When my friend Jessica bought a small piece of farmland in rural Georgia, she was absolutely thrilled. The land looked fertile, the price seemed right, and she was already dreaming of fertile fields and the best thing, her second income. But six months in, reality hit. The land had poor drainage, access to water was seasonal, and the title had legal entanglements she hadn’t noticed. Her dream turned into a nightmare.
Farmland investments are gaining momentum—offering promises of food security, inflation hedging, and long-term gains (as explained in my Benefits of Farmland Investing). But we need to know they also carry risks. If you’re a first-time buyer or just considering rural property, this guide will walk you through the 10 most common farmland investment mistakes—and how to avoid them like a pro.
10 Common Farmland Investment Mistakes
As explained before, farmland investments are a great way to enjoy retirement, hedge against inflation and create awesome passive income. However, there are certain common mistakes that one should avoid at all costs so this asset class can be done securely.
Let’s jump in!
1. Ignoring Soil Quality and Land Suitability
Before you imagine your dream crop, test the soil. Its pH, organic matter, and drainage capacity can make or break your farm’s productivity.
Pro tip: Use a soil testing kit from your local extension service or hire a certified agronomist. According to the USDA, soil health directly influences long-term land value and yield potential.
2. Underestimating Initial & Ongoing Operational Costs
Many new buyers focus solely on the land price—but real costs include fencing, irrigation, equipment, labor, and taxes. You may also face annual maintenance, crop rotation costs, or even pest management expenses.
Below is an example list of operational costs per acre for you to take into consideration. Keep in mind, these are average ranges.
- Soil Testing – $7-$13
- Irrigation Setup – $6,000-$10,000
- Fencing – $1,100 to $33,400
- Machinery & Equipment – $150-$550
- Labor – $30,000-$50,000 (annually)
- Pest & Disease Management –$100 to $300 (quarterly)
3. Not Verifying Land Title and Legal Ownership
Unclear titles can lead to long and costly disputes. In some regions, land records are incomplete or outdated.
Always demand:
- Deed of Conveyance
- Chain of title & Past title chain
- Encumbrance certificate
- Title Insurance
- Government land registry check
Legal advice: Undisclosed Heirs is one of the top 4 common title issues. In the U.S., title disputes can arise from issues like clerical errors, unknown liens, or even forged documents—making a thorough title search and title insurance essential for any land purchase. So better to be safe than sorry, as this can be one of the most expensive farmland investment mistakes.
4. Overlooking Zoning Laws and Land Use Restrictions
Just because land is “green” doesn’t mean it’s usable. Zoning may restrict it to forest cover, heritage status of the region, or non-commercial use.
Pro tip: Check with local development authorities to ensure the land is classified as agricultural and is convertible, if needed.
5. Underestimating Water Rights and Irrigation Access
Water is gold in farming. Even if a stream runs nearby, it doesn’t mean you have rights to fully use it on your land. Always investigate your land and its surroundings, use the below checklist
- Water table depth
- Irrigation board permissions
- Rainfall patterns (check NWS or local hydrology reports for the area)
6. Misjudging Market Accessibility and Infrastructure
Make sure you review the route access, nearest markets, and shops. What’s your route to market? Poor road access, no cold storage, or weak internet connectivity can turn a solid piece of land into a logistical headache.
- Distance to the nearest paved road or highway
- Availability of mobile and internet signal
- Reliable access to electricity or backup power
- Proximity to farmers’ markets, grain elevators, or distribution hubs
7. Failing to Analyze Local Agricultural Trends
Not every crop thrives everywhere. What’s profitable in one region might fail just a few counties over due to climate, pests, or poor soil compatibility.
Use your local Cooperative Extension office, USDA plant hardiness zone map, or resources like AgroClimate to review crop-specific risks and historical trends in your area.
8. Relying on Verbal Agreements with Sellers or Tenants
A handshake might feel friendly—but in real estate, it’s not protection. Verbal agreements leave you vulnerable to future disputes, especially with leasebacks or informal caretaker arrangements.
Always look for ways to make it official, so make sure the following tips:
- Signed and notarized sale deed
- Lease agreement (if renting out or leasing back)
- Written terms covering responsibilities, penalties, and exit clauses
Having all of these ready will get you out of one of many farmland investment mistakes that people usually make.
9. Ignoring the Importance of On-Ground Management
Unless you’re living on or near the property, managing it remotely can be tricky without trusted boots on the ground. While there are trusted farmland management firms, always consider the following tips:
- Ask for local references and past work history
- Require monthly reports (photos, updates, expenses)
- Use trail cameras or install basic remote surveillance systems
10. Not Having an Exit Strategy
This is a must-do strategy on any investment you make. What if your plans change, or the farm doesn’t perform as expected? Without a defined exit strategy, you’re stuck.
Always consider selling to another private buyer, leasing to a local farm operator, or rezoning for alternate uses.
Bonus: Your Farmland Investment Audit Pro Checklist
If you are reading this, it means you have read to the bottom of this article. Here’s a checklist to have in place when purchasing your land and avoid the farmland investment mistakes we mentioned before.
- Soil test complete
- Verified title documents
- Water source and rights verified
- Zoning and land use confirmed
- Road/power access verified
- Year 1 operational cost estimate and years to come
- Nearby market access mapped
- Local crop viability reviewed
- Contracts and legal documents in place
- Clear and realistic exit plan
Write down this checklist and keep it handy; it’s your toolkit to avoid farmland investment mistakes from day one.
Final Thoughts
Smart farmland investing starts with slowing down and asking the right questions. From title checks to soil tests, every detail matters. Avoiding these mistakes could save you tens of thousands—and years of regret.
If the perfect piece of farmland came on the market tomorrow, would you know how to spot the red flags?
Let me know if you found this article useful for your next investment.
Last Updated on 28th April 2025 by Emma
