10 things to know before investing in a cattle ranch
When a 2003 Chinese ban on American beef was lifted recently, American ranchers were cautiously optimistic. It is possible that this move is designed to change China’s beef trade with Australia, but also a huge opportunity if the Chinese market opens up to American ranchers.
Considerations before investing in a cattle ranch
Small Business Trends spoke to Buzz Tatom. He is a ranch sales associate / associate at Venture to the ranches of the west in Montana. Here are 10 things to know before investing in a cattle ranch.
Take a look at the ground support capability
Simply put, you have to know what the earth will take. The most important here is the carrying capacity of the animals. It all depends on the number of cattle that can graze on the property without destroying it.
Be clear about the agricultural / recreational value
“Much of the value represented is recreational,” Tatom says. Buying a ranch means knowing the importance of the term agricultural value or land that can be otherwise irrigated and used for livestock. Canyons and the like are recreational. You have to look at how many of each type are available.
Respect your water rights
It is essential to make sure that you understand your rights regarding the water that passes through your property. Having superior and current water rights means being assured of a constant flow. If you are lower on the list, someone higher up can change the amount of water you get for important things like irrigation.
Know your mining rights
Buying a ranch is knowing who owns what’s above and below the surface. If you only have what are called surface rights, another party may dig up your ranch to access the minerals below.
Tatom explains why mineral rights are important.
“Without them, someone can literally surprise you the next day and drill wells on your property.”
Understanding access to property
Are there any easements that cross the land you are interested in? Does part of your land cross that of a neighbor? It is good to know if there are any extenuating circumstances like these before you buy.
Have the soil tested
Groundwater contamination could ruin the whole deal if it’s bad enough. Find out if there were any landfills in the area and any hazardous waste buried on the property.
Get the lean of the locals
“I always encourage customers to spend more time in local cafes and stores asking for people’s opinions on the ranch,” Tatom says. “You’ll be surprised at some of the things people say about the current owners. “
Check the neighbors
You will be dealing with people next door, even if you don’t see them all the time. Fences will need to be repaired and mining rights and a host of other issues addressed. Getting to know your neighbors can make it easier to make more important decisions, such as managing wildlife.
Take a look at the tax status
When you buy a ranch, it should come with certain exemptions related to your tax status. There are agricultural exemptions and wildlife exemptions that you want to look at. Knowing what you need to do to keep them active is essential.
Look at your financing options
Finally, it’s important to know what your best options are for paying off your new ranch. Everything is easier if you buy housing in cash. Otherwise, you will need to find a qualified farm lender to help you complete the purchase.
Cattle ranch Photo via Shutterstock