Today I’d like to give you a quick summary of my take on the “Bottom Line” when it comes to investing in alpacas (ROI).
1. It’s not like winning the lottery. However, more like growing your investment exponentially and in the long term profit appears very likely, if you’re willing and able to fully embrace the lifestyle for 5 to 10 years.
2. Although there are five main “revenue streams” in the Alpaca industry (livestock sale, stud fees, boarding fees fiber sales, and product sales) … by far the majority of the income will come from sale of livestock.
3. Because the income comes largely from livestock sale, you’ll need to reach a critical mass in your herd (about 20 -30 Alpacas) before you can generate a substantial income.
Prior to reaching this level, it’s usually not a good idea to sell too many offspring because it interferes with your ‘production capacity’.
(Generating income requires that you sell your females … and if you sell too many before your herd is large enough, you won’t be able to increase in size as fast by breeding)
4. There are a number of significant tax benefits and write offs, which vary from state to state. You’ll need to consult with a certified accountant to advise you in particular, however, the government usually provides incentives to make it easier to get started, as long as you treat your Alpacas as a BUSINESS. (See the Post: Let Uncle Sam Buy Your Alpacas For You)
5. Although there are a variety of ways to reach critical mass, how much you invest in a quantity of livestock to start with, and how avidly you engage in the lifestyle are the two most important factors.
Theoretically, it’s possible to buy your way to critical mass right off the bat … however, this might also overwhelm the inexperienced Alpaca investor.
6. You don’t necessarily have to have the land or the money in the bank to get started. Options for boarding (“agisting”) and financing your initial Alpacas are available from most breeders. (More on this in a future post.)
7. You can (and probably should) insure your Alpaca investment at an approximate cost of 3% of the value of your herd, per year. (At the time of this writing.)
8. Generating a 6 figure income each year is realistic if you’re willing to grow your herd to 35 to 40 Alpacas. Some farms do a lot more than this, and 7 figures is not impossible. (Even in a down economy.)
9. Losing your initial investment is probably less common in the alpaca industry because proven females should multiply their values by producing 7 or more offspring over the course of their lifetime.
10. If you’re only in it for the money … you might be better off doing something else. But if you love and passionately embrace the lifestyle, the money should follow.
This is just a quick summary on the “Bottom Line” return on alpaca investing. What are your thoughts? Please comment below.