IRA Investor Grows His Financial Future with Farmland

Kurt of Minnesota has taken his real estate IRA rural to sow an investment that is already flourishing into quite a nest egg.

Kurt used his knowledge about farmland to buy land through his retirement account and rent it out to create a constant stream of passive income. He had bought and sold Iowa farmland outside of his IRA in the past but wanted to make a purchase with long-term benefits. “I thought (buying the land with) the IRA would be a good fit,” he says.

Kurt funded most of the transaction with his Equity Trust IRA money and took out a non-recourse loan to cover the balance. He purchased 40 acres of farmland for $1,750 per acre. The land gained him more than 6% in profits from the annual cash rent, but the investment’s real gain is in the property’s appreciation. It has appreciated to $2,700 per acre or more in one year. He already received an offer of $2,650 per acre.

“So, if you add in appreciation, the investment would have a return on investment of close to 60% in one year … I’ll take that any day!” he says.

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Kurt plans to hold onto the property for a while and earn income by renting it out. He’s had no problem finding farmers who want to occupy the land.

“Actually,” he says, “There’s quite a demand for agriculture/renting. I guess weather can have an effect if you have a prolonged period of drought, but in a state like Iowa, the demand is so high, there’s kind of a long list of renters available.”