Hunting / recreation and timberland values in your location?

[Turkish]

That is absolutely bananas. This is where the economics of hunting land lose me. I get it if someone is sinking cash into something tangible to hedge against inflation or they are speculating on a quick flip. It's a plus to be able to hunt on your investment. But outside hedging and speculation, I don't get how these economics continue to work. The opportunity cost of owning hunting land of such a high value has got to matter at some point.

The thing that goes through my head is this. What else could I do with that money? My first thought is retire, or semi-retire. Let's just take a new 2023 risk free rate of return and call it 5.4%, because that's what you can get in short term treasuries. A million bucks would kick out $54,000 pre-tax income per year, and that also doesn't generate additional costs like property taxes and maintenance,. So let's make that $60,000.

I see that as, "I can have this land, or I can have $5,000/mo in extra income. This math gets even worse if there is a finance component of any amount. Hunting land was an easy choice when I could buy a 40-acre chunk for less than the cost of a new truck. I'd take that deal any day of the week.

Last consideration is quality of hunt. Is me chasing a big buck and providing a place to hunt for friends and family worth $5000/month? Would I be willing to physically write a check for $5,000 every month for what I'm getting out of this property? How else could I entertain myself for $5,000/month?

I use a different rate of return for opportunity cost comparisons. I set my opportunity cost at $5,000/month on my place. It is absolutely ridiculous in my opinion. However, I also assign a priceless price on having land in the country, for a place to go to recreate and exercise, a place to escape the collapse of the urban cores, a place to grow food, and a way to lock in housing costs some day. Before I die, I will see the day when only be the mega rich will own private rec land in MN. The poor and what was the middle class will never get a chance to own property like this in the future. Even if they inherit it, if they're not already wealthy, that land will have a for sale sign on the road approach before they push the dirt over our carcasses.

Really enjoyed reading this. I have been a very timid land investor, missing a lot of opportunities for both places to keep and enjoy and ones I could’ve made a return on.

Question for you particularly, though. As long as you don’t view the land as unsellable for personal reasons, do you not think that it would actually provide a return competitive with your 5.4% example, if you decided, wanted, needed to sell? I guess you’re being specific about actual $60k cash in your pocket for returns.

I have historically tried to buy land at a pace that I wouldn’t need a return to justify the expense. Looking back, I feel that’s been the wrong move financially. Of course, who knows what the future will hold, but I’m as bullish on rec land as ever. I’m seeing more folks buying vacant timberland that don’t even hunt. CWD has moved into pockets and those areas are appreciating as well as others. You could use that as support for saying that deer aren’t what’s pushing values in my area.

 

[b116757]

It likely does but I think he may have been looking at the not having to work angle weighted more heavily in his post. Also there are vast areas of the country that return very little on a yearly basis from any sort of farming activity. They may put money in the owners pocket every few decades or once a generation depending on managment of the timber but swamp ground and many timber tracts are suppressed in there revenue generation but can be spectacular hunting properties usually cheaply bought.

 

[Turkish]

It likely does but I think he may have been looking at the not having to work angle weighted more heavily in his post. Also there are vast areas of the country that return very little on a yearly basis from any sort of farming activity. They may put money in the owners pocket every few decades or once a generation depending on managment of the timber but swamp ground and many timber tracts are suppressed in there revenue generation but can be spectacular hunting properties usually cheaply bought.

Yep. You’re probably right. I see that now. I was thinking value, not income.

There is very very little annual income on properties in my area. Peanuts from hay sometimes. Timber is the big one here and that’s a 10-year interval in only the best cases.

 

[SD51555]

As long as you don’t view the land as unsellable for personal reasons, do you not think that it would actually provide a return competitive with your 5.4% example, if you decided, wanted, needed to sell? I guess you’re being specific about actual $60k cash in your pocket for returns.

Up to today, it would smoke those 5.4% returns. But we're not in a normal market. There's nothing normal about what's going on. Here are my four things that I think drove and are driving land insane.

1. Covid gave cover for the fed to counterfeit tens of trillions of dollars into the world economy, stuff we never heard about or counted here.

2. Covid and the BLM riots set off the great migration immediately after the 2020 census was completed, driving millions of people into places they never were, and they brought with them coastal money that locals simply didn't have, and the bidding war was on.

3. 30 years of non-stop monetary and fiscal stimulus had to go somewhere. We've printed 32 of our 34 trillion dollars in federal debt since 1985. Most of the 24 trillion in corporate bond debt has been printed in that time. I'm sure the state and local governments have collectively also printed their fair share, and throw in the miracle of fractional reserve fiat banking, students and home owners have also printed about 30 trillion.

4. All this was fueled by a forever falling yield on the ten year treasury. Stands to reason when it sharply goes the other direction there should be some moderation in prices, but it hasn't happened yet. There are new market entrants (see bullet point 2) along with big mutual fund money and foreign central bank, government, and corporate money. We're competing with people who don't give a rip about it, but they've got unlimited money to dump into this. It's cool now because we're all rolling in digits and paper money, but this is bad for the country and the next generation.

 

[SD51555]

And yes, an actual $60k in money coming in/year.

 

[Foggy47]

Up to today, it would smoke those 5.4% returns. But we're not in a normal market. There's nothing normal about what's going on. Here are my four things that I think drove and are driving land insane.

1. Covid gave cover for the fed to counterfeit tens of trillions of dollars into the world economy, stuff we never heard about or counted here.

2. Covid and the BLM riots set off the great migration immediately after the 2020 census was completed, driving millions of people into places they never were, and they brought with them coastal money that locals simply didn't have, and the bidding war was on.

3. 30 years of non-stop monetary and fiscal stimulus had to go somewhere. We've printed 32 of our 34 trillion dollars in federal debt since 1985. Most of the 24 trillion in corporate bond debt has been printed in that time. I'm sure the state and local governments have collectively also printed their fair share, and throw in the miracle of fractional reserve fiat banking, students and home owners have also printed about 30 trillion.

4. All this was fueled by a forever falling yield on the ten year treasury. Stands to reason when it sharply goes the other direction there should be some moderation in prices, but it hasn't happened yet. There are new market entrants (see bullet point 2) along with big mutual fund money and foreign central bank, government, and corporate money. We're competing with people who don't give a rip about it, but they've got unlimited money to dump into this. It's cool now because we're all rolling in digits and paper money, but this is bad for the country and the next generation.

View attachment 59627

All your charts and graphs and data provided could create a solid point......if the markets were logical and predictable. Which they are NOT. <----it's why staying invested and keeping allocations are a better way of making gains for most of us.

I still like to think I can make a few calls on the markets over time.....but the tax consequences are too great to do such things....under most circumstances. Many people are pushing around a capitol gains tax that would wipe out 1/2 of their portfolio if they were to sell. What would you do? Pay the tax and hope you timed it right?....then try to calculate a time to re-invest 1/2 of your money? (AFTER THE TAX HAIRCUT). I think not.

One thing I will say for mutual funds.....is that you pay tax as you go....therefore it's far easier to be in and out of funds as compared to individual stocks.....which are more tax efficient. Same goes for IRA and 401k money. BUT....that is not where the big market movers live. IMHO.

Hint: Who are the other investors in your stock? How much is held by funds?

 

[Brian662]

All your charts and graphs and data provided could create a solid point......if the markets were logical and predictable. Which they are NOT. <----it's why staying invested and keeping allocations are a better way of making gains for most of us.

I still like to think I can make a few calls on the markets over time.....but the tax consequences are too great to do such things....under most circumstances. Many people are pushing around a capitol gains tax that would wipe out 1/2 of their portfolio if they were to sell. What would you do? Pay the tax and hope you timed it right?....then try to calculate a time to re-invest 1/2 of your money? (AFTER THE TAX HAIRCUT). I think not.

One thing I will say for mutual funds.....is that you pay tax as you go....therefore it's far easier to be in and out of funds as compared to individual stocks.....which are more tax efficient. Same goes for IRA and 401k money. BUT....that is not where the big market movers live. IMHO.

Hint: Who are the other investors in your stock? How much is held by funds?

The best way I've read to avoid the capital gains is to avoid selling. Let your kids sell after the step up in basis. Need money? Pull an equity loan from your property or maybe even better yet a line of credit. Once you're gone, the kids sell (if they so choose) after the step up in basis, pay off your equity loan, and walk away with the remaining cash.

 

[Foggy47]

The best way I've read to avoid the capital gains is to avoid selling. Let your kids sell after the step up in basis. Need money? Pull an equity loan from your property or maybe even better yet a line of credit. Once you're gone, the kids sell (if they so choose) after the step up in basis, pay off your equity loan, and walk away with the remaining cash.

The only problem with this plan.....is that you gotta die. Some of us want our cake and eat it too. lol.

 

[Brian662]

The only problem with this plan.....is that you gotta die. Some of us want our cake and eat it too. lol.

Buddy, I've got some bad news for you....

 

[Peeps]

We bought our place in 2014 for $116,000. Our balloon loan was coming to an end so we are refinancing right now which included a new appraisal being done. This is in the northern Wisconsin forest zone and is not considered a deer hunting Mecca. We have an older 800 sq ft 2 bedroom house, electric heat also with a wood fireplace insert, small basement, sand point well, septic system, and small 1 car unattached garage. 38 acres with some low land and a small creek cutting through a corner of the property. The new appraisal came in at $250,000.

 

[b116757]

Bad time to be refinancing compared to just a couple years ago.

 

[Peeps]

Bad time to be refinancing compared to just a couple years ago.

That’s for sure but we will be paying it all off when we sell our home and move up there in 2-3 years so I’m not too concerned about it.

 

[b116757]

183 acre plot just came up for sale at $5000 an acre about a mile south of our new 151 acre farm that I gave $3800 an acre for two years ago. Prices still seem to be accelerating around here.

 

[gjs4]

For those scrolling, here is the key summation;

"Buy land. Buy all you can."

 

[Bill]

For those scrolling, here is the key summation;

"Buy land. Buy all you can."

Had a guy stop and ask about hunting my land with his boys a few years back. I explained it's the only reason I own the place so, sorry no. He told me he sold a 320 acre farm when the boys were little. He couldn't believe it when someone offered him $300/acre, "price was so good he had to sell".

If he still had the $ he made from the sale he could buy about 20 acres today.

 

[Howboutthemdawgs]

I have a couple buddies wanting to buy land but they can’t stomach the prices. They keep waiting for a correction or a deal. I told them enjoy waiting on invites from people who realized the truth about land…it’s the cheapest it’s ever going to be today.
The amount of forces working against land prices are staggering. An exploding population through birth or immigration, the need for those people to have food, wood products, homes, retail, hospitals, infrastructure, insanely inefficient energy sources (wind/solar), demand for people wanting recreational properties, etc, combine with the fact it’s impossible to make more means land will never go down unless the economy collapses.

 

[letemgrow]

Had a guy stop and ask about hunting my land with his boys a few years back. I explained it's the only reason I own the place so, sorry no. He told me he sold a 320 acre farm when the boys were little. He couldn't believe it when someone offered him $300/acre, "price was so good he had to sell".

If he still had the $ he made from the sale he could buy about 20 acres today.

I've listened to a lot of "old timers" over the years, and I can't say that I've ever heard them regret buying land....it was only ever selling land that they lamented about.

 

[matinc]

Every time I walk on my acreage it's the best. It's amazing how city slickers view us fly over country folks without a clue. Constantly improving my land is what the creator had in mind.

 

[westonwhitetail]

All I can say is I am so happy to own a piece of land, probably couldn't afford in now!! There is a piece of land a few miles from me that is posted at 6,800 per acre and probably 50-60% is swamp. Its not even huntable swamp, it is just a low lying 20 acres wetland in the middle of farm fields.

 

[Ruttin1]

I just bought my slice 2 years ago at 54. Only regret is I didn’t do it sooner. I may have an opportunity to add adjacent acreage in the future. I would no doubt do it if I can.
From what I’ve seen other properties very near me listed for in the past year I think I got a pretty good deal and prices are doing nothing but going north as others have said.