In an uncertain economy, it is challenging to decide where to allocate investment dollars in order to ensure optimal security and returns. Conflicting opinions about the future of the stock market, expert’s changing suggestions on how and where to spend, and new U.S. and global fiscal policies are impacting the value of our investments in unexpected ways. Overall, traditional financial investments yield low returns today and the loss of principal remains a high risk. With the massive increase in our national debt, high inflation is inevitable. Most knowledgeable financial experts and advisors suggest that a well diversified investment portfolio always consists of real estate, at least 15% of the portfolio value. However, unlike some commercial and residential real estate values today, whose values depend on the overall economic vitality of the markets they are in, ranch and recreation real estate almost always holds its value and is insulated against inflation. Ranch real estate remains one of the most dependable and wise choices amongst savvy and successful investors. There is no doubt that it has a far greater potential of appreciation thus a greater return on investment than the potential illusionary financial returns we’re seeing in the stock market today.
A large amount of commercial real estate today is overvalued and has not adjusted down to the point where prudent investors would enter the market. On the other hand, rural land and recreational real estate across the nation has a different value foundation – scarcity. One can move a business, build a new commercial building and change locations entirely. Yet land remains where it is, as it is – completely unique in location and characteristic. The availability of high quality land, large acreage properties rich in natural resources such as water, minerals, timber, wildlife and agriculture production capability, are more difficult to find and will undoubtedly continue to appreciate and remain in demand.
Land scarcity offers a compelling argument for real estate as the better long-term investment over stock. Land investors will not wake up one morning to learn that bad “credit default swaps” (third party insurance against bad loans made by some of our nation’s largest banking and investment firms) or a newly passed federal law or government program has wiped out the equity value of their stock portfolio – or worse. Another advantage of ranch real estate ownership is the various tax advantage opportunities. Rural land and recreation real estate benefits from favorable tax treatment and offers many types of estate-planning opportunities. Ranch real estate typically receives more favorable regulatory treatment. For example, in Colorado, a ranch with a market value of over $5,000,000 may be legitimately taxed as agricultural land resulting in property taxes of only $250 per annum. In this uncertain economic and investment climate, quality rural real estate remains a promising and profitable investment.
Ranch Marketing Associates markets quality ranch real estate for investment, agricultural production, conservation easement potential, outdoor recreation and development purposes. With offices in Denver, Aspen and Sheridan and Broker relationships throughout the United States, we provide clients with complete, fully-integrated services.