PROPERTY: COWBOYS WANTED
How investors can lasso their own piece of the American West with a little grit, research and patience.
How investors can lasso their own piece of the American West with a little grit, research and patience
Imagine waking up to the morning sun streaking across your face as it sneaks into your room through narrow slits in antique wooden blinds. It’s silent all around you. Not truly silent of course, but the kind of tranquil quietness that only exists miles away from the nearest big city on the open prairie. You open the front door and are greeted by a cool breeze blowing in from the grasslands that seem to stretch on forever to the east. In the distance, dozens of cattle graze in the fields and wild horses run with abandon behind them, silhouetted by the dawn sun. To the west, a gentle stream whispers through the landscape with snow-capped mountains and untouched wilderness looming in the background. Welcome to the American West. Welcome to life on a ranch.
GIVE ME A HOME WHERE THE BUFFALO ROAM
The American West is the place you have in mind when you think of the Wild West. This is the land of old John Wayne films, where cowboys and Native Americans once fought atop horseback, and where train robberies became the stuff of legend. Even today in the modern era, the region still holds its storied past close to its heart and a certain rugged individualism permeates the character of many people who call this their home, especially those working in the agricultural and ranching sectors. For many, owning a farm or a ranch taps into deeply ingrained desires for freedom, independence, having open space and working the land.
“Most of the large Montana land owners love and enjoy the land,” notes Todd Phillips, broker and owner of Phillips Realty, a realty firm specialising in farm and ranchland in central Montana. “Buyers like privacy, freedom and recreation.”
Ranching and farming is a predominant part of the ethos of the American West, an area that is comprised of the westernmost territory in the United States, including the mountainous states of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming. Raising cattle and growing crops is a way of life for many people living here and the rhythms of an agricultural lifestyle are deeply embedded in the cultural psyche of the land, even for those working in seemingly unrelated industries.
These mountainous states contain some of the least populated areas in the continental United States, and much of the territory is made up of farm and ranchland, along with undeveloped wilderness and protected conservation areas. Climates and ecosystems vary greatly across the region and nature is never far away; from grasslands that buffalo, coyotes and prairie dogs call home; to deserts with hawks, lizards and tarantulas; to mountain forests with elk, cougars and even bears.
KNOW THE LINGO
Just as the American West has a unique culture and way of life, so too does the region have its own distinct vocabulary. The first step to investing in farm or ranchland in the region is to understand the terminology used in the property market.
Here’s a quick guide to get you started:
1. ACRE – An acre is a unit of land measurement that’s equal to 43,560 square feet. Farm and ranchland is traditionally sold by the acre in the United States, rather than by the square foot.
2. BUREAU OF LAND MANAGEMENT (BLM)
– The BLM is a government agency that owns and administers more than 245 million acres of public land in the United States, equalling one-eighth of the overall landmass in the country. Many larger properties in tha are referred to as BLM acres. This land can only be used for certain purposes, such as for livestock grazing, and must be leased from the BLM under specific terms and conditions. Generally, BLM acreage cannot be developed or used in a way that disrupts the natural ecosystem.
3. IRRIGATED VS. NONIRRIGATED LAND –
Irrigated land means acreage that is watered
by artificial means to supplement natural rainfall. Irrigation facilities and equipment can include things such as wells, pumps, canals, ditches, reservoirs, lakes, tanks, ponds, rivers, streams and creeks. Non-irrigated land is simply land that only receives water through natural rainfall. Irrigation vastly increases the value of land.
A conservation easement is a restriction placed on a piece of property that prohibits new development with the intention of protecting the environment. Conservation easements allow owners to retain many private property rights to live on and use the land, while also providing substantial tax benefits. According to Christy Belton, a ranch broker with Ranch Marketing Associates who specialises in mountain ranches, conservation easements are “a great tool for investors to have in their tool belt” because of the tax benefits they enable.
4. CONSERVATION EASEMENT – LOW INVENTORY, ENDLESS OPTIONS
Ranch and farm properties in the American West are nearly as diverse as the region itself and can range from seven-acre parcels of dry, empty, undeveloped grassland selling for less than US$60,000, to huge mountain estates complete with numerous houses, staff living quarters, stables, irrigation systems, rivers and scenic overlooks that sell for more than US$100 million.
In the mountain state region, the average price of farm and ranch property was US$1,616 per acre in 2015 – the latest year for which figures are available – according to data from the United States Department of Agriculture (USDA). Kristina Nowak, a real estate agent who owns and runs an 80-acre farm and ranch in Agate, Colorado, says that five years ago