11 



ESTIMATING THE VALUE OF LAND 



A Dairy Farm. How may one estimate the value of land? All 

 that one can hope to do is to give an illustration of a method. For 

 this purpose, the dairy farm, previously mentioned, may be used. 

 It was seen that sixty acres may be sufficient to produce a gross 

 income of $4000 per year where cows are kept on land raising alfalfa 

 by irrigation. According to figures previously mentioned, this would 

 represent an investment of $16,000. This investment may be roughly 

 divided into four parts: (1) raw land, (2) water rights and the 

 preparation of the land for irrigation, (3) buildings, (4) animals, 

 tools, and other floating capital. The animals, tools, and other floating 

 capital may be estimated at 25 per cent of the total investment, or 

 $4000. If the buildings are satisfactory, they may easily cost an 

 additional $4000, thus leaving $8000 for the raw land, for water rights 

 and the preparation for irrigation. It is a matter to be determined 

 in each individual instance, but if the water rights and preparation 

 for irrigation are to cost $2000 on sixty acres, this would leave $6000 

 which may be paid for raw land, or $100 per acre. Obviously if water 

 rights and preparation for irrigation cost $4000 then only $80 per 

 acre should be paid for raw land. No one must assume that the 

 figures stated necessarily apply to an individual case. Each person 

 must take the principle here illustrated and determine what the figures 

 should be under his circumstances. 



An Orange Orchard. In a paragraph on page 6 it was estimated 

 that twenty acres of land planted to oranges might be required to 

 return a gross income of $4000. According to the basis on which we 

 are working, this represents a capital of $16,000, or $800 per acre. 

 In this instance, probably $2000 may be estimated for the buildings, 

 leaving $14,000 for land, water, and trees. Let it be supposed that 

 the water rights, including water delivered to the highest point of 

 the tract, cost $150 per acre, and the cost of bringing these trees 

 to the age of five years, including the purchase of the trees, planting, 

 cultivation, irrigation, fertilizers, and taxes, is $350 per acre, then the 

 situation would stand as follows : 



TWENTY ACRE ORCHARD 



Buildings $2,000.00 



Water rights 3,000.00 



Bringing orchard into bearing ,~ 7,000.00 



Value of raw land 4,000.00 



Total .. $16,000.00 



