Land Investor FeaturesVolume 4

Investing In Ranches

By James Esperti, Partner/Ranch Sales, Licensed in MT, WY, ID

People pursue ranch real estate in the Intermountain West for many reasons. Some are looking for that perfect hunting and fishing property with big mountain views, live water, and a variety of wildlife. Others may want a large, productive cattle ranch with abundant water rights and agricultural components. Some people value the proximity of the property to a sizable town that offers amenities such as fine dining, cultural events, shopping, airports, and music venues.

When considering the purchase of a ranch, it is also important to consider its investment value. There are many approaches to how one manages their ranch assets, but some ranches lend themselves to extracting and realizing value more than others. The ideal ranch is one that checks all the desired boxes for the buyer while also providing financial benefits.

Many properties have apparent potential sources of income and investment opportunities (existing features like cattle or timber production), and some are less obvious but still have potential value if you know what to look for.

One potential opportunity is purchasing a property that is deeded into multiple separate parcels, providing options when considering exit strategies or ways to recoup some of the initial investment. You can sell the parcels independently or reconfigure them to fit your specific goals and usage of the ranch. Also, it is best if there are no current covenants or zoning restrictions that would prevent you from creating more parcels of record and subsequently more value.

Another aspect of some ranches is their conservation easement value. Many of the large legacy ranches in the West are already encumbered with conservation easements that run with the land and can prohibit future owners from managing their investment as they please. Conservation easements, when placed on a ranch, give the landowner an enormous income tax benefit. In order to qualify, a property must meet one of these four tests of conservation purpose:

  • The preservation of land areas for outdoor recreation by, or for the education of, the general public;
  • The protection of the relatively natural habitat of fish, wildlife, or plants, or similar ecosystem;
  • The preservation of open space (including farmland or forest land) where such preservation is for the scenic enjoyment of the general public or pursuant to a clearly delineated Federal, State, or local governmental conservation policy, and will yield a significant public benefit;
  • The preservation of a historically significant land area or a certified historic structure.

There are still plenty of properties available that would be ideal for implementing a conservation easement. The Montana Land Reliance website (mtlandreliance.org/conservation-easements) is an excellent resource if you are considering placing a conservation easement on your property or are looking for the ideal property on which to do it.

Another consideration if you are in the market for a ranch is that some of the intermountain states do not implement a sales tax. This can be particularly beneficial if you are purchasing large items for your ranches like tractors and other equipment, as the cost savings can really add up.

With some thought and planning, you can maximize the investment value of your current ranch, or find the ideal property that will provide that value, and potentially additional income. You just have to know what to look for.

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CONNECT WITH JAMES ESPERTIJames Esperti Montana Ranch Broker Partner

James Esperti grew up in Jackson, Wyoming, enjoying and appreciating the area’s abundant outdoor activities with friends and family.

While attending Montana State University in Bozeman, James fell in love with Montana and all its natural resources. Graduating in 1995, James met Greg Fay and soon began working with Fay Ranches, with the mission of preserving and enhancing the west’s premier ranches. In 1998, Greg and James started Fay Management to help facilitate their clients’ ranch purchases, and to assist with habitat preservation, as well as with the construction of capital improvements.

JEsperti@fayranches.com | 406-581-5795

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