Land has long been considered one of the strongest investments you can make. The basic thinking is that there’s no more land being made, so scarcity will always help hold up values. That is true to a point, but sometimes the time horizon involved is so long that there are no guarantees of profit within the number of years you are willing to hold the land. Ranch land is subject to these same market forces, so if you’re considering buying and selling ranch land, you should keep these four tips in mind.
Considering Its Use
Most ranches are utilized for grazing large numbers of cattle, and while cattle may seem like little more than pets or scenery, the fact is that they are an investment just like the land itself. If cattle markets are weak, there will be less demand for ranch land to graze them. Conversely, strong markets will push cattle operations to seek more space. Ideally, you should buy land during soft markets for beef and sell when they bounce back, an interval known as the cattle cycle. The trick is knowing when that rebound will occur.
Understanding Regulations
Animal agriculture, like all aspects of farming, is under increasing regulation from government at every level. The result of this can be a change in conditions that make it impossible for a ranch to produce the way it has always produced. Buying such property can leave you in a position where the land immediately loses value, making it impossible to recoup your initial outlay.
Climate Issues
The debate on climate change battles on, but there is no doubt that even the natural cycles of weather can impact the value of ranch land sales. Many ranches hit the market when their owners must sell out due to drought, flooding, or fire, and these conditions could persist long enough to degrade soils and pastures to a point where the ranch requires too much work to be usable. Be sure to properly research the state of the land you are buying.
Changing Conditions
Sometimes a seller is motivated by external factors. If a ranch owner places land on the market based on information about an upcoming industrial or highway project, you might end purchasing it without realizing the potential change in value that could emerge almost immediately. By the same token, a new highway or residential development nearby could enhance the property’s value as well.
In the grand scheme of things, there will always be a need for agricultural land. The key for an investor is to understand how that value could evolve in changing conditions, and what that could mean for the potential to sell the property later.
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Good to know that cattle are an investment just like the ranch land itself. I’d imagine that having a good ranch property helps keep your cattle healthy and safe. Admittedly, just the idea of having a large plot of land seems really tempting.
thanks for sharing the nice information.