Making land more affordable

[westonwhitetail]

I own 200 acres that I have bought in four different purchases and am currently buying another forty. With the exception of 60 acres, the rest is contiguous. I am also partial owner in another 140 acres that joins my main block of land. The 140 was also bought with my son and his friend. I will caution you right up front about buying with a partner for obvious reasons - but if you can make it work, it can greatly ease the pain of purchasing land as compared to buying on your own. Also, dont think the only land you can buy is that with a sign on it. I have only made one purchase where the owner was actually trying to sell. The rest, I contacted the owner and asked if they would sell. Usually, that just plants a seed. My first purchase was in 2004. I first approached the owner about selling in 1992. I will admit, that method usually does not result in getting the best price.

I think signs with antlers and marketing for deer hunting doesn’t help with prices either...


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[westonwhitetail]

Thanks everyone for the input, lots of things to consider and think about


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[H20fwler]

Is this a program to establish wetlands or preserve existing? Would ponds be part of it?


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Mine was to establish new. We put in two ponds.

 

[Livesintrees]

Only thing I’m able to do with my 60 is get it into “woodland management”. There’s no tillable to make profit or farm assessment. Woodland management here gets you same tax break as though you were actively farming. Basically the forestor came out couple of times. Took inventory of invasives, as well as ages and tree species. He then marked the “junk” trees in which to thin out to allow the preferred species (in my case here it is oak) to benefit. So all in all the first 5 year plan that he wrote involves removal of 110 “junk” trees which I turn into firewood for myself. And technically I need to show $500 a year income based off selling these trees from the TSI to satisfy the states definition of it being actively managed. After two calendar years the tax break is incredible. Property now is taxed at roughly 6k as of Jan 1st. After the two years taxes will be a couple hundred bucks.

 

[bwoods11]

Every business has failed business people who cannot run the operation, farmers no different. Better more efficient producers step in. That's why WRP land is popular. Farmers can't make it profitable so the govt subsidizes farmers to get out of it.

Farm acreage around here never gets smaller, crop land never in low demand. There is a difference between "food plot" land and real quantifiable ag land.

In our area, real income AG property never gets on the open market ...

I am not talking about food plots. 50/50 farms can be bought in some areas with quality tillable right now. I just purchased a farm in Iowa with 90 CSR dirt (some of the best dirt in the world for 1/2 price it would have sold for in 2013.) Due to a few tough years....The local farmers did not want the timber, rent is still solid in that area (around $250 acre)....plus the timber has good walnut and oak.

Some fairly good deals right now, depending on the state. Rare to find cash flow at much higher than 4% return, but look around. A farm in MN in my county--recently sold--had 91 good tillable (120 acres) for $3000/ac it cash flowed well, and you can always improve a tillable farm with programs...just takes time.

 

[Fall's Legend]

Very good information shared here IMO. I agree that a partner is not typically a great idea, and am glad we decided not to go that route. But, if you can split a parcel with your partner owning one part and you the other, that may be something to consider. Good luck.

 

[almanac12]

Wetland Mitigation - There is a program in WI to get paid to reestablish wetlands that have been drained. As far as I know it takes a lot of legwork to get approved to do this though and there are costs for construction/seeding etc.

Wetland mitigation is very expensive, but could be profitable in 5 - 10 years. It involves engineering work to make structural improvements to degraded wetlands. The improved wetlands are sold as credits to offset wetlands that are filled in by developers. I know of a conservstion minded investor spending millions. He's trying to get over 100 wetland mitigation credits. If he does and successfully sells them, he'll make millions in profit. The credits sell for something in the neighborhood of up to $50k-$60k per acre depending on the watershed. However, I would imagine that number is much lower in some watersheds.

 

[Livesintrees]

Very good information shared here IMO. I agree that a partner is not typically a great idea, and am glad we decided not to go that route. But, if you can split a parcel with your partner owning one part and you the other, that may be something to consider. Good luck.

Partners never work. Everyone feels like they are doing more, or spending more, or somehow getting screwed.

 

[westonwhitetail]

Wetland mitigation is very expensive, but could be profitable in 5 - 10 years. It involves engineering work to make structural improvements to degraded wetlands. The improved wetlands are sold as credits to offset wetlands that are filled in by developers. I know of a conservstion minded investor spending millions. He's trying to get over 100 wetland mitigation credits. If he does and successfully sells them, he'll make millions in profit. The credits sell for something in the neighborhood of up to $50k-$60k per acre depending on the watershed. However, I would imagine that number is much lower in some watersheds.

I was aware there is a ton of effort to get through DNR reviews and approvals, but did not know there was that much of a cost upfront for it. There are also minimum size requirements of about 25 acres which may be difficult to find land with that amount of eligable wetland to be mitigated. The 50-60K per acre is what really is attractive about it!

 

[westonwhitetail]

What are people's opinions on conservation easements? Not for making money on the land, but just in general. I looked at a junk of land the other day that is 22 acres and the entire piece is in a conservation easement. It has about 9 acres of ag field, with the rest being wooded, and a trout stream running through the bottom. The easement restricts building permanent structures, so my biggest concern would be trying to resell it. People may not want to buy it if they can build a house or even a small cabin or shed on it. The price has already gone done significantly because of this fact.

 

[Telemark]

What are people's opinions on conservation easements? Not for making money on the land, but just in general. I looked at a junk of land the other day that is 22 acres and the entire piece is in a conservation easement. It has about 9 acres of ag field, with the rest being wooded, and a trout stream running through the bottom. The easement restricts building permanent structures, so my biggest concern would be trying to resell it. People may not want to buy it if they can build a house or even a small cabin or shed on it. The price has already gone done significantly because of this fact.

Sounds great if the price is right.

 

[Mortenson]

I am not talking about food plots. 50/50 farms can be bought in some areas with quality tillable right now. I just purchased a farm in Iowa with 90 CSR dirt (some of the best dirt in the world for 1/2 price it would have sold for in 2013.) Due to a few tough years....The local farmers did not want the timber, rent is still solid in that area (around $250 acre)....plus the timber has good walnut and oak.

Some fairly good deals right now, depending on the state. Rare to find cash flow at much higher than 4% return, but look around. A farm in MN in my county--recently sold--had 91 good tillable (120 acres) for $3000/ac it cash flowed well, and you can always improve a tillable farm with programs...just takes time.

On that farm with 91 tillable out of 120, what would average yields be? That sure seems like a steal.

 

[bwoods11]

On that farm with 91 tillable out of 120, what would average yields be? That sure seems like a steal.

Yields are 175-190 bushel corn, probably about 45-55 on beans. Yeah it sold fast.

 

[westonwhitetail]

Sounds great if the price is right.

Anyone have experience with how much lower land value would be if it is not a buildable? Take the same parcel that is mixed woods and ag land, the only difference is you can not build on it. What would you think the price per acre difference is?

If it was land with no easement or other restrictions, I think a reasonable price for a typical property in this area is about 3,000 per acre. Wondering how much lower is a reasonable offer? I wouldn't want to buy it for 3,000 an acre and never get that back if I wanted to resell in the future. Thanks.

 

[Telemark]

Anyone have experience with how much lower land value would be if it is not a buildable? Take the same parcel that is mixed woods and ag land, the only difference is you can not build on it. What would you think the price per acre difference is?

If it was land with no easement or other restrictions, I think a reasonable price for a typical property in this area is about 3,000 per acre. Wondering how much lower is a reasonable offer? I wouldn't want to buy it for 3,000 an acre and never get that back if I wanted to resell in the future. Thanks.

Unfortunately it is all very local. You would have to check comps in the area. The County auditor should have records of sales and descriptions.

Personally, I wouldn't pay anywhere near 3000$ per acre for it. But to someone else it might be the perfect little slice of heaven he's been searching for. How much are they currently asking?

 

[Tree Spud]

Anyone have experience with how much lower land value would be if it is not a buildable? Take the same parcel that is mixed woods and ag land, the only difference is you can not build on it. What would you think the price per acre difference is?

If it was land with no easement or other restrictions, I think a reasonable price for a typical property in this area is about 3,000 per acre. Wondering how much lower is a reasonable offer? I wouldn't want to buy it for 3,000 an acre and never get that back if I wanted to resell in the future. Thanks.

What are people's opinions on conservation easements? Not for making money on the land, but just in general. I looked at a junk of land the other day that is 22 acres and the entire piece is in a conservation easement. It has about 9 acres of ag field, with the rest being wooded, and a trout stream running through the bottom. The easement restricts building permanent structures, so my biggest concern would be trying to resell it. People may not want to buy it if they can build a house or even a small cabin or shed on it. The price has already gone done significantly because of this fact.

A conservation easement is a noble thing when people want to protect it from future development. Unfortunately it is also in conflict with any habitat mgmt/hunting objectives you might consider.

A WRP for example can prohibit the following...food plots, placing any permanent structures (trailers, sheds, or bldgs) including deer stands or duck blinds (have to be portable), digging or dredging of soil, cutting wood (hinge cutting is a no no), planting trees & shrubs, ATV trails have to be marked & approved with a permit, no gates or fences, no mowing of grasses/weeds until early July because of bird nesting, etc. You pretty much sign away all rights except walking on the property & paying taxes.

Even though the WRP states up to 5% of easement in food plots they are not a given. They look at surrounding properties and assess available food sources. If your property is adjacent to AG land, they may not approve a conditional use permit for a food plot. Yes, you have to have a permit. They also dictate where you can have a food plot if they allow, and control what you can plant. I applied to "renew" an existing conditional use food plot permit. It took over 14 months to get renewal. I almost did not get the permit as the DNR also has to conduct a land use impact survey and they discovered 2 miles away there was a red bellied spotted newt that was on the endangered species list. On 200 plus acres they allowed for just 2 separate 1.5 acre food plots.

Expect WRP personnel to be on your property to audit regularly without notice and they also conduct annual aerial satellite surveys so they will know if you are violating the rules. My neighbor put up a 100 yard shooting target and mowed a 10' wide shooting lane in the grass. He boldly stated they couldn't stop him .... they did and continued to harrass him with property inspections to insure he was in compliance.

Most of the ponds that the WRP/NRCS dug did not perform as designed as they overestimated yearly rainfall by 300%. Ponds were too shallow and became over grown with cattails.

I recently sold several parcels with WRP easement on them. Fortunately I had a couple of build-able acres outside of the easement on each. The deer hunting was also trophy class. It took a long time to sell both and I was able to sell for about 65% of comparable non-easement property.

 

[Wild Thing]

I own 160 acres which we purchased in 3 separate purchases over a 20 year period. None of it was ever listed by a realtor. Like someone else mentioned above, we contacted the landowners and expressed our interest in buying their property. The first 40 acre parcel took 10 years for the owners to decide to sell and by then they knew us very well and gave us a great deal on the purchase because they knew we would be good stewards of their land. The 2nd parcel had been owned by Commercial Forest Companies for "forever" although it did change hands several times. None of them would sell to us. Finally, an investment company in Boston bought all of the land and we approached them and they agreed to sell it to us at what ended up being a "fair" price.

All 160 acres was fully timbered when we purchased it. I have cleared 16 acres which are now planted to food plots. Over the course of time I have had 3 separate small timber sales. Some acreage was clearcut where I wanted food plots but the other logging was all select cuts (TSI Thinning) in the northern hardwoods (Sugar Maple, Basswood, White Ash, Aspen, etc). We sold a total of $54,000 in timber over the 3 sales. All of these timber sales were managed by our own forester whom we paid a 20% commission.

I paid capital gains taxes on the first 2 timber sales and then I learned about using the timber as a "basis" for capital gains as someone else mentioned above. I had my forester go back and cruise the parcel to arrive at the value of the timber when I purchased the property 3 years prior to the timber sale and I used that value as a basis for my capital gains taxes. I ended up paying zero capital gains on the sale and I am pretty certain I will end up paying zero on the next timber sale as well.

Our neighbor is currently tapping 300 Sugar Maples and selling the sap for 0.35 cents per gallon. That is a lot of work and something I'm not interested in doing. We do tap 120 trees for our own Ma & Pa syrup operation and that keeps me busy enough. We make enough syrup to share with friends and family and do sell some which helps pay for supplies. If someone were so inclined they could tap several thousand trees here for a commercial operation but I am not personnaly interested in doing that.

 

[Telemark]

The deer hunting was also trophy class. It took a long time to sell both and I was able to sell for about 65% of comparable non-easement property.

Interesting. Good info. Those easements really hamstring the owner it seems.

 

[Telemark]

I always wanted a Christmas tree farm. Seems like an effective way to get money from the land. Unfortunately most of the work is right in the middle of hunting season.

 

[westonwhitetail]

Unfortunately it is all very local. You would have to check comps in the area. The County auditor should have records of sales and descriptions.

Personally, I wouldn't pay anywhere near 3000$ per acre for it. But to someone else it might be the perfect little slice of heaven he's been searching for. How much are they currently asking?

Asking $68,000 which is about $3,100 an acre.