As someone with deep roots in agriculture, I understand the value of fertile land and the bountiful harvest it can provide. However, in addition to farmland, commercial real estate can offer significant benefits to your financial portfolio. Here, I’ll discuss five key advantages of investing in commercial real estate: cash flow, tax benefits, diversification, recession resistance, and forced appreciation.
Cash Flow
Farmers are no strangers to cash flow challenges. However, commercial real estate investments can provide a steady stream of passive income, supplementing your farm income without requiring additional time or effort. This off-farm income allows you to focus on your agricultural operations, family, and other responsibilities.
Reference: Brandon Turner. (2019). The Book on Rental Property Investing. BiggerPockets Publishing.
Tax Advantages
Although taxes may seem like an unavoidable burden, investing in commercial real estate can offer potential tax advantages. Strategies such as accelerated depreciation and cost segregation can help improve your tax position while generating passive off-farm income.
Reference: Brian Hennessey. (2018). The Due Diligence Handbook For Commercial Real Estate. CreateSpace Independent Publishing Platform.
Diversification
Financial experts often recommend diversifying your portfolio to mitigate risks associated with market volatility. Commercial real estate serves as a stable and dependable investment, providing a valuable hedge against stock market fluctuations. Furthermore, since commercial and agricultural properties belong to distinct market segments, volatility in one market does not necessarily affect the other. Owning both types of properties helps secure your financial holdings against future uncertainties.
Reference: Larry E. Swedroe and Jared Kizer. (2011). The Only Guide to Alternative Investments You’ll Ever Need. Bloomberg Press.
Recession Resistance
Economic cycles are inevitable, and recessions can impact various industries, including agriculture. However, commercial real estate has historically demonstrated resilience against recession pressures. By investing in this stable and predictable asset class, you can protect your wealth during economic downturns.
Reference: Douglas Silverstein. (2020). Recession-Proof Real Estate Investing. Authority Publishing.
Forced Appreciation
Similar to enhancing an underperforming farm, improving commercial real estate properties can increase their value, resulting in higher rental income and greater resale potential. This “forced appreciation” allows you to proactively build equity and maximize your investment returns.
Reference: Ken McElroy. (2009). The ABCs of Real Estate Investing. Business Plus.
In conclusion, commercial real estate investments offer a wealth of benefits for farmers seeking financial growth and stability. By creating passive income, enjoying tax advantages, diversifying your portfolio, resisting recessions, and forcing appreciation, you can cultivate a strong financial foundation for yourself and your family.
At Farm Raised Capital, we’re dedicated to helping like-minded individuals in the agricultural community create passive income and wealth through commercial real estate investments. Our mission is to preserve your legacy while enabling you to enjoy more time with your loved ones and pursue your passions.
To learn more about the opportunities available in commercial real estate and how they can secure your family’s future, join the Farm Raised Capital community. Visit our website (www.farmraisedcapital.com) and Next Gen Ag Advocates (www.nextgenag.us) to explore our vision, mission, and core values. Together, we can redefine wealth and create a prosperous future for generations to come.
