In the previous parts of our series on how to buy a ranch (Part 1 & Part 2), we covered the initial steps, including finding the right property and negotiating terms with the seller. Now, we’ll focus on the last two steps: securing financing and transitioning the ranch from acquisition to operations. While these steps are not as much fun as the initial identification and negotiation, they are important for making your ranch financially sustainable and functional. Let’s dive into these final steps to help you get from contract to operations.
Step 3: Securing Financing and Closing on the Property
Financing a ranch is a similar, but slightly more involved process than securing a mortgage for a traditional home. Land bankers will need to qualify and approve your ability to pay. The qualification process is less involved with self-reported income, assets, and liabilities where the approval process requires verification with items like bank statements and tax returns. If your taxes for the previous year have not been filed, the bank may request a profit & loss statement for the previous year and proof that the extension has been filed.
Ranch purchases often come with additional layers of complexity that both the buyer and lender must navigate—some ranches will have multiple homes, outbuildings, improvements, or equipment that are involved in the sale. These factors can impact your eligibility for certain loans, as well as the terms.
Key Considerations When Financing a Ranch:
• Type of Loan: Ranch properties typically require specialized loans, such as agricultural or land-specific financing. These loans often come with different conditions than a standard mortgage. Government-backed options like Farm Credit loans may also be available, depending on the ranch’s intended use, such as farming or livestock production. Government-backed options will have a lower interest rate and more conditions because the government is responsible for protecting the bank from losses on the property.
Down Payment and Interest Rates: Be prepared for a larger down payment—typically 20-30% of the total purchase price. Because ranches are less liquid (i.e., harder to sell), interest rates may also be slightly higher than residential mortgages. Many land banks will also pay a dividend at the end of the year to their members. We highly recommend that you ask for the lender’s history of paying dividend as some land banks are better managed than others.
Appraisals and Surveys: Appraisals for ranches are different from those for homes. In addition to evaluating structures on the property, the appraisal will assess the land’s value, taking into account the location, road access, soil quality, water access, and any income potential (e.g., farming or leasing). A boundary & easement survey is also needed for your lender and the title company.
How a Land & Ranch Professional Can Help:
Lender Connections: An experienced land & ranch agent can introduce you to lenders who specialize in rural and agricultural properties. We’ve helped many buyers over the years and know the lenders that have a history of treating our clients well and closing on time.
Navigating Paperwork: We can assist in gathering the necessary documentation, such as surveys, and help you navigate the process to remove unwanted surprises. This is key to avoiding delays during the closing process, and if delays cannot be avoided, communicating the cause of the delay in a way that the seller can understand.
Negotiating Terms: Having a knowledgeable agent can also help you negotiate better financing terms, such as interest rates, loan length, and payment structures. We have seen similar transactions where the interest rate was up to 1% higher than what we were able to secure for our client.
Once your financing is secured, the closing process typically involves signing the necessary contracts, transferring funds, and ensuring that all legal aspects—like title work—are complete. Typically the ranch is yours once closing is complete and the funds have been transferred to the seller’s account by the title company. Occasionally, the seller will negotiate for a temporary leaseback of the property. Moving takes time, and when you live on a ranch, there is a lot more to move than just what is in the house.
Step 4: Transitioning to Operating the Ranch
While closing on a ranch is a significant milestone, the next phase - operating the ranch as your own - requires careful planning. Whether you plan to use the land for agriculture, livestock, hunting, or as a retreat, how well you implement your plan will determine how quickly you can start benefiting from your new property. We typically tell people to spend several months to a year learning their property before making any major changes like building a home. This allows you to see the property throughout the year - when it’s raining, when it’s dry, and during the winter. You’ll be able to identify game trails and develop or improve paths around and through the ranch.
Steps for Transitioning to Ranch Operations:
Infrastructure and Maintenance: One of the first steps is to assess the condition of key infrastructure—fencing, barns, wells, irrigation systems, and other equipment. Prioritizing critical repairs can help prevent delays or hassles while operating the ranch.
Land Management: Whether you’re managing pastures for livestock grazing or fields for crop production, understanding your land’s capacity and limitations is essential. Maintenance tasks like applying herbicides, fertilizing pastures, and rotating crops are necessary for maximizing land productivity. The order and timing of these activities is important to optimize your return.
Stocking and Leasing: If you’re planning to raise livestock, consider whether you will buy your own stock or lease your land to other ranchers. The types of livestock you choose should match your land’s resources—cattle, horses, or other livestock all have specific needs in terms of grazing land, water access, and shelter.
Water and Resource Management: Water is a critical resource for any ranch. You’ll need to evaluate existing water systems, such as ponds, tanks, or wells, and ensure they are in good condition. You will also want to understand how water flows across and through the property so that your trail system is easy to navigate and maintain.
Hiring Help: Running a ranch can be labor-intensive, and if you don’t plan to manage it personally, you may need to hire ranch hands, a ranch manager, or other service providers. Bringing in experienced professionals can save you time and effort in getting your operations up and running.
How a Land & Ranch Professional Can Help:
Transition Planning: A seasoned ranch agent will help you create a detailed transition plan, from organizing repairs to setting up systems for livestock or crop management. Their advice will help you prioritize tasks and streamline the setup of your ranch. Many of the activities can be performed prior to closing so that you are ready to implement the plan when the ranch is officially yours.
Local Service Providers: An agent with local expertise will have connections to contractors and service providers, including fencing repair specialists, well drillers, equipment dealers, and more. These trusted contacts can ensure that you get quality work done quickly.
Land Management Advice: Whether you’re planning to run cattle, grow crops, or lease your land, an experienced land & ranch professional can offer insights into best practices for maximizing your land’s potential. This is invaluable for both income-producing ranches and personal retreats.
How You Benefit From Expert Guidance
Securing financing and transitioning your ranch to operational status can seem daunting, but working with a professional who specializes in land & ranch transactions can simplify the process. From finding the right lender to coordinating repairs and infrastructure improvements, a land & ranch expert will save you time, money, and potential headaches.
Our role doesn’t end at closing—we will continue to offer support as you turn your new property into a thriving ranch. With these final steps in mind, you’re now on your way to successful ranch ownership. Stay tuned for more tips on maximizing the value of your ranch investment.
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