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?”

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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.

Diversifying Ranch Income with Hunting

By: Tyler Jacobs

According to a recent article in Beef Magazine, CattleFax CEO Randy Blach states, “low calf prices are likely to remain in the $130 to $140 per cwt. range in 2017.” In other words, prices that cattle producers are likely to see in 2017 are very similar to what they are experiencing today.  What does that mean for ranchers? Now is the time to run a tight ship and make critical business decisions. For many, that may include diversifying a property’s income stream.

One form of income expansion would be to offer hunting opportunities. According to the U.S. Fish and Wildlife Service 2011 National Survey of Fishing, Hunting and Wildlife-Associated Recreation report, 13.7 million people aged 16 or older hunted that year and spent $38.3 billion on equipment, licenses, trips and more. This tells us that there is a strong desire for hunting opportunities in the U.S. and obviously landowners stand to benefit from that. Hunters not only stay in their home state (resident) but they also actively travel out of state (nonresident). This provides a rich pool of hunters to work with.

U.S. Fish and Wildlife – Hunting in America, An Economic Force for Conservation

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Hunters are also diversified in their interests, which can range from big game to upland game birds like bobwhite quail, chukar, turkey and pheasants. These are all species for which we, as land managers and wildlife biologists, can actively manage a property for. More often than not we are able to do so in balance with the overall goals of the farm or ranch. This is well illustrated in the book “Beef, Brush, and Bobwhites” by Hernandez and Guthrey. Livestock, agriculture and wildlife can function very well together. The King Ranch of south Texas is one of the best examples of this concept in action.

So what influences hunting prices? One might think it is a multi-million dollar lodge. Others would suggest it is food and amenities such as a swimming pool, wet bars and nice vehicles. However, the critical factor is the quality and quantity of wildlife present on a property. The majority of hunters partake in hunting for more than just the harvest. Outdoor recreationists cherish the opportunity to simply be a part of that environment. They appreciate the wildlife, the associated habitat and the opportunity to hunt.  A large percentage of hunters actually understand the investment in time, energy and finances that are made by landowners to ensure healthy wildlife populations that live in vigorous habitats. Hunters will remember the experiences from time spent in the field far more than the food or lodging.

quail hunting ranch georgia

The business side of hunting operations such as marketing hunts, making the land available for leasing, booking hunters, managing hunting camps, overseeing lessees, lease documents and working with the local state game biologists can be tedious to some. Many landowners simply choose to hire a service, such as that offered by Hall and Hall to manage their hunting operations. In this situation, the landowner knows that the ranch is faithfully represented and that the hunting operations will be professionally managed.

So what does all this mean for landowners, especially ranchers who may have to be tightening their belts due to low cattle prices? This is an opportunity to add income that had previously been left on the table and broaden the ranches income stream into the future. Selfishly, this gives us an opportunity to educate those who spend the majority of their time in urban environments about the importance of ranching and agriculture. Perhaps they will even celebrate their successful hunting experience with a steak. That works for all of us!.

Yaggy Plantation Sells to Television Producer at Auction

On October 5th, American TV executive Craig Piligian and his actress/dancer wife Lucinda Piligian purchased the historic Reno County, Kansas Yaggy Plantation at auction for $5.325 million. Piligian is the President and CEO of Pilgrim Films & Television and best known for creating The Ultimate Fighter, American Chopper and Dirty Jobs series for Discovery Channel. In 2001, he won an Emmy Award as co-Executive Producer of Survivor.

The 1,260-acre property was once the largest shipping point for fruit between the Missouri River and California. In fact, at one time it had as many as 50,000 apple trees and a million catalpa trees – which were sold for fence posts and railroad ties.

The two homes, which are accessed from a quarter-mile tree-lined drive, still reflect the period. The south home was built first, in 1892, as a manufactured Sears and Roebuck home that was shipped in by rail. The north house, built around 1905, has a similar floor plan, with five bedrooms. The home was refurbished in 2005.

“There were 100+ in attendance and 25 registered bidders,” said Scott Shuman of Hall and Hall Auctions.  ”There was constant and lively bidding on a variety of tracts and combinations, yet the property sold to a single bidder.

To read the full story of the sale click here.

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A Father’s Colorado Dream

By: Rob Hart

My father has always loved Colorado.  As a kid, we drove all the way from Arkansas in the summer, in the winter, and any other time he could convince my mom that experiencing the outdoors was just as important as school.  We got the full experience – whitewater rafting, skiing, visiting the national parks, horseback riding, hiking, rock climbing, fishing and camping.

Besides the usual fun activities, there was the inevitable and infinite quest to find a little piece of Colorado land we could call our own.  Dad has always dreamed of owning land in Colorado and every single trip included a day of property exploration.  There was rarely a “for sale” sign that we passed without exploring the possibilities.  We walked, hiked and climbed them all, but most proved to be too expensive for our situation or were only accessible by a team of mountain goats.

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Life has gotten in the way and he’s yet to find the perfect place to hang his hat.  However, I’ve learned that it was the search and the dreams that he most enjoyed.  There has never been a tract of land where Dad did not see the possibilities.  “This would be the perfect place for a very, very small cabin.” “You’d have to bolt a house to the side of the cliff, but you could certainly teach the kids to repel and climb.” “It might be a flood plain, but it will be a great place to kayak and fish.” – or – “This one is right next to the national forest, you’d just have to hire a team of mules to get you over there.”

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Regardless of the ultimate purchase possibilities, we always ran across some of the most gorgeous places on this earth.  Lush green forests, crystal clear rushing creeks, miles and miles of endless views, and meadows that made you want to stay all night and try to count the stars. Colorado really is one of the most amazing places on the earth.

The childhood experiences of exploring the unknown and dreaming of the possibilities has had a permanent impact on me.  I can’t remember ever telling a single person that my professional goals were to work in real estate, much less specialize in large tracts of land.  I now find myself living in Colorado doing exactly what I was unconsciously raised to love.  I find no better comfort than spending the day wandering through the back roads of Colorado looking for that perfect place to build that cabin, hunt, fish, kayak and camp.

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Dad and I still haven’t found our little slice of heaven, but at 74 years old he hasn’t given up the search and mine has just begun.  Last week while visiting we went for our annual land run through the Colorado mountains.  As expected, we didn’t find the perfect place but I won’t be disappointed if we never do.  I know now, it’s not about finding perfection but the search that keeps the spirit alive.

Texas Farm & Ranch Wildlife Management: Qualified and Appraised Land

By: Justin Bryan

There is no question that the demographics of rural land ownership continues to change. Where we were once largely an agrarian society with each of us having some ties to a farm or ranch, it is no longer the case as more of us completely live an urban life. Yet the desire to own a farm or especially a beautiful ranch, is still very much in the minds of most of us.

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For many new ranch owners, they desire the property but prefer to avoid the ownership of their own livestock herd and/or coping with grazing leases. It’s not that they don’t understand the value of livestock, they just choose not to oversee the issues involved with livestock. Instead their goals tend to revolve around increasing the abundance and health of native vegetation, being able to view a diversity of wildlife, and reinvigorating riparian/stream and fishery ecosystems. In other words, their primary use of the land is managing it for wild things.

LAND VALUATION

Historically in Texas, appraisal districts and appraised land operating with a livestock business qualify for a tax rate lower than other properties. These are known as 1-d-1 appraisals. A 1-d-1 valuation rate was not in place for those ranch owners who possessed little interest in livestock yet valued and actively invested time, money and labor into the enhancement of rangelands, forests, deserts, wetlands, wildlife, and fisheries.

Understanding that the demographics of rural land ownership in Texas was and is changing, and more importantly to support the continued landowner efforts to ecologically care for these properties, the Texas voters approved Proposition 11 in 1995. This amended 1-d-1 of the Texas Constitution thus: “to permit productivity appraisal for land used to manage wildlife.”  This was followed by House Bill 1358, “adding wildlife management as an agricultural use that qualifies the land for agricultural (productivity) appraisal.” At that point, if the primary use of the land is managing for wildlife, the land could potentially qualify for the 1-d-1 valuation rate. The passage of Proposition 11 opened the doors for landowners to maintain the 1-d-1 valuation rate by actively managing for wildlife and without the responsibility of livestock.

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REQUIREMENTS TO QUALIFY WILDLIFE MANAGEMENT USE  

  1. The land must have been qualified and appraised as 1-d-1 agricultural land in the year prior to conversion to wildlife management use.
  2. Land must be used to generate a sustaining breeding, migrating or wintering population of indigenous wild animals.
  3. The indigenous wildlife populations must be produced for human use.

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APPLICATION TO QUALIFY FOR WILDLIFE MANAGEMENT USE

  1. The landowner must submit a wildlife management plan to the chief tax appraiser in the county between January 1 and April 30 of the tax year.
  2. The landowner must perform 3 of the 7 management practices each year.
    1. Habitat Control (Management)
    2. Erosion Control
    3. Predator Control (Management)
    4. Providing Supplemental Supplies of Water
    5. Providing Supplemental Supplies of Food
    6. Providing Shelter
    7. Making Census Counts to Determine Population

For more detailed information or assistance with the agricultural tax valuation for wildlife use, feel free to contact us at Hall and Hall Farm and Ranch Management Services: Justin Bryan ([email protected]).

Additional information regarding the wildlife valuation can be found at: http://comptroller.texas.gov/taxinfo/proptax/pdf/96-354.pdf or http://forages.tamu.edu/PDF/Wildlife%20Management%20as%20Agricultural%20Use%20for%20Property%20Tax%20Valuation%20in%20Texas.pdf

 

York Lodge at Delta Marsh: Top Duck Hunting Property in Canada

The 50,000-acre Delta Marsh is an extensive open marsh located along the south shore of Lake Manitoba 60 miles west of Winnipeg that provides critical breeding and staging habitat for numerous migratory bird species. In waterfowl circles, Delta Marsh is among the most storied hunting destinations in North America and renown for its large concentrations of canvasback ducks which stage in the marsh each fall.

Beginning this month, waterfowl hunters from around the world make a pilgrimage to Delta Marsh in search of “cans”  and other sought after diving and puddle ducks such as redheads, bluebills, ringnecks, mallards, pintails, and teal.   Much of the marsh is managed by the Province of Manitoba as part of the Delta Marsh Wildlife Management Area, although there are scattered private holdings within the marsh.

Hall and Hall is honored to offer for the sale the largest of these private tracts referred to as York Lodge at Delta Marsh, which consists of 3,600+/- acres and 8+/- of shoreline along Lake Manitoba.  Combining marsh, open water, and beachfront, this diverse property was originally purchased in the 1920s by James Ford Bell, founder of General Mills, who was drawn to Delta Marsh because of its epic canvasback hunting.  A series of water controlled management areas have been developed within the property and can be managed to attract an impressive number of dabbling ducks, while points, channels, and open water bays offer classic diver hunting.  The property’s forested lake shore separates Delta Marsh from Lake Manitoba and provides excellent whitetail hunting.