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Looking at the price to buy whitetail land it seems like a big money liability to me. Of course I understand in the long run the land will retain value. But how in the short run is there a sure way to cash flow off of it to at least cover the mortgage/taxes? Or is it just a money pit ?

As t-roy alluded to depending on the property CRP can be a good deal, but again unlikely to make your payment.

However, for the price I paid for it, I could buy a nice outfitted deer hunt every year for the rest of my life and have plenty of money left over. There is something to be said about walking on your own dirt and knowing that you own it though. Hard to replace that feeling.

My experience is if a property can generate revenue, that is baked into the price and you will pay more for it to start with .

I look at land for long term diversity of my investment strategy (fancy guys call it a portfolio). I own three parcels of land; 30 acres in PA that is now worth 15x what I paid in 1992, my 312 acres in NY is worth 2x what I paid in 2010, and my Ohio property was just purchased, but I can easily get what I paid for it right now and likely far more after I'm done renovating the house.

The benefit to me is while these properties provide diversity for my investments, I can plant food plots, shoot coyotes, and bowhunt deer on them. I can't do that with 500 shares of WalMart. And while land prices can fluctuate during hard times, as a long-term investment it's unlikely you will lose money. And even if it does lose money, you can still hunt it. No brainer for me.

One strong word of advice, buy what you can afford. I know guys that bought 750k farms in Iowa on a 75k per year income and leveraged their home to get financing. Guy lost his job due to Covid and can't make the payments. Don't do that. Nothing wrong with owning 40 acres of OK hunting land that lets you sleep at night, than buying 200 acres of Primo deer land that makes you a nervous wreck because you are struggling to make payments.

Good luck, and I guarantee you won't regret it. There's nothing like owning your own slice of heaven then improving it for hunting.

I guess it's as expected, recreational land is an expense that has to be worth the cost in some other intrinsic value....

With regards to investing, each of us will have a different comfort level with certain approaches. I agree with Pat that the land is a longer term investment. Enjoy it for recreation, but make the improvements that will pay off big time in the long run.

We received an offer for our 120 acre MO farm for more than 2X what we paid for it in 2007, Between CRP on 40 acres and habitat improvements the state has paid for, we are out zero dollars of our own money for a 16'X40' cabin and two 20'X20' barns we had built. Those added nice value to the property.

Throw in what is going on in our country, especially populated areas, rural land will hold value most likely. While Pat gave an extreme example, my only disagreement with his post is we waited too long to purchase. I was 47, we could pay cash, If I had purchased 40 acres of land in KS when I was in my 20s when we still had a mortgage, I would be much happier. I was offered the land for $400 an acre, it recently sold for over $5000 an acre. I was too risk aversive, hope others don't make the same mistake.

Best wishes,

Where I was looking at buying land cash rent for farm ground is $80-100 per acre. Farm ground was going anywhere from $2000-2500/acre. The best stuff is more depending on who the neighbors are. Interest rates for raw land were about 6% the summer of 2019. So if you paid $2000 per acre for a 1/4 ($320k) your yearly payment on thirty year note is just over 23k at 6% interest. You're not coming close to making that payment with cash rent.

Then NO

And if you are that type, you will prob get struck by lightening sitting in a tree stand on the property :-)

Something that hasn’t been mentioned, many times you sell a resource off of any land financed through common lenders, the mortgage company requires and income generated from resources on that land, be paid towards the principle.

Here is the disconnect most do not want to accept - land should not be looked at as something that is leveraged as an investment solely. When you leverage for purely an investment then the investment, IMO, should have significant cash flow relative to your payment. If you want to leverage for the sake of enjoyment and your outside income can eclipse your payment, fine.

If you buy land with cash, then it is much simpler to make it cash flow. I am surprised more folks are not putting money into land as I suspect it will enjoy significant appreciation in the next five years and it should have a 3-8% cash flow on a low risk investment.

Leveraging land and expecting cash flow is difficult to envision being widely available for anyone other than those who are willing to incur a significant amount of time sorting through options and running numbers.

Not true at all. Land within a few hours of many large US cities can generate +/- $ 200k a year on just 5 acres. I know of one in Alaska that’s returning $ 1 million on 10 acres. With the farm to table movement and Restaurant organicS and free range demand a new generation of farmers are rewriting modern small farming. It’s not uncommon for restaurant goers in many east and west coast liberal cities to pay $250 to $500+ a couple to dine on organic and free range food grown with in 50 miles of their city. They eat like this a few times a week. With the right contracts and abilities these new farmers are paying cash for their land . I know people selling thanksgiving turkeys for $150 a piece to people in the Seattle area. They get $25 per 4 lb chicken paid 6 months in advance and are sold out a year in advance. All you have to do is market to skippy and Buffy and make them feel like said poultry was raised in a loving home and died with a smile on their beak full of organic feed. There was a near gold rush in the Columbia basin in Washington, Oregon and Idaho the past 20 years. All it took was for US wines winning and placing very highly against European wines. You just have to think out of the box a little and not listen to people that tell you something is impossible.

In my experience most investors look at cash flow as cash out on an annual basis (expenses, income tax, interest, principal, replacement reserves) being greater than cash in on an annual basis. So having to pay principal and interest reduces cash flow.

Now beyond that the question becomes - is it easier to make a higher return by financing - unequivocally at today's rates - yes.

Would I personally finance at today's rates - yes - but know that if your land income is not high enough you could have tax consequences greater than your net cash flow.

It is not complicated, as I suspect most know, but writing the different aspects of it down (a simple pro-forma) are important for most that have not done it before. And don't forget that you are paying taxes not on your after debt service NOI but your principal reduction is part of the tax equation.

oz

I’m not speaking of knowledge of what someone claims. I’m speaking of 30 years dealing in land and natural resource procurement.

If it was truly a market option for everyone to explore, that turkey would bring $19. Not $150.

From a purely financial standpoint I have opportunities on very low risk investments with friends that will get me 9-10% apr paid monthly (minimum $250k needed). Would have to decide if pulling cash out of a money making investment is worth a long term sit on recreational property?

Also for those that say the land value has increased 2 to 100 times, does it matter if you never plan to sell in your lifetime? Is it part of the plan to sell if needed for end of life care or expenses?

My thought is to have it for when I retire, to piddle around and hopefully take future grandkids hunting. From what I here its always better to have bought 10-20 years ago! so That's what I'm thinking of now for the future!

Now, there's people on here saying that land won't ever go down. I don't believe that. Like anything there is a ceiling and a lot of variables at play. Where I've been looking at buying prices have dropped considerably from 6-8 years ago.

When I have bought recreational land as an investment I am not making the long term improvements to it to make it a great hunting property - I just don't plan on owning it long enough. Either buy to own long term with an eye on value or buy to sell and make money. They are not the same thing.

I told all that to say this: It was fun while it lasted, but I spent too much money there. I made it pay off when I sold it as a ready-to-hunt property and owner financed. That’s the only way I can see to make a property pay in my area.

-Said no one, ever.

It’s the first sentence on this thread.

“For the investment financial planner types or those who know, Is there any way to make a hunting property A money making investment?“

Zero about assets on the land making the payments.

The answer is yes depending on location.

I have heard a lot of people say it’s 100% impossible, I have been doing this for 30 years, try to sell that to a banker. When I do I see someone that is about to be forced out of his industry by a younger more creative person that realizes there is a thousand more ways to get something done today that at anytime in history. The level of resources, the dissemination of information and the infrastructure available to a young , hardworking , creative thinker is Un- precedented. Every single agricultural institution in the US has their documents online. You can sit at your computer instead of the TV and punch up the financial expectations , how to, actual outcomes for almost anything you can do with a piece of land in any area in the US. It’s free.

I bought my first property in 2007 at an auction in Toronto KS, 150 acres at 1K an acre and sold it 6 years later for 1.8k an acre. We did have a gas lease that paid 4K a year. It took considerable effort to convince my wife to make this first investment and it’s paid off as you will see the additional transactions below. Taxes were $225 a year.

Took this money with the flip and purchased 400 acres in KY for $950 per acre, sold it two years later for $1800 per acre. No income from the property but taxes were dirt cheap $425 and I just about doubled my money.

Used this next opportunity to buy another auction property in IL for $2250 an acre and it included a rental house 6k per year income and had 30 acres of tillable paying on average 2.5k per year. Taxes are $1600 a year so its cash positive and allowing me to fund improvements and pay my expenses for food plots etc. I also logged a portion of this property for 12k in additional income. At a future date I hope to log the rest for an additional 15k.

With the left over funds, I bought another distressed 52 acre property with house and 4 acre pond, this is my current headquarters. Purchased at $3,750 an acre and logged it for 22k income. This property now can be sold for $4,200 an acre due to the house and stocked pond and the logging allowed major house improvements.

I would encourage people to invest in land, as Pat notes above it’s a long term investment that in my view will never lose money. Regardless of where your journey starts, any small investment will have a return in a few short years, more so if you build it out accordingly. If you are patient and do extensive homework to learn the real values in certain locations, there are some great buys. My only advice, don’t become attached to a land investment, pull the trigger when it’s time to sell at a peak value and another great deal comes along so you can continue to upgrade. Also, don’t build some crazy expensive home And expect a major return, rarely does that add value and it only drives up your tax bill. When I retire, investing in hunting properties and working on improvements will become my new job to keep me busy.

We had no debt and a paid for 200K home but not nearly enough liquid money to pay for the ground. The easiest way for us to get the cash was to take a mortgage out on the house, still makes me sick to think that we actually did it but we did. With the rates being so low it was the most economical way of doing it. We closed last November and have since started doing improvements. The woods was timbered this spring and that brought in $27K most of which we threw on the mortgage. I paid a local excavator $3,400 cash to push out the entire grown over pasture. This was a tough call because it was so thick and held deer like ticks, but I couldnt just let the thorn trees continue to go unchecked. I was furloughed from work this spring thanks to covid so I spent a month of hard labor grubbing the ground and a farmer friend put out 15 acres of beans that he harvested last week.

As I said, we bought the ground primarily as a place to hunt and I can tell you that actually owning your own hunting ground, no matter how big or small, does not compare to having permission to hunt anywhere else. Another benefit for us in buying this ground is that we now have plenty of space for both of our kids to put a house up in the future if they want to. With the work we have done to reclaim the pasture we will be able to cash rent around 25 acres that will bring in around 3K per year. The taxes are next to nothing right now.

So, while not a great investment, especially considering that we had to borrow against our house, this ground is already worth considerably more than what we paid for it. Mostly because we cleared the grown over pasture and converted it to tillable. I had to give up a lot of deer habitat to do that but I felt that I had to do something with the thorn trees. We have a 4-5 year time line to pay of the rest of the mortgage and then we will continue to max out retirement. We have a considerable amount(to us) in 401k and other retirment accounts already. Our son helped us a ton this year by getting a full ride to our local university. I'm glad to have this ground as part of our "portfolio" and the plan will be to leave it to our kids so that whoever wants to hunt will have a place to go.

The least amount of work to have hunting land make money for me, Is subdivide. Then 1031 a section or build a rental, cashout refi in 6 months (the rental), sell/flip accordingly to continue to upgrade. Once your in the green keep doing it and think of retirement.