Landowners, what % of your net worth does your land equity represent?

[Turkish]

Of your net worth, including retirement accounts, brokerage accounts, cash, other investments, real estate, rental property, crypto, home equity, etc. what percentage of your net worth is your hunting property equity? If that’s too personal a question, what percentage do you feel is a responsible/acceptable percentage? What % of your net worth is the overall value of your land?

I’m at a little below 10% and that’s on the downswing, as my land isn’t appreciating at nearly the rate of other investments (which isn’t a complaint)… for now. When I bought my land, I paid cash and the % was probably around 20%, but I didn’t diligently track my finances at that time. I’m considering another land purchase that would require borrowing money, so I’m thinking about this constantly.

I’m keenly aware of a few facts that make it difficult for me to sort thru this from a $ standpoint:
- Recently in my area, even with a hot rec real estate market, stocks have been a better investment, save for some folks that really hustle and have tremendous connections.
- I extract a huge amount of value from land ownership that I’m not sure my young family will mirror in the future
- I want to be very careful not to make this an emotional decision, but the opportunity is for a tract of land I have tremendous connections with and never dreamed I’d be able to own.

We’ve truly got some savvy and insightful folks here, so what do you say? If this thread sees some activity, maybe I’ll provide some more details to seek more specific advice. Tia

 

[DiSc0Rd]

A ton. I have 2 very medically expensive kids. I couldn't pull it off with out my dad as co-owner

 

[4wanderingeyes]

My opinion is if you can pay for it, and not have it set you back, and it is what you want, buy it. Land you want to buy doesnt go for sale very often, when it does, and you can afford it, buy it. If you are buying it, because it is what you want, and there is a close connection, you would regret it for life if you dont.

On the flip side, if you cant afford it, and it mayend up putting you into bankruptcy, then dont do it. Chances are if you buy it, and decide it was a bad decision in 5 years, you will still make some money from it.

 

[SwampCat]

I was lucky - my wife supported every land purchase I ever made. I have a son and a daughter that spent some great time on our land - but they have witnessed the hunting degrade so far in this state - they know from watching me you can work yourself to death, and other than deer, have no game to show for it. Our state has lost its quail, turkeys, rabbits, and ducks. We have deer and hogs left.

I dont feel it is as important as the percentage that land comprises of your networth as it is that you are financially on track for all other of life’s requirements. If you are financially prepared for the future, go buy the King Ranch if you can afford it.

From MY experience, if you like to manage land, you buy land. If you really like to hunt, spend your money on leases in the right spot and travel to hunt.

 

[Turkish]

I was lucky - my wife supported every land purchase I ever made. I have a son and a daughter that spent some great time on our land - but they have witnessed the hunting degrade so far in this state - they know from watching me you can work yourself to death, and other than deer, have no game to show for it. Our state has lost its quail, turkeys, rabbits, and ducks. We have deer and hogs left.

I dont feel it is as important as the percentage that land comprises of your networth as it is that you are financially on track for all other of life’s requirements. If you are financially prepared for the future, go buy the King Ranch if you can afford it.

From MY experience, if you like to manage land, you buy land. If you really like to hunt, spend your money on leases in the right spot and travel to hunt.

Well, I’m delighted that so far no one has given advice that I haven’t at least pondered before. I must be on the right track.

I’ve learned that I have a deep interest in trees, timber, and soil. This land has been professionally managed by a hardwood timber company in MS for over 50 yrs and is set up for some income, though modest from a true IRR perspective and compared to productive row crop land. As a young professional, my habitat time is limited but this land has a very small minimum maintenance requirement, the rest being lagniappe. In SW MS.

Great advice on preparation. We certainly think we are but we’re looking at our net worth and age as a measure of that. Hence the thread.

 

[Bill]

10% is close for me but I don't look at it as an investment. I look at it as a non depreciating asset as opposed to my boat which looses value daily. (current market conditions excluded)

Sure the land price can fall and it may be worth less then I have in it, but it will never be worth zero.

, but the opportunity is for a tract of land I have tremendous connections with and never dreamed I’d be able to own.

There is your answer. If it doesn't end your marriage and you can swing it, buy it. If you don't, you will never have the opportunity again. Which may be OK but that is for you to decide.

 

[GMan5465]

A couple of thoughts here. We bought a lake lot roughly 20 years ago. It was a significant investment for us at the time. One friend told me it was an investment in the family and getting the kids spending great time with you. He nailed it. We have great memories of our time, you can’t put a price on that.

With the hunting land, it’s my retirement gig. I consider land just part of the portfolio. But it’s a part I can “play with”. Bite off what you can and live within your means.

 

[yoderjac]

We bought at the top of the market in our area, so the current evaluation is probably 60%-70% of what we have invested. Depending on what evaluation you apply to our pine farm (hunting ground), we have between 3% and 6% of our current net worth.

 

[SwampCat]

I dont consider my land an investment that will have any return. If I am lucky, it will never be sold while I am alive.

 

[yoderjac]

By the way, I'm only counting the 378 acre pine farm where I primarily hunt in the estimate above. We also bought two 8 acre adjoining lots about 15 minutes away where we plan to retire. So far, we have built a barn with a small living quarters there. The house will follow after we retire and sell our current house. I did, however, kill 4 deer on that 16 acres this year and only 3 from the 378 acre pine farm whcih I hunted much more. Go figure...

 

[rocksnstumps]

Dont think I care that much about the % compared to networth but would consider debt load to what your living expenses including increasing savings/retirement funds are every yr. Think I remember top end of 40% or something like that for mortgage vs other.

Couple other thoughts.
Really nice managed timber or all in for the practices of a deer mecca. Pick one or the other and yes there is some overlap but good managed timber is not the thick gnarly stuff that some want for sanctuaries or hinge cut everything in sight, or whatever is management practice of the month. Good managed timber has it's own beauty and have seen some some big trees on some managed by same family for over 100+ yrs.

Most of what I remember of MS is really nice stands of southern red oak. Red oak price is down by me so maybe you can get a better deal now on that type of forest and hope tastes and prices swing back in future years.

 

[Turkish]

I dont consider my land an investment that will have any return. If I am lucky, it will never be sold while I am alive.

I’ll put you down as a zero. Haha

 

[yoderjac]

I dont consider my land an investment that will have any return. If I am lucky, it will never be sold while I am alive.

That is my case as well. I'm only part owner in the pine farm. When we bought it, we looked at it as a potential long-term investment based on the location. When I say long term, at least in my mind, it was 25+ years. My intent was not to sell during my lifetime. Our hope was that timber sales would cover the cost of maintenance and perhaps make a bit of money in the mid-term. While it has produced some income in excess of our expenses, we have not earned enough to cover paper losses of purchase price less current estimated value.

I always looked at it as more of a recreational and wildlife management opportunity, not to mention the mental health benefits for me, than a financial investment. Some of the other owners looked at it a more of a financial investment and were frustrated when land values fell a few years after our purchase. As long as we don't sell, I'm fine with the lower valuation. It just means lower taxes.

Thanks,

Jack

 

[Turkish]

Dont think I care that much about the % compared to networth but would consider debt load to what your living expenses including increasing savings/retirement funds are every yr. Think I remember top end of 40% or something like that for mortgage vs other.

Couple other thoughts.
Really nice managed timber or all in for the practices of a deer mecca. Pick one or the other and yes there is some overlap but good managed timber is not the thick gnarly stuff that some want for sanctuaries or hinge cut everything in sight, or whatever is management practice of the month. Good managed timber has it's own beauty and have seen some some big trees on some managed by same family for over 100+ yrs.

Most of what I remember of MS is really nice stands of southern red oak. Red oak price is down by me so maybe you can get a better deal now on that type of forest and hope tastes and prices swing back in future years.

You’re exactly right. Timber markets fluctuate. Quality hdwd values are decent right now. But this tract’s best value is as a timber tract or as a recreational tract. Topo is steep and erodible, but not nearly as severe as surrounding area. Can’t help but feel it has some inherent value over and above the average of the neighbors.

Excellent point that timber value maximization doesn’t jive with optimization of whitetail habitat. Another dilemma I’m conflicted with. Jeff Sturgis would not like this parcel. But I think I’m ok with that.

 

[yoderjac]

You’re exactly right. Timber markets fluctuate. Quality hdwd values are decent right now. But this tract’s best value is as a timber tract or as a recreational tract. Topo is steep and erodible, but not nearly As severe as surrounding area.

Excellent point that timber value maximization doesn’t jive with optimization of whitetail habitat. Another dilemma I’m conflicted with. Jeff Sturgis would not like this parcel. But I think I’m ok with that.

We have been managing our pine farm since 2006. We decided to find a balance between timber value and wildlife management. USDA NRCS programs have help offset much of the lost income from leaning toward wildlife management. We have been very pleased with our results so far. We just signed a deal for a timber sale. Harvest will occur within the next 2 years.

 

[SD51555]

What day are we asking about? Two years ago it was a whole lot less than it is now. The assessor just told me my place is worth 60% more since the fed increased the money supply by 60%.

I look at my place as a hedge against future home inflation. When the time comes, I'll own the land outright, and I'll lift up the cabin and let someone haul it away, and flip that cash into my home build.

 

[Turkish]

What day are we asking about? Two years ago it was a whole lot less than it is now. The assessor just told me my place is worth 60% more since the fed increased the money supply by 60%.

I guess I’m talking about what you could realistically sell for. Today.

 

[SD51555]

I guess I’m talking about what you could realistically sell for.

Yeah, it's bigger today. Real estate never took the 45% dip like the stocks did. It just went straight up. That changed the percentages for me. Stocks today are up 40% from the pre-rona high, which really isn't that good considering it's been 22 months and a cool ten plus trillion in stimulus. Real estate has gone much farther than that. Whoever took on the most real estate leverage the past ten years has been rewarded handsomely.

 

[cavey]

Some people go on expensive hunts out west, some go to the Bahamas - I go to my land.

Like anything - to be an "investment" your property in time should increase in value above what you paid for it at least on a per acre basis (apart from accumulated costs of ownership e.g. payments ). Most people's house are not investments they are luxury purchases that retain some value/equity compared to what the made in payments and interest but often more net cost than equity in the end. That is a reality most people dont fully grasp. They could have bought a smaller house and paid it off faster. But its nice to have bigger stuff... If you can pay something off fast or altogether in one shot I would say you truly have a future investment. Now there is future timber value, income from farming and a few other things that could happen to increase the return and offset interest and taxes. I think you have to weigh in the joy of having the land over opportunity cost of your money going elsewhere.

I Just did a timber cut that brought back roughly 30% of what I paid for all my property, and you never know who will come knocking on your door for the rock buried on it. In some ways land does not preform like stocks but then again some times it does. Over all its a big part of my net worth. If the rock pays off It will blow my net value off the planet at least in my little world. So you never know where land speculation can take you years down the road. The first 40 I purchased was an investment - I paid it off in a few years, the last 120 I bought I will be paying on for some time - is that an investment? It was something I wanted and will put my retirement home there in the next year or so.

I look at it as an investment in my sanity and keeping me grounded - a connection to the land that I never got a shot at once my Dad and Grandfather had different views on where the dairy farm should go. I am the first full generation to be off the farm. I firmly believe in a saying my grandfather once said - "You arent shit unless you own property." and that weights heavily on my mind. If you own land you are part of the top few percent of the worlds wealthiest people - even a handful of acres sets you apart from most on this planet. Of all the billions on this planet only a handful own their own land - something to ponder maybe??

As far as your family Im sure if in the end if you will it to them they will have one hell of a return on your investment - Its the one gift we can give to the next generation but right now its for you and maybe your family to build a love for. The value you hold for the land is priceless in my mind. Your time on this world is finite, wealthy or indebted, your not going to escape that fact - own something you love keep it as long as you enjoy it. Sell it when you dont...

 

[b116757]

Truly this is a deeply personal decision and I wouldn’t even consider putting it to net value litmus test. If your comfortable with your current retirement savings plan and buying this property isn’t going to lead to financial ruin I’d buy it. I have always gotten a tremendous amount of enjoyment from land management that can’t really be qualified financially. Now this not the case for everyone as I said this is a deeply personal decision I will add I have never purchased property that I’ve truly regretted. I did purchase an apartment building once that I didn’t care for but it was a learning experience and I know now that I will not go down that road again. But I didn’t lose any money for the education that’s the beauty of real estate investments they do generally increase in value unless there is some local issue suppressing the local market valuations. If the property is land locked without any permanent access easements that could be an major issue.