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How To Invest In Rural Properties

May 12, 2016 / NEWS

How To Invest In Rural Properties

Rural properties throughout Australia offer unique investment opportunities that can be incredibly rewarding. But there are a number of key factors a potential investor needs to understand before making any big decisions, including the rural way of life.

According to the experts,land values in agricultural areas soared in 2015, with a 4.4 per cent growth in 2014. This is due to heightened interest by major institutional and private investors. This is expected to continue, as agriculture looks to be a core focus for investment in 2016.

Remember, more than six million people live outside of Australia’s big cities so there’s a relatively large market for rural investment, and people need places to live and work in rural regions.

Here are some things to keep in mind when looking to invest in the rural market.

Do your research and set your expectations

Whenever you’re investing, it’s best to set realistic expectations. Do your research about how the land is used and what the general way of life is, so you can completely understand who your potential tenants may be. Make sure you also do your research about the actual area. What industry does that particular region specialise in?

Also, you’ll need to understand there are many types of uses for land, and surrounding neighbours may be using theirs differently – whether it’s rural residents (new and old), or commercial producers.

Knowing where the good opportunities are and what resources on offer is key to deciding where to actually invest. Just remember to look ahead, not at what’s happening now. Seek advice if you need to, and talk to the locals.

A key fact to consider; regions with rising populations and infrastructure or resource projects in the near future will see positive capital growth. It’s also good to look out for the towns or areas where demand outstrips supply.

Other factors that should influence where you invest include auction clearance rates, vendor discounts, vacancy rates, and rental yields in the area.

Check out the view

Many people looking to live in rural areas are concerned about space and outlook. As in the city, if the views are not ‘built out’, you may be able to get more rent for it. But remember; the land your property is overlooking may belong to another neighbour, and that person has every right to alter their own land.

Make sure the property is investment ready

There is a global food demand, and our farms need to be ready to meet these. As such, your investment needs to be ready to provide for manufacturers and commercial purposes. This means keeping good records, ensuring the land is capable of producing sufficient output, and planning for the future.

You cannot control everything

There are plenty of things in life we cannot control, and investing in rural properties comes with a lot of variables. One of the key factor is, of course, the weather. While most people see the long-term returns on agriculture as quite lucrative, there may be fluctuations due to weather, especially so in certain areas. For example, a particular may be more susceptible to natural disasters such as drought, floods or fires.

It’s important to understand the risks involved with agricultural and rural investment. The more aware you are of the risks, the easier it will be to avoid or deal with them. For example, chemical contamination, and livestock or plant diseases may be an issue. It’s also important to check what the land you’re interested in can and cannot be used for. There’s no point investing in a property you would like to rent to a commercial business if the land can only be used for residential purposes.

There are rewards

You can reap huge rewards from investing in a rural property. Choose the right kind of land or property, and you can gain high rental and agricultural yields. Plus, if it’s a residential property, you can even use it as a holiday rental. Rent it out whenever you don’t want to be there, and  whenever you want to enjoy the vast, open and lush environment – don’t rent it out!

Just make sure you don’t rush into any decisions. Finding the right rural property is all about doing your research about the land, its possible use, the surrounding area, and the surrounding properties.

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