Slow and Steady
A reader recently asked for a farmland update. So here’s the latest. I’m collecting $8,500 a year from my tenant who is growing canola on my 310 acres of farmland. He pays me twice a year, half the total amount in the spring and the other half in the fall. Here’s the latest cheque that I deposited into my bank account last week. This amount includes 5% GST.
My farmland loan outstanding is about $193,000. The interest rate is 3.4%. Property tax was about $1,500 this year. No insurance or other cost is necessary for owning farmland. So my total expenses came to $8,100. I’m rounding these numbers to the nearest $100.
Thus I’m able to make a $400 profit on my farmland in 2016. Slowly but surely, the financials are improving each year. 🙂
I think farmland returns are starting to dry up in North America. Commodity prices still haven’t recovered. So unless crop receipts increase by a substantial amount it’s hard to see any reason for the underlying land to become more valuable. Maybe farmland will continue to keep pace with inflation for the foreseeable future so it’s still a good store of wealth, but I don’t see much more appreciation from here.
It’s too bad the Canadian prairies is so cold. Many plants like hemp can’t grow out there. Since marijuana will soon be legalized there will probably be a lot of new cannabis growers by this time next year. Not to be blunt, 😄 but this obviously creates opportunity for investors too. For example, last year I blogged about buying some shares in Canopy Growth Corp, a supplier of medicinal marijuana. So far the stock has doubled in price! Not bad. 😀
Free eBook Download
Maybe I just got lucky with that marijuana stock. You shouldn’t get your investment advice from an amateur finance blog anyway. 😉 But my acquaintance David Chilton, who runs his own financial planning business is more than qualified to offer quality advice. I use the term “acquaintance” loosely because we’ve only corresponded by email a couple of times. 😛 Anyway, he’s teamed up with Tangerine bank to give away the eBook edition of his latest work, The Wealthy Barber Returns.
If you’re interested, just go to this Tangerine page and use one of the download links on the right. I’ve read the paperback before and recommend it for anyone who likes personal finance. The book covers a lot of core investing topics like index funds and the stock market. You can download it to your computer, or mobile device. It also supports the Kindle App. Enjoy! 😀