Landowners...how do you make money off your land? (Fort Worth: mineral rights, leases)
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So I would like to buy some land out in the country, however, one thing I could never figure out are the various ways you can make money off your land. For example, I've heard of landowners letting cowboys graze cattle on the landowner's land for a fee, cultivate straw, hay, etc.
If you buy land you can lease the land to cattle ranchers or if your lucky to a large animal Vet...
If your using your land for agricultural purposes, the taxes are lower as well.
Its a good way to buy land and let it pay for itself and hold on to it for awhile.
My family lives South of Fort Worth near Cleburne and land with deposits of Natural gas I think it is are the big deal there...make sure where you buy the land, you get the mineral rights as well...thats not always a given.
Believe it or not, making money on your land isn't as easy as it seems, and there are some drawbacks. On the other hand, minimizing losses is a little easier. Are you looking to actually provide your income mostly from the land?
Assuming that is the case, then farming/ranching/hunting are the main options available. The first two especially require a lot of money up front, unless the land is already 'ag ready', and require a minimum size to reach break-even point, much less make-money point. My dad raises sheep and trains herding dogs. Ignoring the dogs (which are a straight-up expense ), he manages to about break even on a year to year basis.
Generally idea of what he has to do to get there:
He owns ~26 acres, about 20 of which are open grazing land.
He uses this land to graze the sheep on during 'grass' times.
He leases land from a couple of neighbors for grazing and harvesting hay. The leases are basically 'free' and the neighbors get to keep their ag exemptions. Maybe another 15-20 acres worth? Not sure.
Local guy with equipment cuts the hay and bales it. Local guy keeps some amount (1/2?) as payment, dad keeps the rest for winter.
Sheep multiply, dad takes them down to the auction for some money (the only income in this equation).
Sheep pellets (the kind that go in, not come out)
Coyote losses (llama 'Jitterbug' is some help here)
Tractor to shred and repair road after all this rain (~15k, prolly)
buying hay in dry years, when there is no hay (got to >$120/round bale last year)
Herbacide to limit Kline grass growth (oh, yeah, also applied with the tractor).
Taxes (almost nothing - $150/year for the ag acreage)
Old guy who showed up last year and left a bushell of potatos (turns out he owned the land in the 40s as a 20 y/o and did all the orignal clearing/terracing...he now live in Idaho).
I obviously have no idea on actual numbers . I know that the infrastructure that he got with the land was worth a lot of money (large barn, small workshop, pipe and field fencing. Don't know any actual values, but probably ~$30-$50k.
Last edited by Trainwreck20; 07-18-2007 at 07:13 AM..
Wow, that's exactly what I was looking for. You know, it's so hard to find this information on the Internet...or maybe I'm not sure what search term to use to find this.
So, it's possible to make a living off the land? It just occured to me the other day that I could live mortgage free if I play my cards right. There's just not much info out there for people who have no idea on how to start and have no background history on this type of thing. You see, this is going to be a first for anyone in my family to even think about buying land out in the country. I have no family members or friends that are in the ag business, so I don't have anyone to turn to except for you guys. Thanks Trainwreck.
Lisa, I hear you about the mineral rights. This is a big issue. I heard that it's getting harder and harder to get sellers to convey minerals to the buyer these days. The latest tactic seems to be how sellers will have the right to put wind farms on your land if they decide to in the future. This is crazy! Some people are just so demanding sometimes.
On a related note, I have friends that are trying to sell a bed and breakfast in Wimberley but it has been hard because of the original deed restrictions that prevent a buyer from operating the place as anything other than a few types of businesses (organic farm, B&B, horse farm, etc). Moderator cut: no advertising
Last edited by Trainwreck20; 07-18-2007 at 07:02 AM..
We used to lease the land to a local rancher for his cattle, never made much but like Train said we kept the ag exemption. My dad retired and had more time so he bought 20 some odd cows and one bull and he gets money off selling the calves (they bring about 5oo-800 bucks a head in maybe once a year). You do have all the loses that Train talked about plus the vet bills is something unexpected happened. We lost several cows not sure what got them but we think an animal took them down. Also I have heard of more reports of cattle rustling these days, more on the border ranches than the hill country. One lady I heard lost 55 cows over a two day period! Yikes. We are so far off the main road and since we are behind a game ranch they have armed guards to get thru onto their land then ours..something to think about. You are also going to have to look and find out how many cattle you can run per so many acres if you decide to go that way...
There is a lot of experience out there in how to earn money off your land, but the people doing it are probably too busy to write a book...or they don't want competitors . I swear my dad works a helluva lot more than before he retired.
Anyway, the 500-800 a cow sounds right, my nieces and nephews each bought a cow some 10 years ago that is raised at their grandparents place. The GPs raise the cow and any calves for free, so the kids get the money from selling the calves - usually $500-$750 - every two years. My understanding is that the actually expenses for raising the calves would run between 50-75% of that, so that would be clearing $90 to $375 per calf per year. Need a lot of cows to make that work, which means a lot of land.
Thanks, and sorry for the adveritising...didn't mean to do that.
Nonetheless, I am not looking to go into this full time, I just wanted to know if there were some things one could do to chip away a little bit on the expenses one might incur throughout the year as a result of owning land. It would also help to make some money off of it, if possible.
I have a consulting business, so that would be my main source of revenue. It would be great to live on the land, but then that would incur having to build a house or some type of cabin in the future. The main thing right now is land, at least something for a weekend getaway and something that can be leased out, as mentioned above. I hope to then eventually move to it.
I was glad to learn about the 3011(sp?) where you could trade/swap land tax free with another if you find something better down the line. I also see land as a good investment because it can always be sold, and like Will Rogers said, they aint making more of it! It's a tangible commodity, something that can also be enjoyed and shared while it appreciates. As the population of Texas doubles by 2040-2050, I see more people looking to move away from the crowded cities and into the country. Texas' population increases where "it's like a whole new Corpus Christi popping up on the map every year" (quote by a land broker). I think it's a good idea to get something out in the country now while you can. Besides, I know I'll take care of the place unlike some greedy land owner that will give it up for sub division.
Don't be so down on all land owners! We have had our ranch since the early 1900s passed down and every generation sees the city drawing closer and closer to it. The city of SA was a speck of a city back then and it was way out in the country. IF the city comes to me then I might sell who knows. You might check out the Texas Master Naturalist program lot of ranchers go thru this class .
Sitting here killing time before I head to a meeting...
Neddy, sorry about my land owner bashing. It's true, when the money is thrown in front of your face, sometimes it's hard to resist. If you do reject the offer, you're only going to see your ranch surrounded by other sub divisions, so it may be a good idea to sell and be done with it. Look at that guy in Helotes...he didn't want to sell, but he had no heirs (don't you hate it when that happens? I would have gladly taken the place off his hands, lol). So he sold to a developer and now you have all those subdivisions in Helotes.
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