A Profitable and Huggable Investment!

Yes, alpacas are gorgeous, lovable, and huggable -- but they're also a great investment which will generate an impressive annual return.

Owners range from pet owners and hobby farmers to full time breeders. The alpaca breeding industry provides excellent income potential for small or large operations. Traditional farmers also look at alpacas as a means of diversification. No other farm animal can equal the alpaca for sound investment returns from easily managed animals requiring little attention, and small acreage.

Alpacas are inexpensive to raise, requiring minimal feed, shelter, fencing, and veterinarian costs. The return on one offspring often equals or exceeds the cost basis of the mother. Because of these factors, alpacas are known as "the world's finest livestock investment."

Two Ways to Invest

OPTION 1: Buy alpacas as breeding stock and actively engage in the business as a breeder/rancher/farmer.

OPTION 2: Buy alpacas as breeding stock as a business investment for profit and for tax benefits, but board your alpacas elsewhere, with someone else taking care of the operation and marketing.

More on OPTION 1. . .

Actively breeding and selling alpacas is a lifestyle and a business. As a full time business, it can be a charming life and can produce excellent income. The rewards of raising and nurturing your herd and learning to breed champion bloodlines are extraordinary. Even as a part time business, raising and selling alpacas can be lucrative and quite enjoyable.

Whether for full time or part time, breeding alpacas is a popular alternative to other agricultural endeavors. Investment requirements vary, but usually a minimum investment of $20,000 (to well over $100,000) is required to get started. And returns of up to 50% are not unheard of.

More on OPTION 2. . .

For those who choose to reap the financial rewards, but aren't interested in being involved in the day-to-day operation of running a farm, investing in alpacas is still possible. You can buy alpacas and either agist (board) them with the selling farm or make arrangements to agist them at another alpaca farm.

A typical arrangement is to pay $2.00 to $3.00 board per day, per alpaca. This would include feed, hay, and routine care. You could be actively involved in the marketing and sales of the alpacas and their offspring, or could also arrange to have the agisting farm do it for you.

Young females can be purchased starting at around $8,000 each and young breeding stock males for around $5,000. Depending on the level of participation, returns could be expected of between 15 to 30%. This might bean attractive option for someone who thinks they'd eventually like to have their own alpaca farm, but for now would like the business as an investment only.

Tax-Deferred Benefits

A major investment benefit of owning alpacas is tax-deferred wealth building. As livestock, alpacas are depreciated on a short schedule, so your cost basis can be eliminated in just 5 years. If you retain female offspring to be used as breeding stock, the compounding effects are staggering.

The sale of breeding stock qualifies for capital gains treatment (except that portion which is subject to depreciation recapture). This significantly adds to an investors real return after taxes.

Other Financial Considerations

Alpacas do not require butchering in order to be profitable.

They are fully insurable.

Alpacas are rare inside the United States and can't be mass produced.

Quality breeding stock demands premium prices. The range of value for females is currently between $8,000 to $40,000. These prices have held firm or slightly increased for 20 years. Prices are expected to stay stable for at least 10 more years.