The Ranch Buyers Market 2010 Q2 Newsletter

by:Jim Toth and Dave Halgerson - Fay Ranches

Buying a ranch in the west in today’s market has brought on a new meaning to investing in land. With the value in many other investment options fluctuating drastically from week to week, property is looking more and more like a safe harbor for money. Looming inflation combined with excellent value opportunities have convinced many buyers to invest in a recreational ranch. In addition to value, recent buyers have pointed to the fact that recreational ranches are a finite commodity, there are fewer every year and they can be enjoyed during ownership as one of our clients observed, “Ranches are the one real estate product that there are fewer of every year. Even with beach front real estate, there is the opportunity to saturate the market by continued development as we’ve seen over the past decade. I feel safe investing in a quality recreational ranch because I know that next year there will be fewer, and my ranches give my family a place to gather and have fun.”

Ranches are a Consistent Long Term Investment

Property, especially commodity based land such as farms, ranches, and timberland have been a very stable and consistent long term investment for decades. However, the days of buying property and watching your equity grow through appreciation are down on the list for reasons to invest. A significant return is still possible if property is purchased right with a long term hold strategy in mind. Of course, having an investment with 18” trout or 360 class bull Elk can provide a different type of dividend.

Today's Real Estate Market

In the market of today, the properties getting the most attention still have that “WOW” factor but the ranch also needs to have some economic oomph behind it. A few attractive reasons are depreciable assets, income producing crop or the ability to increase the productivity, and/or ability to increase the value in the land itself with stream restoration, timber growth and/or wildlife habitat. Water rights or the ability to increase the potential for wells and/or stored water can be a major benefit as well. A property that has the ability to pay a return on the investment in some fashion (even the typical 2-3% agricultural return) is a motivating factor in many cases until normal rates of appreciation return.

Long Term Incentives and Options

Also, it cannot be stressed enough to use all possible aspects in offsetting the purchase price on the back end by way of utilizing tax incentives, government programs such as CRP (Conservation Reserve Program) and depreciating assets on the ground. Many ranch owners are purchasing properties with the idea that they will hold for the long term and putting into place all available incentives and options, along with increasing production, hunting and fishing possibilities and any other revenue streams that the property may not have seen in the past.

In Summary

Today’s ranch market has changed and in finding that perfect property for a price that makes sense, you need to study the market and be ready when the opportunity presents itself. At Fay Ranches Inc., we have our finger on the pulse of the ranch market throughout the American West and can help lead you in a direction that will you get more for less in the long term

Contact us for more information and to start finding the ranch property of your dreams please view our farms, land, property and ranches for sale now.