Many families have been involved with farming and agriculture for generations. Handing the farm down to the next generation is always the first thought, but what can you do when the next generation doesn’t want to farm or doesn’t want to live on the family farm?
Let’s talk through three of the biggest questions families face when it comes to handling their land.
1. Should we sell the farm?
When the farming generation decides to retire, and the next generation isn’t interested, many people think that the land should be sold immediately. “If we aren’t going to farm it, why continue to own it?” However, selling isn’t the only option. Often there are emotional and family ties to the land which may be strong reasons to keep the land in the family. A farm manager can be an incredible tool to bridge the gap in knowledge and experience, and to continue to bring income to the property after retirement. An effective farm manager can gather bids from farmers to lease the ground, manage contracts, and advise on inputs such as lime and drainage tile that can benefit the ground for years to come. A good farm manager will be aware of the market conditions in your area and can advise on when and how to sell ground, especially when associated with a farmland realty team. Although farmland is among the most stable real estate investments available, it does at times rise and fall. Forming an effective farm management relationship can help your family hold onto land until the market is right to sell, all while providing income during retirement or to the beneficiaries.
2. If so, when should we sell?
When to sell the farm depends on the current market, the method of sale, and most importantly, your family’s needs and goals. It is important to talk to a farmland broker about the current status of the market. They can help you decide when to list your farmland and how best to market and sell it.
An important consideration is the capital gains tax implications. When a farm has been inherited it benefits from a step-up in basis, making it a very tax-efficient time to sell.
3. If not, how should we maximize the investment?
If you choose to keep your farmland, it is important to make sure that it is being well-taken care of. There is value in hiring a good farm manager, because they can help you maximize the annual income and balance that with caring for the land and maximizing long term appreciation. If you have questions or want to learn more about hiring a farm manager, our team is ready to help.
Owning farmland can a great long-term investment; farmland often generates an overall annual return of 5.5-7.5% and is a very stable and inflation protected asset Another benefit of continued farmland ownership is liquidity because it is a stable balance sheet asset that can be borrowed against quickly and easily for cash flow needs and maximizing future opportunities.
If you would like to learn more about generational planning and the options you have, call our office at (219) 261-2000 to speak with one of our highly skilled Hageman Realty brokers and farmland managers today.
About Hageman Realty, Inc.
Hageman Realty represents trust, knowledge, and excellence. Since 1976, Hageman Realty has been earning your trust in buying or selling farmland, land transitioning, farmland management, recreational consulting, or generational planning. Growing from our family’s history, we have continued to build on that foundation with our passion, hard work, professionalism, and forward-thinking that continues to set us apart. Land is more than just our passion; it remains our livelihood, our way of life, and represents our future. Our seamless process and extensive expertise allow our clients throughout Illinois, Indiana, Wisconsin, Arkansas, and Texas to get everything they need, all in one place. Contact our team today at (219) 261-2000 to learn how our team can assist you in your land buying or selling needs.
