How the Highest Value of a Ranch has Shifted from Agricultural to Recreational
By: Mike Callan
Responsible Broker | WY • Designated Broker | ID • Broker Associate | CO • Broker | MT
When choosing a ranch brokerage, it’s important to understand how the landscape of ranch sales is changing. It wasn’t long ago that owning a ranch meant owning it for its agricultural attributes. Traditionally, values and sales prices were directly tied to what the land could produce, from crops and/or a cattle. Unless situated close to a resort market, “pretty” ranches didn’t have much value from an agricultural point of view.
Fast forward to today, and more importantly, tomorrow… It doesn’t take long to realize that the price tags on a lot of the ranches on the market today are not tied to what that ranch can handle and produce agriculturally. So the question is why is that? Are Sellers and Brokers wildly unrealistic and hoping for a buyer with more money than brains to come along. No (okay, well sometimes), but they have caught on to the fact that many of today’s ranch buyers are buying ranches for their recreational value. They go into a ranch purchase with the mentality of making their profit on the back end (when they sell), but just as importantly, to enjoy the recreational and scenic attributes of a ranch while they own it.
If you pay to go on vacations or hunts long enough, it’s only a matter of time before the travel expenses, time away from family, fees, unexpected glitches, and potential disappointments, you’ll start to question if the time and money you invest is really worth it.
BUYERS: Advantages to Owning Your Own Recreational Property:
- Ownership – To arrive at a property you own all to yourself is a feeling like no other. There is a sense of pride, of freedom, and of privacy that can’t be replicated anywhere else.
- Convenience – More than likely, the ranch you buy is going to be in a location that’s convenient to where you already live. This alleviates the travel hassles and expenses that come with always being a visitor, instead of an owner.
- Control – For the most part, it’s your property and your free to do what you will with it. That’s what America is all about, freedom!
- Enjoyment – Maybe the most underrated aspect of purchasing a property of your very own is the memories you will make on it. The experiences you’ll share with family, friends, or by yourself will never be forgotten.
- Investment – In the famous words of Mark Twain; “Buy land, they’re not making it anymore.” Ask any investor and most of them will tell you that land is one of the best investments they’ve ever made. Plus, it’s one of the few investments you can actually enjoy while it’s building equity!
- Legacy – Business, careers, titles, fame, they all come and go. A ranch is something that you can literally plant your flag on, build, improve, and pass on to your family for generations to come.
SELLERS: There are a number components that today’s Ranch Buyers take into consideration when they are evaluating a ranch, and in turn, what Ranch Brokers look at when trying to help correctly price a property:
- Hunting / Fishing – When it comes to the wildlife on the property, some folks are looking for quality, some for quantity, and others for variety. The more your ranch can cover all three of the categories, the more value it has.
- Improvements – Obviously there is added value in the buildings and improvements that the property has. However, it’s important to be aware that more improvements don’t always equal more value. The more improvements a ranch has, the more it narrows the pool of buyers who are willing to pay for all those improvements.
- Access – Different Buyers are looking for different things, but on the whole, the more difficult the access is to the property, the harder it is to sell. Many Buyers who claim to want to be “remote” often back off on that requirement once they see first hand exactly what remote can mean in our Western States.
- Water / Wind / Mineral Rights – There is potentially a tremendous amount of value that can be assigned to owning some or all of these rights on a ranch. In the same way, there is also a certain amount of value that will be subtracted if someone else owns them. It’s always a good idea to keep or obtain as many water, wind, and/or mineral rights possible that are appurtenant to the property you are selling.
- Utilities – As with access, some Buyers would prefer to be “Off-the-Grid”, but on the whole, there is added value if utilities are already in place on your property.
- Agriculture – Make no mistake, having agricultural aspects on a property is a huge bonus. The obvious reason is from an income/tax standpoint, but also as it is a requirement for the property to be zoned agricultural in most states in order to qualify for Big Game Landowner Tags.
- Property Boundaries – Who are your neighbors? More often than not, Buyers see added value in sharing a boundary with public land, and less value in bordering smaller parcels or subdivisions.
- Conservation Easements – There is no doubt that properties that don’t have Conservation Easements on them have more perceived value than similar properties that do. That being said, every Land Trust is different, and what they will or won’t permit the land to be used for can vary. In general, More Restrictions = Less Value.
Whether you are looking to Sell land or Buy it, it’s vitally important to hire a brokerage that fully understands the recreational aspects of property! At St. James Sporting Properties, we know that and promote that, better than anyone in the business. Give us a call today and let us help you capitalize on this important investment.