A Golden Bay couple are selling their dairy farm using a unique property investment strategy aimed at helping aspiring young farmers get ahead.
Collingwood dairy farm owners Deborah and Tim Rhodes are stepping outside the box to turn their 135-cow dairy farm into an “armchair property investment”.
An “armchair investor” is a term used to describe an investor who is hands-off and passive, enjoying the benefits of property investment from the comfort of their armchair.
The Rhodes admit they have never seen a private dairy farm sale like this one, but they are confident it might be a win-win for all involved.
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The pair hope to target urban investors with no farming skills and no desire to farm, but who want to purchase rural land, and offer a fixed lease to an experienced local farmer.
The 45-hectare property is located just outside the small rural town of Collingwood, in Northwest Nelson.
Tim said the farmer would reap the benefit of leasing the land and collecting the milk-cheque, while the property investor would enjoy a low-risk fixed income of over $50,000 per year — regardless of fluctuating milk prices.
“There’s also the opportunity for lifestylers to buy and live on the property, decommission the dairy shed, and to lease the land out to a local farmer who needs the land for young stock grazing,” he said.
“Farmers in Golden Bay pay over the odds for lifestyle land so they can put their calves on. There’s a lot of competition and tactics involved.”
Deborah said there was a well-known roadblock to the ownership and leasing of farms.
It was “frustrating” for many highly experienced farmers who couldn’t break through into share milking jobs.
“Farms get blocked and clogged with share milkers not wanting to move on; there’s a big demand for farm leases. It’s also hard for share milkers to get the capital to purchase farms,” she said.
The current climate of investors falling over with banks clamping down on lending for building on land investments bought with resources consents, meant the housing market in places like Auckland had created insecurity about when it might burst.
“Leasing farms are really hard to find, but they can be a really good safe and secure investment return; it gives the buyer a land title that allows further bank lending, the land, prestige and adds to a portfolio that not many non-dairy farmers would have access to.”
Deborah’s background is in nursing and pharmaceutical sales and Tim’s lies in property investment and horticulture. The couple, who have three children, made a bold career switch seven years ago to the dairy industry, before buying the Golden Bay farm.
The pair are also known in the community for their sustainable farming techniques.
Deborah said she wants investors to “look wider” into the rural sector.
She said there was a large demographic of people living in cities who had no idea about what was going on in the countryside and often saw the dairy industry and farmers as all “dirty”.
“They are the spenders; house-buyers; property investors; technologists — usually with a nice car. They are also the ones making the biggest noise about water,” she said.
“That population is where the trouble lies with the separation. Those people missed out on having that connection with the rural lifestyle. They are the biggest separators at the moment, but they are also our target market.”
Steve Goodman of Goodman Rural Consultants said the armchair investment strategy was uncommon in the farming sector, which was surprising as it’s was relatively low risk scenario.
“It’s uncommon that the farm is provided as a rental investment. I do think it could be successful, depending on the quality of the tenant, that’s the key to it, and raising the capital. In other words, how the sellers will go about finding the urban investors and how they go about marketing that.
“Sometimes, it’s better when that’s done independently.”
The private sale can be viewed on on Trade Me.