Cost of Land Ownership in South Dakota

[UGUIDE]

I guess I don't understand the point of the article and how it would relate to a recreational hunter. It appears to do a better job explaining how hard it would be to get in the outfitting business assuming your business model included purchase of the land. Also guessing most outfitters lease not buy.Total Annual Outlay By Partner = $22,691.50

DB

DB, the main point could be that let's say a TCT (total Cost of Trip) for UGUIDE hunt might be $2,000 door to door and that compared to your $22K annual ownership outlayed might look good and more achievable that the ownership scenario.

I think common land ownership is very achievable but uncommon (honey hole) type land is in high demand.

 

[moellermd]

DB, the main point could be that let's say a TCT (total Cost of Trip) for UGUIDE hunt might be $2,000 door to door and that compared to your $22K annual ownership outlayed might look good and more achievable that the ownership scenario.

I think common land ownership is very achievable but uncommon (honey hole) type land is in high demand.

I don't know how you can say that when in almost every scenario a $100,000 is need down just to buy let along the money needed to keep it a float.

 

[UGUIDE]

I don't know how you can say that when in almost every scenario a $100,000 is need down just to buy let along the money needed to keep it a float.

I know a 1/4 section for sale in some of best pheasant land in SD for $1,500/acre. That's a about $48K down based on 20%.

Just like public hunting, a good freelance land hunter can find a deal even better than that. But you're gonna have to "hunt" for it and do the work.

The first piece of ground I bought was not a pheasant camp it was a swampy deer hunting 40 in MN for $11K and I had to sell it a year later due to a life event. Good news is I got $12K for it on the sale.

I just don't buy the whole "Hindsight" excuse for people not buying land because it is more expensive today than it used to be. BUNK! Somebody, in 2020 is going to say "man, wish I would have bought land 10 years ago when it was cheap".

Not everybody is ready to own land and not everybody is ready for a UGUIDE hunt. You have to find the "value" in each. I freelanced for 20 years on public and motels before I was ready for either.

 

[landman]

I just don't buy the whole "Hindsight" excuse for people not buying land because it is more expensive today than it used to be. BUNK! Somebody, in 2020 is going to say "man, wish I would have bought land 10 years ago when it was cheap".

Neither do I. A person will not buy land by waiting until it is cheap or affordable. However bargains on individual parcels do come around once in a while but a person has to hunt for them, be able to recognize when it is a bargain, and be ready to close the deal quickly when it happens.

 

[moellermd]

I just don't buy the whole "Hindsight" excuse for people not buying land because it is more expensive today than it used to be. BUNK! Somebody, in 2020 is going to say "man, wish I would have bought land 10 years ago when it was cheap".

I guess I do not know the economics of the type of land you are talking about. In my neck of the woods 10 years ago you could have bought ground that would have cash flowed. It still would have taken a good down payment, but at least you did not have to feed it. Those days are gone if all you do is farm the ground let alone leave some un-farmed

 

[UGUIDE]

I guess I do not know the economics of the type of land you are talking about. In my neck of the woods 10 years ago you could have bought ground that would have cash flowed. It still would have taken a good down payment, but at least you did not have to feed it. Those days are gone if all you do is farm the ground let alone leave some un-farmed

It does seem that way now Moellermd but what I can't explain is why the recreational buyers seem to be out of the market and now it is mostly farmers that are the buyers of land (at least in SD country). Those guys know it has to cashflow so how are they now able to afford it?

 

[landman]

It does seem that way now Moellermd but what I can't explain is why the recreational buyers seem to be out of the market and now it is mostly farmers that are the buyers of land (at least in SD country). Those guys know it has to cashflow so how are they now able to afford it?

I can explain some of the reasons why farmers are buying land today. Keep in mind that the value of land is based upon the demand for it. Most land is sold by auction so if land is going for $2500 per acre then there must be at least two buyers willing to pay about that much. Here are some of the reasons:

1. Farmers have more equity because of the run-up of land prices so they have more borrowing leverage.

2. We've had a couple of years of good crops and good prices so the farming economy has been good despite the recession.

3. The recession and higher land prices has slowed down the demand from recreational buyers.

4. The outlook for higher commodity prices look favorable for the future. Interest rates also are expected to remain low for a long time.

5. Operator/owners of land can generally make more money per acre than a recreational owner. The return per acre for adding an additional quarter may be fairly high when he doesn't have to add another combine, tractor or planter to farm it.

There are dangers of buying too much land and all one has to do is look back to the mid 80's to see what can happen. In the late 70's and early 80's land prices rose sharply and many farmers used that equity to qualify for loans to buy more land. Interest rates had been steady and low for many years so most loans were variable rate instead of fixed. Then interest rates rose sharply and the payments on the variable rate loans went up sharply too. Suddenly many farmers could not make the payments and began defaulting. Banks began to foreclose and land prices plummeted. Many farmers were forced off of their land and their way of life. Everyone was afraid to buy land and many were unable to qualify for a new loan. It was a sad time for the farming community. The effects of this time kept land prices low for the next 15 years. This is not unlike what just happened to the housing market just a couple of years ago.

If you wanted to buy land I suspect that the best time to buy was from 1985 to 1998. If you could go back to this time you would find that it still took guts to do it because we did not know what the future would bring.

 

[moellermd]

It does seem that way now Moellermd but what I can't explain is why the recreational buyers seem to be out of the market and now it is mostly farmers that are the buyers of land (at least in SD country). Those guys know it has to cashflow so how are they now able to afford it?

I can tell you exactly why that is I know plenty of people who are doing it. A lot of guys are getting up there and have a few 1/4s paid for and use the extra money they now have to feed the other land purchases. It is the "their not making anymore mentality."

 

[landman]

Did you know that the time of year that a land purchase is made can influence the selling price?

For example, lets say you buy a quarter of land in August 2010 for $2500 per acre vs buying the same parcel in April of 2011. In both situtations you would get all of the crop income for the 2011 season and nothing from the 2010 season. Let's see how some of the costs may be different. For example you would pay nine months more of taxes and interest the first year of ownership. In this example it could include interest on $400,000 for nine months, which would amount to $18000 at 6 percent and nine months of taxes or about $1500 for a total of $19,500. This is equal to about $122 per acre. Therefore you might be willing to pay $2500 per acre is the sale is in April but only $2378 if the sale is in August.

Just something to keep in mind when buying or selling land.

 

[UGUIDE]

Did you know that the time of year that a land purchase is made can influence the selling price?

For example, lets say you buy a quarter of land in August 2010 for $2500 per acre vs buying the same parcel in April of 2011. In both situtations you would get all of the crop income for the 2011 season and nothing from the 2010 season. Let's see how some of the costs may be different. For example you would pay nine months more of taxes and interest the first year of ownership. In this example it could include interest on $400,000 for nine months, which would amount to $18000 at 6 percent and nine months of taxes or about $1500 for a total of $19,500. This is equal to about $122 per acre. Therefore you might be willing to pay $2500 per acre is the sale is in April but only $2378 if the sale is in August.

Just something to keep in mind when buying or selling land.

This is why you are the Landman.........Man!

:cheers:

 

[UGUIDE]

Just read that land prices in Iowa are up 4% over last year.

 

[Lazlo]

pheasant hunting in South Dakota

It is all interesting to say the least.
It is all too expensive for me.... A couple of friends(or not), my dogs, some public land and some private land and WALLA! I'm in Nebraska, Minnesota, and my favorite North Dakota!!!!
This is what it is all about... Good friends my dogs and hunting! I do get my limit most of the time but that is the last thing I worry about.
Oh yea it's the cheapest too.
My concern is I hope other states don't end up like South Dakota.

 

[timag]

One of my fellow realtors just listed a 880 acres with a 13 bedroom lodge plus kennels, another house, and equpiment for sale at $2,200,000.

PM me if you want more info.