B2
Farms seeks investors who understand the potential return from investing
in agricultural farmland.
We believe that farmland offers excellent investment value with good
income potential and long-term capital appreciation. At B2 Farms, we’ll
help investors locate, invest and/or manage farmland assets and investments.
Interested in Farmland as an Investment?
According to the USDA, from 1999 to 2008 the Average Farm Real
Estate Value has increased from $1,030/acre to $2,350/acre. During
that same timeframe, the Average Cropland Cash Rent has increased
from $67.50/acre to $96.00/acre
Although farmland values have decreased 5-10% from their peak
in 2008, strong commodity prices, farm programs, outside investments,
favorable interest rates and tax incentives will continue to drive
farmland values higher in the near future.
We seek to manage farmland that can produce a return of
at least 3-5% annually.
Farmland is a tangible asset becoming more scarce. As urban sprawl
has increased, the amount of land available for agriculture has
decreased. New agricultural cropland isn't created any more.
The supply is eternally fixed and decreasing.
Farmland can be recreational. Owners who enjoy hunting, fishing
or conservation find farmland ownership as an additional benefit.
Farmland can also be rented or leased to hunters, fisherman and
outdoor enthusiasts. Their fees will provide additional income
for their opportunity to have access to the farmland. Farmland
usually has a thriving bear, duck or deer population varying with
location.
Farmland owners can generate additional income by selling carbon
offset credits on the Chicago Climate Exchange. Certain land management
practices such as no-till farming, grassland plantings, and tree
plantings are just few ways that carbon credits can be obtained.
This is a new facet of farmland investment that will gain increasing
importance in the future.
Farmland improvements such as drainage tile and levees can
be depreciated. Farmland can be held in IRA’s and can be
used in 1031 exchanges to minimize capital gains taxes. B2 Farms
can help you explore these strategies.
Working with B2 Farms
Our primary purpose is to operate profitable farming operations
to provide maximum return for our investors. Here are some ways a
farmland investment can diversify your investment portfolio, increase
your current return, and play a part in your estate planning. Several
options include:
Investor owns farmland and tenant leases back the farmland from
the investor for a cash price. Leases can vary depending on your
geographic location. Productive farmland in the Midwest such as
central Illinois and Iowa can rent for as much as $300/acre. Productive
farmland in the eastern United States can range from $100-$200/acre.
Investor owns farmland. Tenant leases
back the farmland from the investor for a cash price plus a flex
price based on commodities price and inputs. Flex leases are relatively
new and becoming more common year to year. Typically, an agreed-upon
cash rent base is set. A flex price is negotiated based upon commodity
and input prices shortly before the growing year. A cap on the
flex price can be set to minimize volatility.
Investor and tenant split the costs, risks, and profits of
the crop
Investor owns farmland and assumes all crop input and marketing
decisions. Investor has tenant plant and harvest crop at an agreed
upon cost/acre. In these situations, the farmland owner might find
it more profitable to have tenant custom farm the land instead
of leasing out the farmland to a tenant.
