Details Of The Various Aspects Associated With The Agricultural Land Funds

June 15th, 2012 by admin

Let’s take a look at the various aspects associated with the agricultural land funds. There are certain factors which are motivating the investors to get interested in the agricultural sector.

The factors are rise in the food prices, the long term inflation characteristics of the agricultural lands and the less correlation to the other assets. Basically, there are three investment models for the investment in the agricultural land.

One is the buy and hold, in which the investor buys the land and waits for a bit longer period of time in order to get more profits. This investment model generally builds up a total return of eight percent per annum.

The second model is buy and develop and it is a bit risky than the first model. It is used by the hedge funds. The whole scenario involves buying the raw land and converting it into a productive land to increase its value twofold. And the third model is lending the land on lease to the local managers.

It is the most risky method adopted by an investor. In this method, the investor has to recruit local agricultural experts and has to monitor them closely. The lease model will generate approximate revenue of fifteen percent on an annual basis.

No doubt, the agricultural land investments have a potential to provide a long term consistent income, but the path is full of risks such as extreme liquidity and geo-political risks. Therefore, a careful selection of the agricultural land is very necessary while opting for the investments.

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