One of the trends being observed while conducting numerous young farmer and rancher conferences and educational programs is the frustration of being locked out of the land market. Recently, a producer in his late thirties with an off-farm job, zero farm debt, zero debt on operating loans, and zero debt on machinery, equipment, and livestock with only a small home mortgage expressed his frustrations. His dream is to own his own farm, but land prices are being driven up by investors, data centers, or manufacturing and technology firms buying up everything at any price. Like many others, his question was, “How can one compete and is there a right time to buy? The prices just seem to be too high to make sense.” I hear these same sentiments at least weekly on the speaking circuit.

First, farm and ranch land generally will not reach a price where the land will cash flow from farm profits generated on the land. In the 1980s, and of course during the Great Depression, there were short and intermediate windows of opportunity when this did occur. One will be required to leverage off-farm earnings such as income from your job or a spouse’s or partners’ job to be able to meet debt service payments. This could be analogous to a retirement contribution program, but oriented toward land and real estate purchases. This will take discipline, modest family living withdrawals, and a strategic goal with everyone on board being involved for a number of years of diverting earnings for debt service payments rather than retirement contributions.

Another suggestion is to network with older landowners who do not have heirs. Over 20 percent of farms and ranches have no next generation returning to the operation. Your strategy could be to carry on the legacy of the farm if the older generation wishes to maintain the land as a farm. Sometimes language can be written into a lease or purchase agreement even with family siblings that are inheriting the real estate.

As the junior generation, understand the psychology of the senior generation. Safety, security, reflecting on life, and deteriorating physical and mental health are at the top of mind with the seniors. Develop a plan that addresses these issues. However, be sure to put the plan in writing rather than having a verbal agreement.

Land investment is a marathon unless one is into flipping for a quick return. At some point in the marathon, you are going to hit the wall. That is, you will hit a wall in economic terms where you will be required to draw on working capital reserves. Also, be prepared for a period when everyone is selling, which requires working capital for a down payment for the land you desire. As a rule, maintain three years of working capital for your payments. Keep one year in cash or near cash for both of these situations.

Finally, agricultural land is a good investment over time. Since 1910, farmland has appreciated or remained stable 79 percent of the time. When comparing farmland values from 1941 to current times, it has appreciated 88 percent of the time. One final word of wisdom is that it is difficult to save enough to stay ahead of land inflation and it will require considerable sacrifice by all parties and stakeholders involved.