Written by Shiloh Wittler
Licensed Appraiser and Broker Associate
Mason & Morse Ranch Company
Published: November 30th, 2021

May this article find all of you fully blessed, thankful, and recovered from the 2021 Thanksgiving feast and looking forward to the next family “show” in December. If you are anything like me, the Thanksgiving feast was enjoyed and left you feeling like that bull at the rodeo that lays down in the middle of the arena, and it takes at least five ropes from the pickup men to get your ole soggy butt home.

I am a Broker Associate with Mason & Morse Ranch Company. While a more official bio can be found on the “Find a Broker” page, let me informally introduce myself quickly to the readers. My name is Shiloh Wittler. I am a Certified General Real Estate Appraiser and Ranch Broker. I am also a small commercial cow calf rancher. I am an avid learner and reader of books. I love my beautiful wife, family, and friends but not all the same. I am passionate about agriculture, the western way of life, rodeo, the outdoors, animals, ranch land real estate, investing, and hot coffee.

It is no secret that land values across many market areas in the country are generally at some of the highest levels we have seen. As an appraiser, I am constantly asked “what is my ranch worth? Is farmland a good investment right now? What is the value of pasture land, irrigated hay meadow, hunting ground, fishing properties and similar asset types?  

As an appraiser I expect and enjoy the general question. With a small grin I usually provide a general answer along the lines of “well…probably more than it was a year ago”. A more specific answer, of course, requires a more specific question. Where is the property located? What class of soils are present? how many animal units (AU's) does it run? what is the crop production history? What is the nature of the water rights? Does the hunting ground have good access year around? What river streams are on the property, and does it have ownership on both sides of the river or just to the centerline of the river?
Today however, the question more frequently being asked by landowners is one of asset re-allocation. While phrased in various ways, the lingering question I have received from several landowners in the current market boils down to the following:

“It’s obviously a great time to sell but is it a good time to buy back. How, what, when, and where do I re-invest?” There is certainly more than one potential right answer to this type of question.

Again, a more specific answer requires a more specific question. By simple definition asset allocation involves investments divided among different asset categories. Although, determining the particular mix of assets is personal and unique to each individual investor, family, or operation. This mix of land assets within a portfolio could vary significantly depending on a number of factors that must function together towards the overall investment goal.

Unfortunately, this is not the sort of article that will give you the “next best stock pick” so to speak which is poised to deliver a 200% return on your investment in the next eight months. No one can perfectly predict the future, but a successful investment and land asset allocation is achieved when the downside risk is managed in order to position yourself to capitalize on upside potential. The goal of this article is not to provide a “one size fits all” answer, rather to discuss a few things all landowners should possibly consider given the opportunity to re-allocate assets within a widespread strong land market.

At its core, the practice of asset re-allocation is rooted in the desire to continuously improve. Landowners almost seem to be born with this innate desire and are constantly working to improve their land resources. All of us at the Ranch Company “Live It to Know It” and are passionate about what we do. We consider ourselves blessed to be able to work with people of the same mindset, constantly learning, improving, and working to utilize the land asset most efficiently.

The desire to continuously improve resources and portfolios by re-allocating assets is also evident outside of the land markets. Even the most successful investors re-allocate assets or re-deploy their capital within their portfolios. By every definition possible, Warren Buffett would be considered one of the most successful investors, if not the G.O.A.T (Greatest of all Time – not sure I am cool enough to use an acronym/catch phrase like that, but too late). Regardless of his historical successes and his age, Buffett continues to re-allocate assets, reducing his position in one segment of the market only to increase his exposure in another sector.

A few considerations regarding the re-allocation of land assets:

Long-Term Goals: Perhaps first and foremost, consider the long-term goals associated with your land investment strategy. If you previously made a long-term goal, has it since changed or is it still relevant? If you are somewhat uncertain of what this goal is, it may inhibit specific asset allocation decisions coming down the pipeline. Sometimes the business end of a decision to divest in a particular land asset can collide with a more personal connection to the asset which is associated with the legacy of a multi-generational family holding. Don’t overlook long-term goals that may span generations. Consider the timing of succession planning and consult the appropriate professionals for good asset management. Is it beneficial to start some estate planning today and put some assets into a trust? Warren Buffett put it this way “If you aren’t willing to own a tock for 10 years, don’t even think about owning it for 10 minutes.” For land investments this forces us to carefully look at and consider the long-term advantages a specific land resource can provide in order to bring us closer to our long-term overall goal.

Leverage More Productive Resources: A strong market may be giving you the opportunity to offload some less productive resources you have wanted to sell for several years in order to leverage more productive assets. Perhaps your goals and operation could specifically benefit from more irrigated acreage and less dry cropland. Maybe your operation is expanding with kids moving back to the ranch and it is beneficial to dispose of some summer pasture further away from home base to acquire more winter pasture in closer proximity. If sold, there could possibly be some potential lease back options. There are hundreds of different possible scenarios that prime motivation and necessity for different land resources, but you get the point.
Relocation: If you are looking to sell the entire holding or current operation to relocate you will definitely want to find a knowledgeable ranch broker to assist you in the transition. Is this family recreational ranch located too far away regarding travel time to consistently make good use of it with a growing family? Perhaps you would rather have a smaller recreational property with more live water fishing instead of larger hunting acreage that is only seasonally accessible.
Pay Down Structured Debt: You might do all of your research in evaluating the market and your position only to find there is currently no land resource in which you wish to roll your investment into that improves your position, or better fits into your long-term goals. If you still want to offload the asset and take advantage of a strong market, you are not completely out of options. Don’t underestimate the value in paying down or restructuring debt to leave you in a better cash leveraging position later when the right opportunity does arrive.
Conservation Easements: This one should be approached with significant research and care. The current strong market could provide an opportunity for land assets to be protected in perpetuity utilizing a conservation easement. Conservation easements can be a great asset management tool, but simply does not fit everybody all the time. Having been involved in several conservation easement projects myself; you need to allow adequate time to research and make sure you fully understand both sides of the coin and how it may impact your long-term goal.
Hedge Against inflation: This is perhaps more for those wishing to add land resources to their asset portfolio for the first time. Several investors have taken profits out of the stock market or other non- real estate related businesses to invest them in land. Land is a finite resource which is not being made anymore and has historically proven to be one of the better hedges against inflation. From a different perspective, land investments can help you connect with the land, connect with nature, and generally provides much more tangible enjoyment than stocks. You cannot enjoy a beautiful sunset evening with your family by setting atop a stack of Tesla stocks.

The above is not intended to be an all-inclusive list of considerations, just a few that came to mind while writing this article. Each consideration could be discussed much further in detail, but no one wants to get done reading this article to find out its already Christmas. Allocating land assets is all about tradeoffs, and every potential unique scenario provides its own set of tradeoffs. In closing, a strong land market across many market areas continues to provide landowners an opportunity to consider the re-allocation of land assets.

No one understands the specific property, operation, position, and long-term goals better than the landowner and the decision to sell and re-invest is not easy. It requires substantial research and consultation with knowledgeable land professionals. At Mason & Morse Ranch Company, dba RANCH COMPANY, we market farm, ranch, recreation, conservation & lifestyle assets across the U.S. Our agents “Live It to Know It” and not only understand the value of your land asset but also the many influential factors which must be considered in helping you realize the long-term land investment goal. 

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