Land Prices & Farmland Dynamics
Land Values and Farm Sales in Indiana
Whether you call it market corrections or stabilization, the farmland values of the local real estate market have been in a flux for a few years. Top quality land that is very productive continues to maintain a high price per acre, while average to marginal quality farms and land have seen declines as much as 15% or more in the last year or two.
Key Factors to the Best Price Per Acre
From local competition to the taxes per acre, the location of a farm continues to play a vital role in the price per acre. Farmland that sits next to high quality farm operators may bring more per acre, particularly when competition plays a factor. Working with a land broker that has relationships with local farmers and land investors also plays a vital role.
Regardless of your understanding of soil profiles and soil types, the productivity of a farm is a key component of price. Top Quality Class A farms will have a higher National Commodity Crop Productivity Index, or NCCPI, or Surety WAPI, Weighted Average Productivity Index than a Class B or Class C soils farm. As these numbers go up, they are indicators of the price per acre.
We track local farm land sales and can help valuate and determine the price per acre average.
Precipitation and annual rainfall in the local area also factor into the productivity of a farm and the price per acre. Top quality soils in Indiana county regions such as Tippecanoe, Benton, Warren, Carroll, White, Clinton and Jasper or Newton County can have a varied annual rainfall from 30 t0 40 inches of rain. These dynamics are key to cash rents, returns and the price per acre.
Return on Investment
From cash rent rates to farm real estate investment returns, the ROI of a farm is looked at from a buyer and seller perspective with different perspectives. A farmer will calculate input costs, while investors are looking at straight cash rent returns that are typically 2.8% or higher. Some flex leases allow an investor to gain greater returns when crop prices are on the upswing.