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Investing in land & ranches

As a seasoned professional in land and ranch sales in the North Texas area, I've learned a few crucial tips that can guide you through the complex yet rewarding process of investing in rural properties. Here’s what every potential investor should keep in mind:

Location, location, location applies to land & ranches too

  1. Purpose and Potential Uses: Before diving in, consider what you want to do with the land. Are you looking at cattle ranching, recreational hunting, or perhaps holding onto it for future residential development? Each goal will guide you toward different property features, such as the presence of water sources for agriculture or diverse terrain for recreational use.

  2. Soil and Water Resources: The quality of the soil and access to water are pivotal. These not only impact agricultural viability but also determine the sustainability and potential value growth of your property. Most people do not think about this, but soil conditions drive land use. Sandy soil will have more oak and pecan trees but lower productive value, while soils with higher clay content will have a higher productive value for farming, but tend to have “uglier” trees. More clay in the soil also means that it is more expansive, and this will make it more likely that homes in the area will experience foundation issues.

  3. Accessibility and Infrastructure: Make sure the property is accessible via quality roads and check if basic utilities are either in place or feasibly installed. These factors are often overlooked but are critical for development and resale value. We have found that rural water districts will increase line size before installing new lines because the easements are already in place for existing lines.

Aerial view of pasture land

Understand the area around the property area's reputation

  1. Local Market Trends: Keep a pulse on how local land values are moving, and stay informed about any nearby development projects or changes in land use policies. These can significantly impact your property’s future worth, and remember that the list price is not always the sold price.

  2. Community and Services: Familiarize yourself with the local community and what it offers. Services like schools, medical care, and shopping areas are important for long-term property appeal. It’s also important to know that you may be years away from having services, but you can buy in areas that are likely close to services by working with a professional who studies the trends. For example, hospitals are typically located at the intersection of a north-south and an east-west highway or farm-to-market road so that ambulances can get to the hospital quickly.

  3. Zoning Laws: Investigate local zoning laws to understand what can and cannot be done with the property. If a property is close enough to a city to be in their extra-territorial jurisdiction (ETJ), many cities will publish future land use documents. While these documents do not affect the zoning of your property, a future land use plan provides you with an idea of what the city plans to do (and what infrastructure it will provide) in the future. Zoning can affect everything from the type of structures you can build to the kinds of activities allowed on the land, which is crucial for planning your investment’s use and growth.

Land investing is long-term (typically 10+ years). Plan accordingly.

  • Cash Flow Expectations: It’s important to understand that land and ranch investments usually don't provide the immediate cash flow that other real estate investments might. Instead, the real payoff typically comes from appreciation over time—a true test of patience and vision. Investing in land is a time-tested hedge against inflation.

  • Management Needs: Managing a large property can be as demanding as it is rewarding. Whether it's the upkeep of the land or managing livestock, be prepared for the hands-on involvement or the cost of hiring managers.

  • Tax Advantages: Land ownership can come with several tax benefits, from potential property tax reductions to agricultural exemptions. These can make a significant difference in the investment’s overall profitability.

Investing in Texas land and ranches isn’t just a purchase—it's a legacy. Whether you’re a seasoned investor or new to rural real estate, understanding these facets of the market is crucial. Ready to explore your options? Let’s discuss how we can find the perfect property that aligns with your vision and investment goals.

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