For much of America’s history, small farms, including hobby farms, dominated the agricultural landscape. Today, these small family farms make up less than half of the nation’s agricultural land and contribute only 18% of total agricultural production. However, they remain a popular and rewarding investment for those looking to cultivate a small, personal farm for their family and community.
If you’re considering purchasing land for a hobby farm, here’s what you need to know to find the right property for your needs.
What is a Hobby Farm?
A hobby farm is a small-scale agricultural operation primarily for personal enjoyment and sustenance rather than for generating income. While hobby farmers may sell excess produce or livestock, the IRS does not classify these operations as for-profit businesses, meaning they are not eligible for business tax deductions.
What you choose to grow or raise on a hobby farm depends on factors such as location, expertise, and available land. Some hobby farmers cultivate fruits and vegetables, while others grow flowers, raise poultry, dairy cows, sheep, or even manage beekeeping or fish farming operations. Some also experiment with vineyards, producing homemade wines. With the right approach, a hobby farm can transition from a personal venture into a profitable small-scale farm.
Purchasing Land for a Hobby Farm
Selecting the right land is crucial when starting a hobby farm. The property’s size, quality, and zoning regulations will significantly impact your farming capabilities. Consider these essential factors:
Determine Your Budget
Farmland prices vary widely across the U.S., so it’s important to establish a clear budget. Consider the upfront land costs as well as ongoing expenses, such as property maintenance, seeds, fertilizers, equipment, permits, and taxes. If purchasing undeveloped land, factor in costs for essential improvements like utility connections, fencing, and road access. For a breakdown of farmland prices across different states, visit Farm Bureau for more insights.
Search Available Listings
To find land that meets your requirements, explore listings on reputable platforms such as LandHub, where you can filter searches by location, acreage, and price. Once you narrow your choices, work with a local real estate agent specializing in rural properties to guide you through property viewings, negotiations, and the purchase process.
Ensure the Property Suits Your Needs
Key factors to evaluate include zoning regulations, soil quality, and climate suitability. Most hobby farms operate on agricultural-zoned (A-1) land, which permits crop cultivation, livestock raising, and equipment storage. The property’s climate and soil composition should align with your farming goals. While many hobby farms operate on less than 50 acres, some thrive on just 10 acres or fewer.
Visit and Assess the Property
Before making a purchase, conduct a thorough on-site assessment. Walk the land, examine the terrain, and check for essential features like water sources. Hire professionals to test soil quality and water safety, and consult a building surveyor if you plan to construct a residence or other structures on the land.
Turning a Hobby Farm into a Profitable Venture
Many hobby farmers generate income through farmers’ markets, home sales, or Community Supported Agriculture (CSA) programs. If you decide to transition into a for-profit farm, familiarize yourself with the IRS’s Hobby Farm Loss Rule (Form 1040, Section 183) to understand tax deductions and financial considerations.
Is a hobby farm a worthwhile investment? That depends on your financial situation and expectations. If you’re taking on significant debt, the risks may outweigh the benefits. However, if you can cover land and operational costs comfortably, hobby farming can be a fulfilling and financially sustainable endeavor, offering both personal and community rewards.
