Buying Land

[Shmeegs28]

Hey guys,

I am currently playing with the idea of buying some land out in Colorado. I would like to start a business where I buy properties and then lease them out to ranchers, farmers, and hunters. I am currently running the numbers to try and figure out what is in the budget. If anyone has any experience with something like this, such as grazing costs, farm land leasing, hunting leases, or buying raw land in general. I would really appreciate some insight from folks who can share some wisdom.

Thanks in advance!

-Kade

 

[Matthew57]

As far as the hunting lease part, my advice is don’t do it.

 

[Schaaf]

 

[rjthehunter]

I wouldn't expect to make any money.

Land isn't a depreciating asset, so it'll go up over time, but you won't make meaningful money from grazing fees or hunting leases.

 

[Forkyfinder]

Really?

Check out Montana! Some friends of mine think this is a really good idea. But you can almost count on bull tags in permit units - even more than R landowners as long as youve got 2500 acres. 2499 and you wont count. So be sure to game it with an ag lease from the neighbor if that doesnt work out. Note - if youre the kind of rich guy that follows the rules - fwp says states you have to hunt your land - but wont and cant verify it, and even if they could, wont enforce it. Theres this "gamechanging" law called hb635 that passed last legislative session.

Like i said - important to have at least 2500 acres via lease or private land. That way you can hunt "your land" (wink) every single year. If you dont own enough acres - you dont get the tag by default - and will only get it around 60 percent point of the time because of our preference point system for other, more poor, NR and NR landowners.

These guys did a better job explaining - but heres the important stuff

"These licenses grant elk hunting opportunities on the land the non-resident owns or land that they lease for agricultural purposes"

https://landinvestorguide.com/articles/montanas-new-game-changer-house-bill-635

Montana | Big Hunting News for Out of State Property Owners

Prime hunting opportunities in Montana for nonresident landowners. House Bill 635 reserves 15% of big game licenses large properties. Learn about application dates and more.

www.swanlandco.com

 

[Forkyfinder]

Really?

Check out Montana! Some friends of mine think this is a really good idea. But you can almost count on bull tags in permit units - even more than R landowners as long as youve got 2500 acres. 2499 and you wont count. So be sure to game it with an ag lease from the neighbor if that doesnt work out. Note - if youre the kind of rich guy that follows the rules - fwp says states you have to hunt your land - but wont and cant verify it, and even if they could, wont enforce it. Theres this "gamechanging" law called hb635 that passed last legislative session.

Like i said - important to have at least 2500 acres via lease or private land. That way you can hunt "your land" (wink) every single year. If you dont own enough acres - you dont get the tag by default - and will only get it around 60 percent point of the time because of our preference point system for other, more poor, NR and NR landowners.

These guys did a better job explaining - but heres the important stuff

"These licenses grant elk hunting opportunities on the land the non-resident owns or land that they lease for agricultural purposes"

https://landinvestorguide.com/articles/montanas-new-game-changer-house-bill-635

Montana | Big Hunting News for Out of State Property Owners

Prime hunting opportunities in Montana for nonresident landowners. House Bill 635 reserves 15% of big game licenses large properties. Learn about application dates and more.

www.swanlandco.com

Important thing i missed. You can - if youd really wanna suffer through it - get a gen tag by letting everyday people hunt via an access program. Otherwise youll be subject to the ever worsening PP system for odds as a NR. This applies only if you own/lease less than 2500 acres.


Again. Important to skip being too poor and not owning 2500 acres (or having a pre-existing scam with the neighbor in place via lease).

Anything i missed? Im sure some propoents will let me know of other tricks via letting wounded warriors on sometimes.

 

[Treeshark]

One nice thing about Colorado is the potential to transfer (or sell) landowner tags if the property is eligible- if you’re serious about doing this for an investment property, that’s something you should factor in.

Hard for me to see this penciling out as an income-producing endeavor though.

 

[Forkyfinder]

One nice thing about Colorado is the potential to transfer (or sell) landowner tags if the property is eligible- if you’re serious about doing this for an investment property, that’s something you should factor in.

Hard for me to see this penciling out as an income-producing endeavor though.

Run him through the NM system. Im sure hed like to know that.

Pretty neat though - if you owned 15000 acres in montana and gamed out 5 seperate leases for some chicken grazing - youd have 5 free elk/deer tags for some leasing.

These are just the kind of incentive we need to provide nonresident landowners in Montana, or so im told!

 

[Matthew57]

I knew it wouldn’t take long for TS to plug landowner tags .

 

[Carnage2011]

I knew it wouldn’t take long for TS to plug landowner tags .

True! And another chance for @Forkyfinder to being up 635. Those two things are like clockwork these days.

 

[Forkyfinder]

True! And another chance for @Forkyfinder to being up 635. Those two things are like clockwork these days.

Seems like an apt time when theres a way to change the incentives. Look into hb907

 

[Treeshark]

I knew it wouldn’t take long for TS to plug landowner tags .

Seems relevant to the topic (especially since they were brought up first in the post immediately before mine).

 

[Forkyfinder]

Seems relevant to the topic (especially since they were brought up first in the post immediately before mine).

True! And another chance for @Forkyfinder to being up 635. Those two things are like clockwork these days.

Seems relevant for me too. I provided him some "gamechanging" opportunities for NR landowners in Montana.

 

[seeth07]

One nice thing about Colorado is the potential to transfer (or sell) landowner tags if the property is eligible- if you’re serious about doing this for an investment property, that’s something you should factor in.

Hard for me to see this penciling out as an income-producing endeavor though.

There are a quite a few states where this does pencil out to be be profitable. I've ran the numbers on a NM property that I almost bought last December. We put an offer in on that one and just couldn't come to an agreement on the elk tags (go figure). The seller wanted to keep them for the next 10 years as part of the deal because that is what the terms of their arrangement was with an outfitter and unfortunately that was what made the property have the selling price it did. We countered and offered them 100k less to have them keep the tags for 10 years and they thought we were joking. 1 Bull tag at 5k and 1 cow tag at 2k per year is 7k x 10 is 70k. Add in 10 years of interest and likelihood of those prices going up. Apparently they couldn't do math.

The property also was leased out for grazing. We didn't get a real value for this specific property but figured we could get a couple thousand a year for that especially since the property had year round water on it.

I also ran some numbers to do it on a parcel here in WI and it absolutely does work out. People are crazy here for their whitetails

 

[Forkyfinder]

There are a quite a few states where this does pencil out to be be profitable. I've ran the numbers on a NM property that I almost bought last December. We put an offer in on that one and just couldn't come to an agreement on the elk tags (go figure). The seller wanted to keep them for the next 10 years as part of the deal because that is what the terms of their arrangement was with an outfitter and unfortunately that was what made the property have the selling price it did. We countered and offered them 100k less to have them keep the tags for 10 years and they thought we were joking. 1 Bull tag at 5k and 1 cow tag at 2k per year is 7k x 10 is 70k. Add in 10 years of interest and likelihood of those prices going up. Apparently they couldn't do math.

The property also was leased out for grazing. We didn't get a real value for this specific property but figured we could get a couple thousand a year for that especially since the property had year round water on it.

I also ran some numbers to do it on a parcel here in WI and it absolutely does work out. People are crazy here for their whitetails

Percisely why our state governments have no business subsidizing more of this.

 

[Treeshark]

I don’t doubt you, @seeth07- but I wonder if we have a different definition of what “pencils out” means.

The opportunity cost is what makes it difficult. What % return makes it a good investment vs various alternatives (index fund, residential/commercial rental, real estate ETF etc) likely holds that answer, which is probably different for everyone.

 

[Forkyfinder]

I don’t doubt you, @seeth07- but I wonder if we have a different definition of what “pencils out” means.

What % return makes it a good investment vs various alternatives (index fund, residential/commercial rental, real estate ETF etc) likely holds that answer, which is probably different for everyone.

One of the huge benefits land like this has (esp compared to res or commerical real estate) is very low annual tax burden and maintenance cost, a near certainly wont lose value, and huge tax shelter for other purposes (ag primarily).

Capturing all of that to calculate IRR will be hard - especially with the hunting markets growth.

Plus - whats the additional return you cant calculate if well to do people continue to lobby for you to get more free stuff?

 

[Trial153]

Buy some public land, a square mile or too.....should be plenty up for sale shortly

 

[Gut Shot]

Not sure about CO but in the midwest it's generally not a good way to invest unless the ground has a lot of upside potential and you intend to sell short term. You are going to pay capital gains unless you can 1031 the land. Just leasing the ground is going to give you a very low ROI and Cap rate. Put another way, the rent check won't cover the mortgage.

 

[seeth07]

Put another way, the rent check won't cover the mortgage.

That really depends. Tillable is going out of control right now due to corporation farming. If you found say an 80 acre property with even just 30 acres of tillable, you can absolutely have a net profit from the rent. In the last 5 years alone in my area, the tillable I rent has gone from $175/acre up to $425/acre this coming season. At that rate, its a paycheck of $12,750 while only likely having to pay around 2k in taxes.

Purchasing land right now in a good agricultural area right now is about as good of an investment as you can make right now. The going price for tillable acreage is soaring out of control as corporation farm operations are able to outbid every property hitting the market right now and honestly most aren't even hitting the market as they are seeking out and offering "too good of deals to pass up" to many of their neighbors right now.