The Role of a Ranch Management Company

By: Justin Bryan

Historically, the most reliable predictor of a successful farm, ranch, or recreational operation is a competent, honest, and qualified management team. This team should have the owner’s interests at heart and possess the attributes necessary to effectively manage the property. In the end, their oversight of the property and relationship with the owner will have profound long-term implications toward the success of the property and ultimately influence those who may desire to purchase it in the future.

pronghorn-yellowstone

The real pleasure a landowner receives from ownership is obtained when he/she is confident that the property is being properly supervised.  When this occurs, the owner, family, and friends will be able to enjoy it as intended both from the operational and the recreational point of view. The enjoyment of ownership is what we term the “psychic return” and is a significant part of the “return on investment” derived by the landowner. Each landowner has his or her own unique needs – large and small – and matching those with the correct management system is the key to successful property management.

bull-creek-037

For the on-site landowner who is consistently present and knowledgeable regarding rural property management, the ability to guide the daily tasks and develop valuable relationships with the staff creates a healthy environment to thrive upon.

In contrast, many rural properties are owned by on-site individuals who lack a real understanding of the unique aspects of rural property management. This can often result in poor overall performance of staff at which point ownership ceases to be enjoyable. A common example of this would be a situation in which the principal managing family member passes away and an inexperienced family member is required to fulfill the duties. Then there are the true absentee landowners. This inherently creates the most challenging situation for staff and owners to communicate clearly. Often the managing director of an absentee-owned property is an estate executor or a successful business person who, although accomplished in their chosen field, lacks knowledge in real-world rural property management. Procuring the right people in place who “ride for the brand” and perform their job as expected can come in a variety of forms to meet the requirements of each type of landowner.

3

In terms of management, each type of landowner is afforded a few options regarding administration and on-the-ground labor. Their requirements might involve simply livestock and/or agriculture, or they might involve a mix of livestock, wildlife/fisheries and the maintenance/restoration of buildings. These choices include traditional staffing, farm and ranch team consultants, or a hybrid mix of traditional on-site staff with consultant oversite. Each of these staff options have pros and cons and must be evaluated by landowners whose needs are unique unto themselves. The selection of the system that best fits the owner provides the opportunity for the “return on investment” – either psychic or financial – that is desired.

texas ranch for sale, lucky star ranch, texas rangeland

Traditional Staffing

It is a unique individual who chooses to be a beneficial source of labor and knowledge on a rural property. Ranch employment is not your average everyday eight-to-five job and, therefore, necessitates a high-level of personal commitment.  Be it a livestock guy or gal, wildlife biologist, or all-around ranch hand, reliable and competent employees are a must. To alleviate poor hiring choices, those individuals who are well-vetted by someone who truly understands what is required on the property and knows the owner’s expectations often have the best opportunity to succeed. These individuals provide a stable platform upon which a property can thrive. The relationships that can be built between an owner and long-term staff are rewarding as both entities work in conjunction to develop the property and see it flourish over time. Staff turnover, when it occurs, can, unfortunately, be the most expensive, stressful, and time-consuming issue in farm and/or ranch ownership causing the enjoyment of ownership to begin to wane.  If and when employees leave, they take with them the comprehension of what is actually required to permit a property to operate efficiently and effectively – from water systems to haying, livestock to bill paying, to hunting operations. Their knowledge of the property derived from a long tenure can be challenging to replace.

Farm and Ranch Team Consultants

Acquiring the services of a rural property management firm is an option available to landowners, especially absentee landowners or estate executors who desire to immediately have in place a proven team focused exclusively on their needs. This independent focus allows the firm to work with and typically mentor the on-site staff, and it allows them to always be part of the solution for the landowner and never part of the problem. A firm such as this can effectively manage the increasingly complex federal and state environmental regulations, changing national and world markets for livestock, crops and timber, critical water and mineral rights issues, and tax considerations on any given property. The firm’s experience with multiple successful operations gives them a high level of current knowledge and practical expertise for these details to be dealt with correctly and in a timely and professional manner. In this situation, the owner/executor is assured that the property is being taken care of properly. In addition, a history of professional management is, without a doubt, a major advantage if and when the decision is made to sell a property.

Hybrid Management

A hybrid management scenario occurs when a landowner desires to have competent staff on-site in combination with supervision expertise from a management firm. This allows for the management company, which has extensive exposure to a diverse array of operations, to provide operational oversight on a broad spectrum of ranching enterprises while the boots on the ground fulfill the daily tasks. A hybrid system is commonly utilized by all three types of landowners who desire to maximize profits and minimize potential headaches.

DSC00196

Desirable Management Services

  • Budgeting, accounting and bill paying
  • Creation and execution of natural resource development and business plans
  • Asset evaluation including land, equipment, structures, herds, crops, fish, wildlife, and other tangibles such as the human resources available
  • Product sales and marketing services
  • Recruitment and hiring of management level personnel
  • Direct management and/or consultant services to staff
  • Periodic oversight of operations
  • Direct management of deeded properties, leases, and grazing allotments

Such services are most often chosen a la carte per the landowner’s needs. These can be as complex as the cost-benefit analysis of financing farm equipment, restoration of wetlands and/or native grasslands, or habitat mitigation credits. Or as simple as periodic oversight, bill paying and monthly reports or consultation with or mentoring of staff.

2

Managing quality rural real estate properties, be it commercial farms or ranches or prime recreational retreats, can be a daunting challenge. This is particularly true for absentee owners, but even full-time resident owners can often benefit from the outside perspective of an experienced farm/ranch management firm. Ultimately such services should ensure that details of the property are being properly taken care of to allow the landowner to fully enjoy his/her property with family, friends, and business associates.

Hall and Hall is one of the few companies that provide management services and the recruitment of management level employees on behalf of landowners across a broad geography and property type. Please feel free to contact one of our offices if we can be of help. It is the stated purpose of our management group to make the ownership of rural land a positive and worry-free experience for our clients.

 

Chasing Gentleman Bob – Quail of the Rolling Plains

By: Justin Bryan

Bobwhite quail are a boom and bust species. With an average life expectancy of one year, their reproductive ability must be able to make the most of a good situation. For us in the Rolling Plains region of Texas, a “good situation” is defined by maintaining 100% usable quail habitat on any given property. This includes an abundance of nesting sites, escape and loafing cover, and praying for cooler than normal, wet summers. Fortunately, we can control the range conditions (i.e., quail habitat) through proper grazing, unfortunately we cannot control the weather.

blog

Below is data collected by Texas Parks and Wildlife Department, which represents the mean number of quail observed along defined routes per year for the Rolling Plains.Notice the “booms” and “busts”? Those once again are tied to range and weather conditions and more importantly represent years you can hunt and years you likely should not. As quail enthusiasts, we would like to hunt good populations of wildlife quail every year.

12

Our goal as quail managers is minimize the drop in the “busts” and maximize the increase in the “boom”. We do this by implementing mechanical, chemical, prescribed fire and judicious grazing techniques to enhance the habitat and then pray it rains. For more information on quail habitat management in Texas, contact Justin Bryan at 325-260-5883.

DOZER PRICKLY

blog1

blog2

Happy Holidays & Welcoming New Managing Director Monte Lyons

By: Joel Leadbetter

This time of the Holidays spent with friends and family is quite special.  We all have the opportunity to reflect on the previous year and count our blessings.  This year has been very special for us at Hall and Hall for which we are very grateful.

We celebrated our 70th Anniversary and I believe each and every one of us are extremely proud to be associated with this company and what it represents.  We feel privileged to be a part of something bigger to carry forth the vision of the founders: Henry Hall Sr., Henry Hall Jr. and Warren Hall.

We have had great success in each of our business enterprises through the course of last year.  Of course, the catalyst to this success is due to our unbelievably supportive clients and customers.  Without them, none of this would happened.  Thank you.

I have finished my five-year tenure as a Managing Director of the company.  It has been my pleasure and honor to serve in this capacity.  Monte Lyons, in our Lubbock, Texas office, will take the reins on the first of January and he and Mike Hall will continue to drive this company forward providing the highest level of service for our clients.

I would like to thank my partners and colleagues at Hall and Hall for affording me this opportunity. It is something I will cherish and remember for the remainder of my career.  Most of all, I would like to thank my wife, Dawn, for putting up with me.  She is the one that had the heavy lifting.

I hope everyone had a Merry Christmas, and all of us at Hall and Hall wish all of you, the greatest of success in 2017.

1

Good Time to Leverage Ranch & Farm Real Estate

By: JT Holt

Seems everyone wants to be debt free.  Recently, a mentor referred to a statement his mother made to him when he graduated college and was purchasing his first home in the early ‘80s.  The statement that has resonated with me for some time now, goes like this: “Son, I’m sorry that you had to purchase your home on the time.”  As this makes me chuckle, it brings up a good point and makes one begin to deliberate when is, or when will, debt be a good thing?  If you are able to obtain a greater return than the interest rate available, doesn’t it make sense to leverage an asset to generate greater returns?

The biggest competitor for me as a lender these last several years has been cash!  Why would you not utilize your cash in a farm or ranch real estate purchase, with no other stable returns of any significance in the market place? It was proven by the large amounts of cash that flooded the farm and ranch real estate market.  The recent moves in interest rates, the availability of financing, and the equity that has been lost all pose the question, “Is now the time to leverage my farm or ranch real estate?”

texas ranch for sale, lucky star ranch, texas rangeland

Lucky Star Ranch

Since the recent election we have seen the 10-year treasury go from 1.80 To 2.54, which has some direct correlation to our interest rates.  Long-term fixed rates have taken the greatest hit overall, at this point, but we have seen a significant increase in farm real estate interest rates recently, although they are still significantly lower than historical averages.  The concern is, will rates continue to rise in this economic environment?  Now may be the time to take advantage of these low rates and pull some of the equity out of your farm or ranch real estate.  Do you need to lock in a low fixed rate today?

The availability of financing may be a greater issue than you realize.  As we saw the collapse of the financial markets in 2008, we saw a significant tightening in farm real estate loans.  As farm loans became more difficult to acquire, it caused greater strain and financial concerns for producers.  The offset of this was the profitability of farming and ranching during this cycle and the cash in the marketplace.  Right now we are actively seeking opportunities to finance farms and ranch real estate.  In this search, we are seeking out the top producers, those that have a strong financial position and those that have equity in their farm or ranch real estate that we are able to leverage.  Is this you?

Significant equity has been lost over the last three years in farming and ranching.  Row crop farmers are going on three years of losses while the rancher is most likely seeing it for the first time in his operation this year, and if not, definitely a drop in income.  Now may be the time to restore that liquidity position.  Did you utilize cash to purchase some ground and now need to restore your cash position?

Robinson Bar Ranch

Robinson Bar Ranch

All in all, now may be the time to look at utilizing the equity in your farm or ranch real estate by taking out a farm loan before rates move too far.  Farm real estate loans are still attractive to your lender, and it allows an opportunity to restore your liquidity position.  Is now the time to leverage one of your most valuable assets and “buy it on the time?”  Call us today and let’s talk through your many farm and ranch loan options.

Investment Quality Rural Real Estate for Families

Jim Taylor and Tyler Jacobs were invited by Angelo Robles to speak at a meeting of Single Family Offices at the beautiful Carneros Inn in Napa Valley. Single Family Offices are increasingly ubiquitous as wealthy families are setting them up to manage and diversify their investment portfolios as well as manage their personal affairs.

Carneros Inn in Napa Valley

Carneros Inn in Napa Valley

Jim had an opportunity to speak on his favorite subject – Investment Quality Rural Real Estate (IQRRE). He began by defining IQRRE as real estate whose value comes from qualities that are intrinsic to it. These are enduring qualities that will always have value regardless of what happens in the world.

He had an opportunity to compare rural land to the offerings of previous presenters who talked about more traditional investment real estate like office buildings and apartments. Key differences include the fact that farms and ranches do not depreciate nor do they become obsolete and they have a 55-year history of appreciating at around 6% per year. In addition, while we can build an unlimited number of apartments and office buildings, they simply are not making any more land. Quality rural land will always have value and, by the way,  has a zero vacancy rate.

There will always be tenants for farms and ranches and, while returns are modest compared to the double digit returns promised from leveraged apartments and office buildings, we were able to show that annual cash returns will more than carry investments in operating farms and ranches.

Jim Taylor on a ranch in Montana.

Jim Taylor on a ranch in Montana.

The audience of families and their advisers was made to order for IQRRE. Quite apart from appreciating the concept of having a portion of the family wealth invested in a hard asset that will support itself and appreciate over the years, the intangible benefits derived from the joy and pleasure of ownership and of having a place for the family to gather and to introduce the next generation to nature and to the tangible benefits of production agriculture is immeasurable.

The message was well received and, despite some persistent rain showers, everyone appreciated the understated elegance of the Carneros Inn and the many opportunities to enjoy the Napa Valley which is truly the wine capital of the USA.

best-time-to-visit-napa-valley-1170x506

Napa Valley

Father Son Fall Hunting in Montana

By: Ryan Flair

As the air becomes crisp and the leaves turn to hues of gold, my favorite time of the year has arrived.  Fall when I share with my son all that Montana has to offer. Whether listening to the bugle of Elk, fishing for fall browns,  or chasing our bird dogs across the prairie,  it is in these moments I find peace and the world comes to a slow and steady pace.

Father and Son-1

Slipping away from the bustle of life, cellphones, internet, and other daily distractions, and spending time with my family in the world as nature intended is cherished time indeed.  I am so thankful and fortunate to call this place my home and have the opportunity to help with our clients’ journeys as they create their own wonderful moments like these.

We at Hall and Hall want to wish you all the best this fall season and are thankful to have been part of your experience.

Outstanding in your field-1