Thx Sav for the input...

Sounds quite dismal imo, very slow income or none at all, considering a lease would roughly equal the tax burden, so the opportunity for profit would be from appreciation? Does this "traditionally" relieve an owner's burden of holding land that is not currently in use, and thus the profit opportunity is very low at this time? Excuse me for assuming a few things ITP.

He left out way, way too much information for anyone to draw any sort of conclusion from that anecdote.

Just because someone leased a 320 acre parcel for it's tax burden doesn't mean much, since we don't know what kind of land that is. Perhaps it is a large, wooded parcel that was leased to a hunt club, since it's not suitable for ag production. It could be the side of a mountain for all we know.

Off the top of my head, I can think of a considerable number of reasons of why fertile, productive aglands are worth much, much more than their tax burden (save for freakish tax liabilities that may exist out there somewhere). If he comes on and says "Yes, it was a 320 acre tillable parcel in Southern Illinois fit for corn and soy", I'd have a hard time believing it leased out for taxes.

Most leases on land are designed to essentially cover the cost of taxes on the land with perhaps a little left over each year.

Now, when you enter the realm of high quality tillable land (really the type Watchmaker is referring to) annual rents outpace taxes by a wide margin; however, when we look at cash flow in terms of ROE it is still marginal at best imo. Some friends and I lease the hunting rights to some rice/soybean fields in Arkansas. The farmers out there tell me they pay 100 dollars an acre annually in rent and land can be bought for ~2000 dollars an acre. Now that is 5 percent COC gross and one still has to subtract property taxes and any other expenses (leases do not write themselves, you may have a farmer go bankrupt, etc.) Not exactly earth shattering returns imo.

With a few exceptions I know of only two types of people who own significant amounts of land: Those you got it the old fashioned way (inheritance) and HNW individuals. With good reason imo.

5 year average sale price per acre/timberlands is less than that @ $800 or $1400, depending on whom you ask, yet multiple Timber REITs still exist. In looking for relevant info, I found this interesting article (just published an hour ago, oddly enough) that outlines some of the very basic ideas that should be co-equal with the non-existing agREITs.

http://www.pionline.com/article/2010...TSUB/301119973

Timber REIT, 8-10%, this sounds more interesting.

I am not sure what point you are making with the lower absolute sale price of timberland.

Here is a .pdf from the USDA outlining foreign holdings of agricultural land in the US. This is tangential to your research but may interest you. I skimmed the first 30 pages and here are a couple of observations. The majority of foreign landowners own timber land in the US. In the state of Maine ~20 percent of all private ag land is owned by foreign entities whereas nationwide the number is 1.6 percent.

So, there does not appear to be restrictions on foreigners owners tillable land in the US, but the given the choice (presumably dictated by economics) they choose timber land at a greater rate than tillable land. Also, whats the deal with Maine?

We still do not have an adequate explanation for no agREIT's and I am looking forward to any more research you come across.

[Places tin hat on head] I still maintain that there are no agREITs because it does not pencil out economically due in large part to special interests in Agribusiness funneling nearly all of the profit from food production away from the farmer/landowner and to their shareholders/owners. [/tin hat]

Obviously, I am open to a more scientific/fact based explanation.

I ride the train in every morning with a number of guys from the Merc who might know something. I'll talk to them and see if I can't get put on the right trail to figure out why there are no agREITs. I just can't see a practical reason why an agREIT is an absolute unicorn, barring something on the legal end...

The lower absolute price of timberland in relation to (some) aglands seems to have some bearing on NAV, given that the underlying land value would be higher with aglands acre for acre, an agreit would probably be a pretty desirable proxy for agland exposure, yet timberlands with their lower prices exist in REIT form while pricier (and presumably more desirable) aglands don't??

(I don't know what the comparable ROE/per acre would be for either one, as far as timber versus, say, corn or soy- but perhaps it's inefficiently slanted towards timber given the associated costs? A bunch of University Trusts managed by genius eggheads seem to love timber REITs)

Former Goldman Sachs derivative trader Shonda Warner opens fund investing in agricultural land with eventual goal of becoming first ever agREIT in the US.

linky

"It's really hard to buy property at the right price,"

"The returns in agriculture haven't looked sexy for a long time, but I think that's about to change,"

Two quotes from Warner.

I think this goes to the heart of the matter. I have more to say but am still researching the previous article I linked you.

Fantastic, answers a lot of questions.
So, I guess these may be springing up just now...

I come from an egghead family, and am confused at buying the dips here as explained in the article. Wouldn't the majority of the timber be unused (the great portion of timber used for home construction) or too expensive to ship to those who would put it to good use? (considering our current economic situation) Ag land seems like a better bet in the future, and Q. for watchmaker, did the eggheads like timber REITs before the "housing collapse" or after?
http://www.farmdoc.illinois.edu/mana...fefo07_06.html

http://www.extension.iastate.edu/Pub...ons/FM1801.pdf

Here's some data out of IL and IA on ag land lease rates.

This seems to be the picture for Iowa determining pricing an ag land lease (as stated in above link).
• what others are charging/paying
• average yields
• corn suitability ratings (CSR) index
• share of gross crop value
• return on investment
• crop share equivalent
• tenant’s residual

Oh, and Sav, I understand hunting land is much much cheaper to lease out, I like those rates (JK), I should lease out my prop. in OK for $4.16/year or my NV land $33/year...haha. But yes I have friends in VA with a similar hunting situation (via family land) and they lease out portions of it at a similar rates plus "shoot em up" club fees.

Some timber info I just read...
http://www.fao.org/DOCREP/E7730E/E7730E01.HTM

http://www.reuters.com/article/idUSTRE57338K20090804

OP... don't listen to him...

If you are interested in speculating in hyper-inflation... the least of your worries will be broker fees... since the dollar will be worthless anyway. Isn't like you are going to be engaging in a day-trading style and getting in and out of the market, when a movie ticket is going to cost 120 dollars...

You should buy silver... when there is a money crisis the silver to gold ratio historically always goes back to 1/16th. If you buy silver now, and gold hits 2,000 dollars per ounce, your silver will be worth like 7 times more of what you bought it for at todays price, I think it's at 18 bucks?

I've said this before on this forum but if your bet is that the spread will tighten you should also short gold.

http://seekingalpha.com/article/1492...ll-alive-today
Some basic info on the AuAg ratio, I don't see the price getting to 16:1 for a long while. But of course see silver outperforming gold, as I've stated many times recently. 40:1 is more likely.

Hence why I believe it is a great investment...even if a long while is 10-15 years away...

people buying homes right now are going to get SLAUGHTERED... currently the average U.S. home costs 20,000 ounces of silver... and the last time the fed reserve rapidly increased its money supply back in the 1970's we saw home prices drop from 20,000 ounces of silver down to 2,000 ounces of silver. over a 10 year period....

so bottom line is, if you invest in silver today instead of real estate... you might be able to afford a home 10 times nicer in 10 years.

That is Robert Kiyosaki lingo right there, actually sounds more like his metals guy Mike Maloney. You must realize in 10-15 years silver may be worth €12.70 the same price it is today. If you are not ready to sell that shiny sh** when everybody is buying it into a trend, you will be sorry you didn't.

EDIT: But let us not argue or derail further, for I love the shiny stuff sir.

They universally agreed with one another that they've heard of such REITs and they do indeed exist, but not a man could name a public or private one... so, basically, bullsht.

I think the article posted by SAVMAN tells the tale of the tape. If they don't exist now, they probably will soon enough.

I remember researching this a bit when I first started learning about potential hyperinflation scenarios and looking into gold/commodities. I found this Canadian fund: Agcapita. They invest primarily in Saskatchewan farmland, and currently have over $100 million under management.

Intuitively it seems like a good idea, but I couldn't find any hard information online other than their standard memo they post as a comment whenever an article mentions them. Anybody know anything about them? Seems legit with Jim Rogers on their board and being approved for registered retirement accounts, but I would love to see some historical returns without having to order the investment package.

I received similar responses from some friends in the apartment business (uh yeah I heard of some guys funding an LLP or something blah blah...bs) If nothing else I am going to some more research and see what happens. I am going to be spending the weekend with an ag consultant and a timber consultant so it looks like everyone will be getting 20 questions from savman.

As an aside....I found Mr. Music Recorders comment about the Genius Eggheads and their interest in timber land w/regard to the Housing Bubble interesting. If anyone cares to expound I am all ears.