Texas & Oklahoma Land Brokerage Company, Southern Plains Land has noticed a return back to Agribusiness interest from buyers on Ranches & Farms for Sale. For a few years there, buyers only seemed to care about how pretty ranches for sale were. That seems to have cooled down some and now serious land buyers nearly always ask “what will it return”. The mentality of Agribusiness seems to be prevailing over the mentality of “Honey, it’s so beautiful”.

“Today, we are nearly always asked if a ranch or farm for sale will ‘make any money’ in today’s market of cautious buyers”, says Rancher, Farmer and co-owner of Southern Plains Land Co., Kalin Flournoy. “The recreational view of ranches for sale has simmered down considerably since about December of 2007. Today’s Ranch buyers are returning more toward the views they had prior to 2003 – 2004 as the practice of land flipping has nearly ended and the ideal of sitting on the porch of a magnificent home overlooking a beautiful hollow occupied by pecan trees and cattle, with money just appearing from thin air has waned”, said Flournoy.

Though ranching and farming is considered to be a life style by many, like investors, even owner-operators are focusing more on the Agribusiness side than just the sheer beauty of ranches for sale. Most of our buyers are from out of state and depend heavily on a Land Broker’s working knowledge for the investment return of a ranch or farm for sale. In the last few years, every Real Estate Agent wanted to be a Land Broker, whether they had any real knowledge of ranching or farming or not and some of the calculations on the stocking capacity of many ranches for sale have been disappointing for buyers and in some cases utterly disastrous, according to Flournoy.

“Few land owners today, have ever had to draw their entire living from a farm or ranch and like most Land Brokers, they tend to exaggerate its potential net return on investment, especially on a cattle ranch. In many cases buyers expect a Land Broker to calculate a realistic return on a ranch or farm for sale. Very few Land Brokers have the working experience and knowledge to calculate the realistic net return of a ranch or farm”, said Flournoy.

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Texas & Oklahoma Land Brokerage Company, Southern Plains Land sees new interest in Investment Property, primarily Farm Lease-backs, from investors who are typically not agribusiness minded, but have lost trust in the stock market, bank CDs, net-leased retail and similar commercial property.

“We are receiving more and more interest from investors in ranches and farms for sale, rather than actual ranchers and farmers, mainly because of the lease potential, especially in crop farms. It is not uncommon to see a return of 5% – 6% net return offered on a 5-year lease-back when shopping farms for sale in the Southern Plains states.”, says Rancher, Farmer and co-owner of Southern Plains Land Co., Kalin Flournoy.

“A decent net return can be obtained from some cattle ranches for sale, only if a very experienced hands-on land brokerage and a good cattle operator structure the deal. The lease value of cattle ranches is typically more consistent and longer term than farm leases, as cattle futures have been more stable in the last few years than grain futures; however, cattle ranches cannot compete in net returns for a buyer in today’s market like crop farms”, Flournoy said.

Typically, when investing into land for sale, especially agribusiness investments, the aggregate value of a buyer’s initial investment is much safer than retail commercial property. The purchase value is typically vested in the land for sale and not so dependant on the strength of the tenant and lease portion of the sale, as it is in most commercial properties. Vacancies are not an issue with ranch or farm leases, as ranchers and farmers will actually compete for leases, according to Flournoy.

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