dollar creates financial turmoil.  James Rickards recommends land as a safe haven.In spite of the recent blip up, the dollar has a 100 year history of going DOWN, so it probably makes sense to “sell” dollars when they’re “high” and buy real assets…like real estate…especially when those real assets are on sale.

BUT…the challenge is that land doesn’t cash flow like little green houses.  Or does it?

In the broadcast barn to explore how to get more green from your acres:

  • Your erudite host, Robert Helms
  • His not-so-glamorous co-host, Russell Gray
  • Special guest and renowned financial commentator (The Gartman Letter), Dennis Gartman
  • Special guest and agricultural land expert, Steve Bruere

The beautiful thing about real estate…one of many beautiful things…is there are SO many different ways to make money.

Real estate investors can do just about anything a paper asset investor can do, but be much more insulated from the corruption and rigging in financial markets.

Most people think of real estate investing as the house they live in…maybe a second home…or even a rental property.  More serious investors look at multi-family, commercial, retail…and maybe even industrial.

But if you think back to the very beginning of real estate ownership, the PRIMARY purpose of land was to produce food.

And last time we looked, food is still a pretty important commodity.

So while residential real estate investors…landlords…need to pay attention to jobs and wages, agricultural real estate investors (and mineral investors…like oil and gas producing properties) need to pay attention to commodities.

It isn’t really more difficult than employment and wages.  It’s just different.

And if you want your land to cash flow, you don’t need little green houses or big red hotels.  You can rent your land to farmers.Make your land cash flow by renting to a farmer

This is a subject that’s intrigued us for quite some time.  When financial markets are jittery, it can be smart to focus on “primal” investing…things that are essential to human existence.  Because even in difficult financial times, there’s always a demand for essentials…like food and shelter.

Dennis Gartman is the author of The Gartman LetterIn this episode we visit with Dennis Gartman, who’s one of the most well known and respected financial commentators.  We ask him about macro-economic factors which impact not just farmland and commodities, but residential real estate as well.

You should listen to his comments, but the short of it is he likes housing.  Cool.  So do we.

Next up is Steve Bruere.  Steve is a very experienced farmland broker from America’s heartland.Steve Bruere is a land broker with Peoples Company

We’ve been talking about agricultural investing for the last couple of years, but haven’t focused much on U.S. farmland.  Steve helps us understand some of the how and why of U.S. farmland investing.

More mouths to feed means perpetual demand for food and famrlandWhen we look at the world, we see more mouths to feed.  And while we’re not quite sure where all those mouths will want to live and work, we’re pretty sure they’ll all want to eat.

And because the fruit of the land can be shipped to where the people are, farmland investing can be a great way to get in on the action without having to rely upon the local economy.

Just think about investors with properties in the Bakken.  If oil prices stay down long term, North Dakota might not be very profitable for real estate investors.

Another nice feature is that renting to a farmer is like owning a hotel property and renting to a hotel operator…or like renting a commercial property to a business.  EXCEPT…you don’t have the tenant improvements and other expenses of maintaining a physical structure.  It’s more like a NNN lease.

So farmland investing can be a great way to store wealth in real estate long term, while generating cash flows while you wait.  And if the the local path of progress brings people to your pasture, then you can put up some buildings…or sell to a developer…and move your equity to a new market.

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