Johnson Property Group

Conditions ripe for off-farm property investment

Investing in assets away from your farming operation can prove a worthwhile and fruitful
strategy for diversifying risk. Johnson Property Group (JPG) director Andrew Johnson said a surprisingly big grain harvest and high livestock prices had resulted in an increase in urban real estate activity by farmers.

“Now with residential interest rates so low, many farmers are exploring the added value of finding assets beyond their agribusiness,” Mr Johnson said. “But family and operational situations are unique and often complex, so it’s crucial to make sure investing in property as a wealth creation tool actually suits your circumstances.”

The majority of farming families tend to have most of their assets tied up in agricultural land and the farming business, so investing off-farm can diversify income sources and increase capital returns.

Choosing the best strategy to expand farm business wealth requires careful consideration to reduce exposure to factors such as market fluctuations, commodity prices and weather. And many farming businesses have complex ownership arrangements, so it is vital to understand what entities operate inside and outside your agribusiness structure.

Primarily farmers need to establish why they are looking for opportunities off-farm. Will this strategy aid your family’s succession planning? Or if there’s no future farming generation, will an expansion of the agribusiness fund your retirement? Or perhaps you’re concerned about the risks in agriculture and believe diversifying off-farm will help mitigate them?

“We have farmers who create an off-farm property portfolio to help provide for their
children’s education and family’s off-season lifestyle,” Mr Johnson said.

Once you’ve established the reason for your off-farm asset pursuit, you should consider the cash flow implications for your family and the farm. A strategic investment can improve your cash performance, but it’s vital you pay attention to the consequences.
Mr Johnson added that location, age, style of building, zoning and property asset class
exposure should all be discussed with an experienced real estate agent and property
management expert. “It’s these early discussions that can make a big difference to your bottom line,” he said.

Call Andrew Johnson at Johnson Property Group on 0418 194 101 or email [email protected].