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| Timing is everything. If you had sold the land in 2007, it would have been 2013 before the stock market was back at a breakeven, not figuring any taxes on the sale. Meanwhile, that land would have nearly doubled in price while you were getting 4-5% annual rent. Land dropped from 2013 and it took until about 2020 to recover and meanwhile the stock market doubled. So, in those cases, timing made the results completely opposite.
Another thing that rarely gets discussed is that land purchases can be leveraged. Historically, you could borrow let's say 2/3 of a land purchase, but not many bankers would let you go buy a million dollars of stock and lend you $600k to do so. Also easier to find ways to cut and make that $50,000 mortgage payment at the end of the year than to put $50,000 into the S&P when times are a little tougher.
Then there's the years when operating the land has bigger returns over just rent. Those years you clear $2-400 more than what cash rent would be, you also capitalize on those. And buying land will bring some economies of scale to your operation. I spent too much time believing that land was a poor investment compared to other alternatives early in my farming career. I made a recent land purchase and cashed in some mutual funds to do so. That was probably really bad timing, but it was adjoining land. Time will tell whether it was a good investment or not.
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