People are always seeking stable investment options to secure their financial futures. Traditional avenues like gold, IRAs, and 401(k)s offer a sense of security, yet their returns are subject to market volatility. In the end, most times, no money is left for future generations when the individual passes away.
Mark Leonard, the President of LEO-LAND Inc, a diversified Iowa corporation with its wholly owned subsidiaries of Agcom Financial Services and Leonard Limousin and Angus, has been a staunch advocate for a lesser-known yet lucrative investment: agricultural land. He mentions, "So many farmers and ranchers I know, have never put money into an IRA or a 401K. Their land is their IRA or gold. When they finally decide to quit being a producer, the land provides them with all the money they'll ever need to live comfortably for the rest of their lives." Born into a farming and ranching family, his extensive banking experience has led him to guide individuals in the most lucrative direction possible, and as Mark says himself, "There is no better investment on Earth than the Earth itself."
Of course, it may not suit all people, but individuals who want to diversify their portfolio and make good profits must consider land. Even investors are pouring significant amounts of money into US farmland as they snap up an asset expected to outperform as the world's population grows sharply while natural resources become scarcer.
Although Mark himself advises personal ownership rather than going through an investment group, the sheer rise these groups have witnessed highlight the growth of the sector.
The value of farmland held by investment groups has more than doubled over the past three years, according to the National Council of Real Estate Investment Fiduciaries (NCREIF). Its value hit $16.6bn at the end of 2023, up from $7.4bn at the end of 2020 and $1.8bn in 2008, said the NCREIF, which tracks the holdings of some of the largest agricultural investment funds in the US. The average value of US cropland has also swelled in recent decades, rising to $5,460 per acre last year from $1,270 per acre in 1997. These rates are projected to climb further as climate change reduces arable land and the global population grows.
The agricultural land also benefits from tax codes and depreciation advantages within cattle projects. For example, buying a bred cow for $10,000 between state and federal taxes and local taxes can be written off the first year or depreciated over three to five years. For most people, an immediate deduction upfront would be most advantageous. For those looking for passive investments, they could be on a personal income basis in a 40% to 45% total tax bracket. Buying a cow, for instance, at $10,000 saves $4,500 in taxes, and one can automatically have $5,500 of their own dollars invested with essentially no risk.
For decades, Mr. Leonard has championed the cause of rural communities, recognizing the potential of agricultural land as a cornerstone for financial stability. While gold may glitter with promise, its value hinges solely on market speculation. In contrast, agricultural land stands as an enduring asset, with historical data showcasing its resilience. Mark Leonard further points out that over the past century, agricultural land values have consistently appreciated, barring only two instances of stagnation during economic downturns in the 1920s and 1980s.
Agricultural land in itself can be both an appreciating asset and a source of steady income. Unlike gold, which offers no annual dividends, agricultural land provides owners with a reliable revenue stream, whether through leasing or direct utilization. "If people want to look for some additional investments, something they hadn't thought of before, something that certainly has greater gains, investing in a land is the best option," Mark states.
He believes that people can achieve a three to five-year program of over 20% return on their money, especially in the cattle business. Land ownership offers a 2% return on investment with an annual cash deal, but the value of the asset rises substantially over time. Since 2007, land values have increased at least five times, making it a more attractive option for long-term investments or legacy leaving.
The appeal of agricultural land extends beyond financial gain, which ultimately resonates with Mark's vision of community empowerment. He emphasizes that investments in rural areas bolster financial portfolios and foster local development. Increased investment translates into improved amenities, job opportunities, and economic growth, ensuring the vitality of rural communities for generations to come.
Mr. Leonard's passion for rural development stems from his deep-rooted ties to the land and its people. Hailing from a rural community himself, he understands the intrinsic value of agricultural heritage and seeks to preserve it for future generations. Despite the allure of urban life, this rancher remains committed to bridging the gap between rural America and mainstream investment opportunities.
