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April 19, 2018

Cattle Ranches for Sale: Know the Details of Rent Vs. Own

Explore the benefits of owning ranch land over renting.

In my latest column in Central Florida Ag News, I shared all the reasons why it’s a good idea to look at cattle ranches for sale and do more than just dream. Since large tracts of ranch land are one of the biggest requirements for a cattle operation, you have to have plenty of land whether you use ranch land for lease or you buy your own. The rent vs. own debate is a common one, but it’s always a better idea to buy if you’re able. Those that choose to take the ‘rent’ path are missing out on some very important benefits of owning ranch land. See all the benefits of buying land over renting or leasing below.

Rent Vs. Own: Where the Benefits Lie

Land ownership has been at the heart of the American dream since the founding of the country. Many of those who came here for land did so with the hope of farming and ranching. As American writer Mark Twain once advised, “Buy land, they’re not making it anymore.” If you take Mr. Twain up on his advice, you’ll reap these benefits:

Land is an Asset. The land owned by a farm or ranch is the most valuable asset on the balance sheet, according to a publication by Penn State Extension. It’s also an asset that is not going to break down, run away, or be stolen. The reliable asset that land presents equates to collateral for borrowing money. Whether a rancher wants to buy livestock or other materials, expand the operation, make repairs, upgrade equipment, or simply make it through a downturn in the market, owning farmland means the difference between getting approved for a loan or not.

Land Ownership Equals Control. Just like you can’t paint the rooms of a rental house any color you’d like, all the decisions about ranch lands for lease are in the hands of the landowner. As a renter, you must run all changes by a landlord, and the fact that you don’t own the land creates a measure of uncertainty that can only be alleviated by land ownership; with leases being short term, such as year-to-year, the uncertainty of whether the land will be available to you and your operation, or whether rental rates will go up, is a constant concern. Owning the land means you get to make all the decisions, according to a Granular article. It adds a measure of control in an industry where control is fleeting. Having control, in this one area at least, is a good feeling that operators can rely on when the weather or the markets just aren’t cooperating.

You Reap the Benefits of Improvements. Cattle ranching generally requires a significant commitment to improving the land and water. Soils need to be amended, improvements need to be made, and water sources need to be protected. Making those amendments and improvements to the land constitute a considerable cost, and they increase the value of the land significantly. Unfortunately, the benefits of those efforts are reaped by the landowner, and not the renter, as soon as the lease is up, which can be as soon as the next year if your lease is year-to-year. As a landowner, the benefits that come with improvements made to the land will be reaped by you and your operation alone for years to come.

Land is a Hedge Against Inflation. Inflation is on the rise, and land prices have historically beat inflation rates, making land a sound investment. You can rest assured knowing that your hard-earned dollars are going towards owning something, and are accumulating for your operation’s benefit. With renting, the money you pay towards rent isn’t building wealth for anyone but the landowner.

Owning Land Can Turn into Leaving a Legacy. As a landowner, you also get to make choices about the long-term considerations for your land. Want to leave the operation to the next generation? Thinking about using the land for hunting leases? Considering a conservation easement for a long-term legacy? These options are only possible if you own the land.

Buying farm and ranch land isn’t always simple, especially for ranchers and farmers just starting out. Usually, being a new farmer or rancher is the most common reason why ag operators choose to rent vs. own. It pays for those in the ag industry to partner with a lender who knows the ins and outs of the ag industry. For instance, when one Florida ag family wanted to turn it’s focus from alligator farming to their cattle and hay operation, AgAmerica Lending helped them purchase 330 additional acres of unimproved pasture land with a $870,000 loan featuring attractive terms.

Explore all of the ways our custom loans can help grow your operation and contact us today to see how our team of experts can help you realize your land ownership dreams.


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