Is Alabama a Good Place to Buy Land?
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
This article was updated on 9/12/2023.
Alabama is an agricultural powerhouse, and investors are seeking out the best land for sale in Alabama to contribute to the industry. Buying farmland in a state such as this one can become a lucrative investment, and farmers are eager to rent rural land from such investors.
One out of every 4.6 jobs in Alabama is agricultural or forestry-related. The chances that rural land can be used for those industries are high. Additionally, investors can look out for land for sale in Alabama that's closer to urban areas.
Alabama is growing, and so is the need for commercial real estate. Renting out property on the land you own is another great way to raise your land's value.
That said, let's look into what else you should know about buying land for sale in Alabama.
What Is Most of the Land in Alabama Used For?
Nearly half the land in Alabama falls under rural status, but that number is decreasing as urban life grows. Still, the state produces a variety of crucial agricultural products with its farmland.
Here are some ways Alabama land is used:
- Forestry;
- Cotton Production;
- Poultry Agriculture;
- Corn Production;
- Hay Production;
- Soybean Production;
- Peanut Production;
- Homesteads;
- Hunting Land; and
- Nature Conservation.
As for agricultural production, Alabama shifts its production with the country's demand. Their primary crop used to be cotton, but now, the state is producing more of the other listed crops, such as soybeans, peanuts, and pecans.
What's the Average Cost Per Acre of Land for Sale in Alabama?
The average cost of land for sale in Alabama is about $2,605 per acre, but this varies widely from county to county and plot to plot. The status of the land you're looking to purchase, whether it's vacant, improved, or developed, will also affect price.
- Baldwin County: $3,739 to $6,690 per acre;
- Monroe County: $2,250 to $3,290 per acre;
- Conecuh County: $1,953 to $2,568 per acre;
- Dallas County: $1,350 to $3,505 per acre.
Some areas, like Baldwin County, have higher costs of land. Investors can strategically buy land for sale in Alabama according to their budget.
Leasing vs. Buying Land in Alabama
Leasing land is cheaper than buying, but the return on investment may be lower. How you benefit from leasing or buying depends on your end goal for your property.
Leasing land in Alabama, in this case, means renting property with the intention to build. This could include cultivating farmland for farmers to use. Land leases can benefit both the landowner and investor when the intended usage becomes successful.
Where leasing land becomes challenging are building restrictions. This is especially true for commercial property construction. Investors should research the zoning and restriction laws of land before leasing it.
Buying plots of land outright means total ownership and longer-term profit potential, yet greater upfront costs. Investors can look into financing their farmland to help absorb any upfront price tags.
ROI Expectations
The monthly payments of leasing land are usually lower than paying off a land mortgage; however, if you're planning on building on that land, then there are more expenses to consider.
If you don't have deep pockets, then buying land for sale comes with a down payment followed by monthly mortgage payments. Investors should also watch out for restrictions before purchasing land. If you plan on running operations on a property for a long time, it'd make more sense to buy than to lease. You want to maintain complete property rights so you can adjust your business as you see fit.
Your return on investment will be much higher in the future when you buy; with leasing, you can't expect those same benefits. After paying off your land, you then own the accrued value.
Cash Rental Rates for Alabama Land
Cash rental rates indicate how much it costs per acre to lease land. Farmland in Alabama offers affordable rates for renters; however, not all farmland rents the same.
There are four land categories with different average rates. Farmland is defined as cropland, irrigated cropland, non-irrigated cropland, or pastureland. Alabama has seen a steady consistency of rental rates for all four categories.
However, rental rates vary across counties, as well. The difference can be as much as $100 between counties for irrigated cropland. This is why potential renters should keep in mind that rates won't be entirely consistent throughout the state.
The Agriculture Industry in Alabama
It's no secret that Alabama was a cotton state. Until after the Civil War, cotton was its primary crop. Farmers were forced to produce other crops after a large portion of the state's cotton crops became infested.
The state has continued to persist in the agricultural industry. The multi-billion dollar production permeates into other industries as well. More people are taking agriculture programs at colleges, and visitors to Alabama tour farms that are open to the public.
"Agritourism" is the term for agricultural tourist attractions in Alabama.
Alabama's large economic impact is often missed. As a younger generation looks to continue Alabama's farmland legacy, investors have ripe chances to offer opportunists land they can work on.
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