| “Buy land, they aren’t making it any more”. How many times have you heard that one? It’s one of those old saws that has not only withstood the test of time but strengthened with it. Or has it? Is buying land still a good financial move in our current climate of economic chaos and uncertainty and can you really afford it?
Hunting property is typically referred to as “recreational land”. For purposes of this discussion recreational land is “an expanse of land where outdoor recreational activities like hunting, fishing, hiking, camping and wildlife viewing are pursued”. It is not a house on the beach, a cabin on 5 acres in the “wilderness”, or a campsite on a stream or lake.
It is definitely not a 20 acre tract of “developable” land just outside of town bought on spec, or a dairy farm complete with a herd of cows, a half dozen tractors and bank note that would make Hank Paulson cringe. It’s not 600 acres of tillable fields waiting for the ethanol market to take off. These are investment properties and land which may or may not have an enterprise value factored into the price. They are often bought (and sold) on spec and should for the most part be avoided by “recreational buyers”.
What we’re talking about here is 50-500 or so acres of rural property preferably with a resident population of deer and other wildlife. It typically will include some tillable acreage, a timber resource, road access, water and a spot to site a cabin or retirement home. Neighbors are sized up by the color of their tractors not the cut of their clothes and being part of a QDM co-op is the ultimate status symbol and definitely a “neighborhood” you want to hang out in. In a phrase, we are talking about a piece of ground that can be developed into the hunting property of your dreams.
Price is the first economic issue you have to deal with, it is the purchase price of a property. Hunting property prices (not spec or enterprise property prices) are typically driven by the market dynamics of supply and demand. Quality hunting property has always been in demand but the recent Quality Deer Management movement sweeping the country has made demand for quality deer hunting properties even greater.
Buffalo County WI deer property is expensive because it grows big bucks and lots of hunters want to shoot a big buck. Hunter-landowners are paying big bucks to own land and hunt in a high quality deer area. Property in Bucks County PA and Westchester County NY are also expensive but for a different reason. These areas are heavily populated and land is in short supply. Everybody wants it and as the man said, they aren’t making any more of it. Buyers in these highly populated areas are willing to pay for the privilege of owning land and re-creating close to home or their place of business.
Fortunately, most property with deer hunting potential is priced well below property in these areas. Some regions of NY and PA still offer real value in raw land as do sparsely populated areas of northern New England. The trick is to find the right property for the right price.
For the most part, the market dynamics of supply and demand are pretty much factored into the “ask” of property offered for sale by serious sellers. Most sellers are selling for a reason and that reason is to generate cash so most properties are priced accordingly. Most realtors will have a pretty good idea of what property in their area is bringing and price accordingly. Most property offered by realtors is priced at or near market value as well.
One exception would be sellers who insist on dramatically overpricing their property. These are not serious sellers; they are just owners looking to “cut a fat hog”. They tend to lower their price quickly when the realities of supply and demand set in or take it off the market completely. “For sale by owner” signs are often the tip-off to this kind of deal. Unrealistic pricing pretty much guarantees that a property will sit and sit and sit for years as the seller waits for a naive buyer with more money than brains. Don’t waste your time on this kind of situation.
Real estate professionals use “comparable's” (what similar property in the region sells for) to establish fair market value. Comparable's should be taken with a grain of salt when buying deer hunting property as most buyers and, for that matter, sellers don’t know the difference between a piece of ground with outstanding deer hunting potential and a property that will at best be just so-so. More than one would be purchaser has turned his back on a great hunting property because 200 acres of “hunting hell” 3 miles down the road sold for a hundred bucks per acre less.
Hunting property purchasers should think in terms of “huntable acres”. Few if any properties are 100% huntable. Large open fields, steep vertical faces, excessive road frontage and neighbors reduce the total huntable acres on a property. A 300 acre property with 100 huntable acres is no value at any price. Look for property which is at least 90-95% “huntable”. Anything less than that should be discounted accordingly.
Truly, finding a hunting property with outstanding potential is no job for amateurs, or for that matter, for realtors who might not have extensive experience in hunting property management and sales. Evaluating hunting property is best left to the pros who know what goes into developing a great deer hunting property and are able to accurately gauge a property’s hunting potential.
Many factors go into property selection. In addition to huntable acres; soils quality, wind and weather conditions, growing seasons, food and cover, deer densities, herd age structure and ratios, security and access are all important but, the most important consideration is how all the features of the property will “work’ together as a whole. This is where a trained eye and experience really pays off.
Basically, you have three choices in finding the right property: 1) You can roll the dice and take a stab at it finding your own property (risky and inefficient), 2) you can buy a fully developed property with a track record of producing quality deer hunting (very hard to find and very pricey) or 3) you can work with a wildlife professional to help you find “a diamond in the rough” or “started” property with outstanding potential. This is by far your safest bet and will yield the greatest return on your time and money.
But, purchase price is only part of the property financial equation. We all know what a $30,000 pickup is worth 10 (or even 5) years after you buy it. What about a $300,000 hunting property? Will it appreciate in value and prove to be a solid investment or like some real estate today, will it be worth only a fraction of what you paid for it.
Recreational property, fairly priced, typically rises in value over time. But, how much? That depends on a variety of factors including region and market dynamics but most recreational property purchasers can pretty much count on their property to appreciate at least 5-7% annually. Some areas have seen dramatic spikes in recreational land value with accompanying downturns but historically, raw land has tended to appreciate. Even at 5% this adds up to a pretty good investment over time and best of all it is a safe place to park cash.
What about the real estate crash we’re all hearing about. We’ll let’s look at what’s crashing. Beach houses, high rise condos bought on spec., housing tract future sites, and “fast buck” land deals are all going south. Fairly priced, non speculative “raw land” prices are holding up nicely.
Will people have to sell land to raise cash in a major league recession or some sort of economic depression (ugh)? Sure. Will this drive prices down? Perhaps. But forced sale land deals will no doubt be gobbled up by investors with cash looking for a secure spot to park their money or neighbors looking to expand their holdings. Good hunting property is difficult to find. It is unlikely that there will ever be an excess of quality hunting property for sale. It would probably take a mass sell off in a specific region to systematically drive raw land prices down. Hunters are better off leaving the land speculation game to the pros.
Land starting to look like a good deal? Let’s look a little closer. Most deer hunting property has an existing timber resource. A $300,000 hunting property might well have a $50,000 -100,000 or more timber resource in place. It may be ready to harvest immediately (to offset the purchase price) but even if it isn’t, the timber is growing each and every year (5-7%) and eventually (barring disease and natural disasters) will begin paying dividends in the form of timber harvests. Historically, board footage prices have risen about 2% annually over the past 25 years. If 2% per year doesn’t seem like much, check out some compound interest rates to see how quickly it adds up.
Timber harvests can yield some pretty attractive cash. Timber prices typically fluctuate with market conditions but in constant dollars your timber portfolio will grow about 7% each (price coupled with footage growth) and every year. Put a couple of hundred acres into a rotational harvest program and you are looking at a cash dividend every 5 years or so. Not bad, considering how your stock broker has been treating you lately?
Even taxes have a bright economic side in the deer property ownership game. There are a number of state (NY-480A) and federal (CRP) programs available to reduce tax burdens to raw and agricultural property owners. Most of them are conservation driven and “pay” land owners (often in the form of tax relief) to manage their property for wildlife or timber or some other worthwhile practice they would normally be undertaking in the name of wildlife conservation. Couple these with a smart accountant who knows something about trusts and estate planning and your hunting property tax burden can take on a whole new meaning.
The recent energy crisis has created a good bit of economic activity in the form of gas, oil and mineral rights leasing on many recreational properties. Recently gas leases in some northeastern locations have skyrocketed as energy companies pursue new sources of energy. The activity has been spotty but if you are lucky enough to be in a target area and are willing to allow exploration on your property, you could be looking at per acre lease rates that approach the purchase price of your land. You can at least count on reducing if not actually paying your taxes on gas lease revenue.
And don’t forget wind power. More than a few outstanding deer hunting properties sport 200 ft. wind generators supplying clean renewable energy to the public and regular cash payments to the property owners.
Can you afford to buy your own hunting property? When you put on the green eyeshade and sharpen your pencil recreational property at a couple of thousand bucks an acre (or less) doesn’t look like such a bad deal after all. In fact, in today’s world of shredded portfolios and underwater beach condos, raw land starts looking like a darn good deal.
When you think about it, you can hardly afford not to own your own hunting property? Where else can you safely park your cash, earn a handsome return, do something good for wildlife and have a place of your own to hunt deer in the bargain. Remember -“they are not making it any more”.