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<blockquote data-quote="OklaBrangusBreeder" data-source="post: 192978" data-attributes="member: 2672"><p>I don't get the line of thinking in this thread at ALL.....!!!</p><p></p><p>In the original post, the answer to the "increase return" question was given:</p><p></p><p>"It seems that real estate prices have been driven up all over the country by people retiring to the country or investing in real estate"</p><p></p><p>By counting ONLY the lease value as the "return" on investment you are not taking into account the increase in the VALUE of the land.</p><p></p><p><strong>For Example:</strong></p><p>Back in "good" days of Walmart as a stock. It was paying probably less than 1% in Dividends. But did that make it a bad investment? NO. Because it was climbing by 25 or 30 percent per year in VALUE. Based on TOTAL RETURN it was making say 25% in value appreciation PLUS 1% in dividend making a TOTAL RETURN of 26%. That was a GREAT stock even though its cash generated earnings was pretty insignificant.</p><p></p><p><strong>Likewise:</strong></p><p>Should you value land ONLY on the lease value for pasture. NO YOU SHOULD NOT! In the initial premise it was stated (which I agree with) that land prices are climbing dramatically. From a TOTAL RETURN viewpoint, you make 2-3% on the lease value/running cattle PLUS the VALUE of the land itself is increasing yearly. So from a TOTAL RETURN viewpoint, the land is doing fine.</p><p></p><p>If you want to make more money from the use of the land, power to you. But I wouldn't be using the "land has to generate a return" argument to justify the whole notion...</p></blockquote><p></p>
[QUOTE="OklaBrangusBreeder, post: 192978, member: 2672"] I don't get the line of thinking in this thread at ALL.....!!! In the original post, the answer to the "increase return" question was given: "It seems that real estate prices have been driven up all over the country by people retiring to the country or investing in real estate" By counting ONLY the lease value as the "return" on investment you are not taking into account the increase in the VALUE of the land. [b]For Example:[/b] Back in "good" days of Walmart as a stock. It was paying probably less than 1% in Dividends. But did that make it a bad investment? NO. Because it was climbing by 25 or 30 percent per year in VALUE. Based on TOTAL RETURN it was making say 25% in value appreciation PLUS 1% in dividend making a TOTAL RETURN of 26%. That was a GREAT stock even though its cash generated earnings was pretty insignificant. [b]Likewise:[/b] Should you value land ONLY on the lease value for pasture. NO YOU SHOULD NOT! In the initial premise it was stated (which I agree with) that land prices are climbing dramatically. From a TOTAL RETURN viewpoint, you make 2-3% on the lease value/running cattle PLUS the VALUE of the land itself is increasing yearly. So from a TOTAL RETURN viewpoint, the land is doing fine. If you want to make more money from the use of the land, power to you. But I wouldn't be using the "land has to generate a return" argument to justify the whole notion... [/QUOTE]
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