A typical investment in a Southland dairy farm should deliver operating cash returns of circa 6% per annum to the shareholder. Once the farm is established, this return can be distributed on a monthly basis. Any appreciation in the value of assets at time of exit is over and above this. Historical land appreciation for rural land has been 8% p.a since 1950.
- The typical investment structure in New Zealand for rural syndicate ownership is either a company or a limited liability partnership.
- If investing under a company structure, taxation will be deducted at the current company tax rate of 28c in the dollar.
- If investing under a limited liability partnership structure, then each shareholder will manage their own taxation position when shareholder returns are paid as gross returns. This structure may suit overseas owners.
Farm Investment Risks
- Milk Price
- Climatic
- Management
- Interest Rates
- Liquidity and saleability
- Exit