Make Money with Land

[Oleo]

I'm interested in finding ways to make money with land, and I have some money available to invest - Any suggestions on ways of going about this? Here are some ideas I've considered:

- Buy, Improve, sell
- Buy and lease farming rights
- Hunting Leases or outfitting

For the last two, it just doesn't seem like there's enough money to be made. For the first option, what improvements do you think drive resale value of rural land?

 

[SD51555]

Is this land you already have?

 

[Oleo]

I was mostly thinking about land I don't yet own, but I bought 70 acres in March that I intend to sell this coming spring. It was a good deal, and I thought it suited my hunting needs, but I ended up finding another place that I intend to keep. So, my question could apply to the first place that I intend to sell, but it's already on the buy, improve, sell path without a lot of improvements. The second place I bought is pretty much just for hunting and recreation, so it's not part of this idea. I was thinking I'd take the proceeds from the place I sell and either do something similar again, or try something different.

 

[KJS-ND]

I think buy, improve, sell can work in the right situations, although I've never personally done it. You need to 'flip' relatively quickly if you borrow money now or the interest will eat up profits relatively quickly.

I don't think the return on investment will be high enough on the leasing of farming or hunting rights to make it worth while strictly from an 'investment' purpose. If you can find a mixed property, you can lease out the farming rights and still keep for hunting, but again, unless you put a ton down it will be a cash flow negative based on todays prices, rental rates, and interest rates. This is what we've been doing - buy mixed, rent the farmable land out while enjoying the hunting aspect. When interest rates were lower, you could almost cash flow a note off the rental income with a 'reasonable' down payment - now days, not so much.

 

[Oleo]

Yeah - I haven't found many ideas that don't involve flipping the land. I'd be paying cash, so the interest rates wouldn't get me, but it would have to have as good or better return than more passive stock market investments.

 

[Turkish]

I’ve looked into this a lot. You have to be able to find undervalued land and make your money with an attractive purchase price — for both scenario 1 and 2. #3 is a non-starter.

 

[Oleo]

I’ve looked into this a lot. You have to be able to find undervalued land and make your money with an attractive purchase price — for both scenario 1 and 2. #3 is a non-starter.

Makes sense - Have you had any success finding the undervalued land? Any tips? Do you look at listed properties and hope you're the first to the table on good deals, go door knocking on unlisted, or go to land auctions?

 

[Turkish]

Makes sense - Have you had any success finding the undervalued land? Any tips? Do you look at listed properties and hope you're the first to the table on good deals, go door knocking on unlisted, or go to land auctions?

Not really. I’ve come along late to the game. Land agents in my area and social media have really made the process more efficient, making people more likely to understand the value of their assets. The realtors, land agents are the ones that get the deals, nearly invariably. I think realtor licensing should prevent them from making some minimum percentage of their income from land sales, but I digress. Self reflecting, I lack confidence in myself and my ability to spot deals. I’m very conservative by nature and usually think land can’t bring the prices it inevitably does. What seem like minor issues to other buyers (access, terrain, neighborhood) are major turnoffs to me.

To answer your question, yes, I have found some deals, but I haven’t capitalized. Even the good ones still didn’t pencil out as being lucrative enough to justify my perceived risk. These have been properties in poor neighborhoods, security wise. And they’ve sold and been resold, so someone made a little $. These were 20ish% below market, so not glaring obvious deals. Realtors are getting the 30+% below market deals on my area. One investor bought a tract I had offered on. He bought it with 2 other adjoins tracts and put together a really nice complementary piece about 500 acres. He resold within 6 months and made about 12% return before expenses. Decent return, but we’re taking about close to $2M. I’m too risk averse for that right now, even though I bet a bank would loan that to me.

What part of the country are you in?

If you really want a rabbit hole to go down, check out Retipster and their podcast. This is all about land flipping, not hunting or recreational at all. They get into letter campaigns, etc. I have tried writing letters, but only for specific tracts I want for personal use, not for flipping. And I’ve had exactly zero responses.

 

[Howboutthemdawgs]

A lot of real estate agents are not looking out for the buyer or seller, they are looking out for themselves. If they have a little rack on their hat it’s even worse…
But I think the only consistent way to make money in land is to hold it for a decent period of time and just ride the inevitable appreciation. I’ve also looked at ways like buying a property and using my equipment to make it more attraction and throwing a redneck blind or two on there and flipping it but the numbers simply don’t work. I’m not doing all that for 10 grand in profit.
There aren’t many clueless sellers anymore. All they have to do is google land for sale in my county and they can see the going rate.

 

[Turkish]

A lot of real estate agents are not looking out for the buyer or seller, they are looking out for themselves. If they have a little rack on their hat it’s even worse…
But I think the only consistent way to make money in land is to hold it for a decent period of time and just ride the inevitable appreciation. I’ve also looked at ways like buying a property and using my equipment to make it more attraction and throwing a redneck blind or two on there and flipping it but the numbers simply don’t work. I’m not doing all that for 10 grand in profit.
There aren’t many clueless sellers anymore. All they have to do is google land for sale in my county and they can see the going rate.

Buying and holding is safe and has historically given a reliable positive return, but it has historically penciled out as a poorer return than other typical investments like the stock market. To buy and hold, one really needs to receive some non-monetary personal enjoyment from it, in my opinion, or their money is better off elsewhere. I have property I treat like that, but I’m also very interested in learning about buying and selling as a more active investor. Of course, no one knows what the future holds.

And it’s funny, my local “small antler hat” realtor happens to be the ONLY one that I trust in my region. He’s quite literally the only one I’ve ever talked to (across a sample size of about a dozen) that seems to be watching out for me after hanging up the phone. I do get the stereotype, though.

 

[SwampCat]

If it can be leased as duck land, can probably work something there

 

[Spike_Horn_Shooter]

I’d have to think the best way to do this would be if you OWNED heavy equipment - think bull dozers, dump trucks, excavators maybe hiring the logging out then do the cleanup, driveway install, food plot building.

It’s my observation that in business if the barrier to entry is low, the profits will be as well. See every Avon, Lularue, shake thing. If the barrier is high there might be some money to be made. In the case of land flipping with making it a better rec property, the only deals I can see are where a guy needs heavy equipment to fix big ticket items.

Hiring out heavy equipment is not cheap, but the results bring a decent *personal* ROI on the properties I’ve had it done.

 

[Turkish]

I’d have to think the best way to do this would be if you OWNED heavy equipment - think bull dozers, dump trucks, excavators maybe hiring the logging out then do the cleanup, driveway install, food plot building.

It’s my observation that in business if the barrier to entry is low, the profits will be as well. See every Avon, Lularue, shake thing. If the barrier is high there might be some money to be made. In the case of land flipping with making it a better rec property, the only deals I can see are where a guy needs heavy equipment to fix big ticket items.

Hiring out heavy equipment is not cheap, but the results bring a decent *personal* ROI on the properties I’ve had it done.

But if you stick that heavy equipment cost into the land buying/selling cash flows, is the ROI still there? I’d argue you still need to buy it right to make good money.

 

[Howboutthemdawgs]

Buying and holding is safe and has historically given a reliable positive return, but it has historically penciled out as a poorer return than other typical investments like the stock market. To buy and hold, one really needs to receive some non-monetary personal enjoyment from it, in my opinion, or their money is better off elsewhere. I have property I treat like that, but I’m also very interested in learning about buying and selling as a more active investor. Of course, no one knows what the future holds.

And it’s funny, my local “small antler hat” realtor happens to be the ONLY one that I trust in my region. He’s quite literally the only one I’ve ever talked to (across a sample size of about a dozen) that seems to be watching out for me after hanging up the phone. I do get the stereotype, though.

Glad you had a good experience, I’m painting with a broad brush obviously

But you nailed it on the enjoyment aspect. I buy my farms cause I love land and want as much as I can reasonably get. If I make money one day great, but I’m not going to lie to myself or my wife and act like I have some great land flipping scheme in mind when I buy them. Granted the piece I sold a couple years ago made almost double on a 3 year, useable investment. But to the original question, I don’t know of any plans that are quick and reliable. I have known guys who have bought tracts with timber, cut them, and a year or two later sold them for the original price paid. So they made what the timber sale brought in.

 

[Turkish]

Glad you had a good experience, I’m painting with a broad brush obviously

But you nailed it on the enjoyment aspect. I buy my farms cause I love land and want as much as I can reasonably get. If I make money one day great, but I’m not going to lie to myself or my wife and act like I have some great land flipping scheme in mind when I buy them. Granted the piece I sold a couple years ago made almost double on a 3 year, useable investment. But to the original question, I don’t know of any plans that are quick and reliable. I have known guys who have bought tracts with timber, cut them, and a year or two later sold them for the original price paid. So they made what the timber sale brought in.

I think the OP is talking about more active income producing strategies.

 

[BenAllgood]

For the first option, what improvements do you think drive resale value of rural land?

PIcs of big bucks

 

[Turkish]

PIcs of big bucks

Here trail cam photos and food plots seem to be expectations. Decent access is helpful, but I’m surprised at how this seems to be an afterthought for many in these parts.

 

[Tree Spud]

I'm interested in finding ways to make money with land, and I have some money available to invest - Any suggestions on ways of going about this? Here are some ideas I've considered:

- Buy, Improve, sell
- Buy and lease farming rights
- Hunting Leases or outfitting

For the last two, it just doesn't seem like there's enough money to be made. For the first option, what improvements do you think drive resale value of rural land?

Buy, Improve, Sell - What are you improving and of what value is that to the buyer? If you are looking to improve for deer hunting, you better have some racks on the wall that demonstrates value. All deer hunting ground has a history of success, or lack of on it. You can do all the habitat tricks you want, but without results I don't think folks put much stock in the upgrades. Some folks may prefer to do their own land work also. Hunting is like any real estate ... location, location, location ... without a history of good game cam card pics and several of those bucks on the wall, you are only offering hype.

Buy and lease farming rights - Buying quality farm ground (where soil is rated for Ag) is hard and expensive. Around here, quality Ag land starts at $7k/ac and can get up to above $10k/ac. In realty, most good Ag ground never sees the open market. It is sold direct farmer to farmer. You would have to check with their local NRCS office to get a feel for lease rates on Ag property. Irrigated land goes for 2-3 times non-irrigated ground.

Hunting Leases or outfitting - The lease price you can get is based on demonstrated success on trophy bucks. Leasers are like renters, you never know what they will do to your property.
The outfitter scenario is a nightmare one. The will run clients through every 3-5 days during the season and will kill everything 2.5 and older. Your neighbors will probably have run ins with them and any good will you had with them will be lost.

 

[SD51555]

I think there are still ways to make money on rural land, but it won't be hands off anymore. Everyone knows the math on renting crop ground based on expected yields. Timber values seem to be well enough understood that there's not many magical deals where a property can be bought, logged, and then it's free. There is lots of demand out there for real food, and the right group of people will pay you a premium for it. But it's got to be authentic. No corner cutting.

I think for anyone scraping by (and I'm not saying you are) if they want to realize their dream of living in the country, they're gonna have to find a way to make $5,000-$15,000 a year off the place to help afford the place. Might need to grow berries, apples, pigs, cattle, eggs, sweet corn, asparagus, firewood, air BNB your primary home, dog boarding, storage, etc.

 

[jsasker007]

Whatever you do it better be cash or the government will end up with the profits. I think they call it the new normal.