9 Things to Know Before Buying a Ranch
As you go through your journey of buying a ranch, there are several different things you’ll need to keep in mind. As you work through the ranch buying process, keep in mind you’re goals and budget. These two items will help you make an informed buying decision.
At Harrigan Land Co, we are here to help! With decades of ranch real estate experience, we know (and live) the ranching lifestyle. Our team of experts is dedicated to helping you buy the ranch of your dreams. From start to finish and beyond, we are your number one ranch buying resource.
What to Know Before Buying a Ranch
Below is an outline of all the things you’ll need to know before buying a ranch. These are questions that you should ask yourself as you begin your ranch search. Once you begin looking, your answers can begin to change. Just remember, each of these questions has a cost and savings associated with it. Use your team of expert ranch real-estate brokers, accountants, and business management professionals to make the best decision for you.
1. What is Your Budget?
One of the biggest things to know before looking at ranches is your budget. Buying a ranch isn’t like buying a house. There are far more cost and tax implications than with a normal real estate transaction. You’ll need to consider a wide range of financial decisions including:
- real estate costs and fees
- business fees if you plan on using your ranch for income
- maintenance costs
- any improvement costs to the land
- lawyer fees
- cost to hire staff
- cost of owning and maintaining animals
2. How Much Time Do You Need?
We’ve all heard the saying “time is money.” Nowhere else is that more important than with your free time. Ranches take work, a lot of work. The bigger the property the more time you’ll spend maintaining it. If you’re using your ranch for income, this time increases by quite a large amount.
Decide how much time you’re willing to spend working on your ranch each and every day. Keep in mind, even small ranches with livestock could require 20 hours of labor a week or more. Sure, you can hire staff and caretakers to help out, but that is an added cost you’ll need to factor into your budget. Find a timeframe that fits your lifestyle before you start buying a ranch.
3. How Many Animals Do You Need?
Are you planning on having animals on your ranch? Livestock and horses require a certain amount of space per animal. This keeps the animal (and your land) healthy and happy. Decide how many animals you’d like to keep and choose a ranch that’s sized appropriately.
4. What are the Maintenance Costs?
One thing that separates buying a ranch from buying a regular house is the maintenance cost. Ranches cost substantially more money than a regular home. You’ll need to factor in staff, animals, regular home and building maintenance, fire and weed mitigation, keeping pastures health, the list goes on and on.
Work with a trusted ranch real estate broker and a ranch management team if this is your first time through the gauntlet. Your team should help you make realistic estimates of annual costs.
5. How Much Can I Expect to Make?
One big mistake many new ranch owners experience is they over-value their gross income. For example, conservative estimates put a breeding cow at a worth of $190 to $340 annually. That’s quite a spread when calculating income.
Other factors are if you’re using your ranch as a recreational property. How much income, realistically, can you expect in one year? Three? Ten?
It’s a no-brainer that an income-producing ranch is a business. Businesses have growth trends and are subject to market fluctuations. Have a solid marketing and business plan in place if you plan on making money from your ranch.
6. What Are My Tax Incentives?
There are many different types of tax incentives for buying a ranch. First, are business expenses, there is a complicated tax structure called a 1031 exchange. Not to mention, many agricultural endeavors offer up an array of tax benefits.
This all sounds great, but oftentimes the tax law and best ranch management practices aren’t on the same page. Be an informed buyer and work with a team that knows how to balance what’s best for your ranch health and what’s best for the tax incentives.
7. What is the Climate Where You are Buying a Ranch?
When it comes to buying a ranch, one big thing matters, location! You’ll want to have a full understanding of the climate and weather trends where you are buying a ranch. Knowing the weather can help you plan for livestock, crops, recreation activities, maintenance and more.
8. What Rights Does My Ranch Include?
Knowing your mineral, water, and resource rights as a ranch owner are essential in the ranch buying process. These rights and what they entail vary from state to state and sometimes even from county to county. You’ll need an expert ranch real estate broker and possibly a lawyer that specializes in land rights to help you navigate this complicated landscape.
9. Did the Previous Owners Maintain the Ranch?
As you begin the process of buying a ranch, always ask for an in-depth analysis of how the previous owners maintained the ranch. A soils report is always a solid idea, as is a peep at their ranch management plan. If they don’t have one, this can be a huge red flag. You want to make sure that the owners before you took excellent care of their property.
Proper ranch management means more wild animals (better hunting and fishing), stronger pastures, proper fire safety, and fewer fix-its before you move in. Don’t get caught with unexpected maintenance.
These important items to know before buying a ranch ensure you’ll make a sound decision based on your needs. Let Harrigan Land Co help you find the ranch of your dreams today!