Where to find higher yields
One rarely discussed option for long-term yields is to buy and lease farmland.
Lloyd Brown, president of Hertz Farm Management in Nevada, Iowa, says farmland has seen an average annual return of 10% — 5% from net operating income and another 5% from appreciation — over the past 50 years.
You can find tillable acreage to buy through a company like Hertz or on such sites as Landflip.com and Landandfarm.com. Price per acre can vary dramatically by area, from less than $1,000 per acre to $20,000 or more.
Brown says most farms are a minimum of 30 acres, but the most common size is 80 acres. Soil and climate are critical in determining what can be grown there and go a long way toward determining the value of the land.
"Over the past few years, the cash rate of return has been about 4%," Brown says. "If you're talking about a piece of land at $10,000 per acre, you could expect $350 an acre or more cash rent."