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How will the elections impact land and real estate?

With Trump in power and Republicans taking the House and Senate, what does this mean for real estate practitioners and homeowners?

Did the election help or hurt real estate?
Regardless of how you feel about the national election results, it appears homeowners, realtors and the real estate industry overall will benefit from them.
“It was a great night for us,” NAR Senior Vice President Jerry Giovaniello said regarding the Realtor Party results. RPAC won over 90 percent of races in which it was involved. In addition, RPAC was also extremely successful in state and local races. For example, RPAC supported Governor-elect Gary Herbert (R-UT), Governor-elect Phil Scott (R-VT), and a constitutional amendment in Missouri to ban sales taxes on services.

Will Trump support tax reforms such as changes to the Mortgage Interest Deduction or 1031s?
Under a Trump administration, Giovaniello says that because of Trump’s knowledge of real estate and development, he will have valuable input to offer Congressional tax committees. It appears, however, that with Republicans at the helm, several tax incentives could be at risk.

When politicians say we must “simplify tax codes,” Giovaniello hears it as a euphemism for “going after home ownership incentives” like the Mortgage Interest Deduction (MID). There are already proposals on the table, and Giovaniello says they’re already talking to the authors on both sides of the aisle.

“The Realtor platform did mention that [the MID] is important, but they weren’t very specific, nor were Democrats on this,” noted Giovaniello. What does a Trump presidency mean for the MID? “We’re not exactly sure,” given that what will be prioritized won’t be clear until he is sworn in. Trump has indicated he supports the MID, however, and Giovaniello points out that Trump “knows the tax code as far as real estate is concerned, and has used it very successfully.”

1031 exchanges are in the cross-hairs, and Giovaniello says both Congress and the administration have said we should limit these tax deferrals. There are proposals from both sides to limit 1031s, with the belief that the same numbers of transactions will happen regardless. “That’s just not the case,” Giovaniello asserts and NAR and RLI will be working hard to make sure 1031s remain unchanged in the tax code and are kept as a valuable tool for investing in commercial real estate.

Will fear chill foreign investments?
Some areas are doing quite well as a result of foreign investments in the real estate markets, but will the perception regarding Trump’s attitude impact sales? Trump “has very strong opinions on immigration, so whether that leads to a chilling effect in the short term” is unclear, notes Giovaniello, reiterating that until priorities are set, we simply don’t know. “It’s something we have to be alert to,” he said. In particular, the EB-5 program has been used successfully to jump-start real estate development in all areas of the country. However, there has been a call from critics to reform the program and make it more transparent and accountable. A Trump Administration could increase the pressure to end the program or make it more difficult to use effectively by foreign investors.

Are federal regulations in the crosshairs?
The Trump Administration has described an aggressive attack on burdensome and overreaching federal regulations. For example, Trump has blasted Dodd-Frank on the election trail, and much conversation has centered around loosening Dodd-Frank regulations as the economy has improved. Trump also mentioned the Clean Air Plan, the regulation that was created to reduce carbon dioxide emissions from power plants, and the Clean Water Plan, the regulation that sweeps in more waters of the U.S. under federal jurisdiction, as rules that he could withdraw, rescind or limit.

Will there be incentives to purchase homes?
As home ownership rates creep back up, Giovaniello doesn’t anticipate new tax credits for the purchase of a home under a Trump administration, noting a more likely scenario would be student loan refinance initiatives. Republicans believe that FHA should be available for first-time or low-income borrowers, but want to end incentives for high-income Americans. That appears to be the direction incentives will head.

Gridlock, and gobs of governors?
Will there be gridlock under a Trump presidency? Giovaniello doesn’t think that’s going away, but says “The American people voted for change. I think either party that doesn’t embrace that is going to be in bad shape.”

What will RPAC do? “Make your friends before you need them,” said Giovaniello. “We’re about to have a new, impactful class of governors, so we need to get in early now, before campaigns start,” noting they must proactively engage the candidates. The goal of the Realtor Party is to coordinate national, state, and local levels and leverage their national scale to enable those at the local level that know their communities best.

In conclusion, Giovaniello says of the election results, RPAC “did very well,” winning 90% of the races they were involved in, but are now preparing for post-election life now that the chips have fallen, by planning for the coming battle over federal and state regulations and a massive national gubernatorial race.

Riggs, RussellAuthor: Russell Riggs, RLI’s NAR Government Affairs Liaison. In his position with the National Association of REALTORS®, Russell Riggs serves in Washington, D.C., conducting advocacy on a variety of federal issues related to land.

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A Passion for Ranch Real Estate With a Hint of Equine

This piece was originally featured in LAND Magazine.

Driving down a Texas highway north of the Dallas Fort Worth metroplex, you see one horse ranch after another. Visitor’s think, “I Wonder why all these horse ranches are here?” The equine enthusiast thinks, “Man I wish I could live here!” The equine industry has exploded in the North Texas corridor traveling north on Highway 377 leading out of the D-FW metroplex from Aubrey to Whitesboro. It is a constant draw for all aspects of the equine industry. There are days the trucks and trailers outnumber the cars, from the normal bustle of horsemen and horsewomen hauling their horses to a trainer, a vet, another farm, to a lesson, delivering a sale horse, buying a horse, riding with a friend, going trail riding, moving mares to another farm, competitions and even the traditional life of just going to check and gather cattle.

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North Texas and southern Oklahoma have become popular locations for the equine industry.  For years Aubrey and Pilot Point Texas were considered one of the most highly esteemed equine areas in the United States. At that time the growth of horse ranches was moving north up the Highway 377 corridor. Now the entire corridor from Aubrey to Whitesboro is populated with horse ranches. This attraction has been going on for some time. “What is it that attracts the horsemen?” you ask. The three main draws of the area for the equine community are sandy loam soil, climate and proximity.  

Sandy Loam soil is a must if you are a horseman moving to Texas. If a person isn’t knowledgeable about soil they can be fooled by location. The Sandy Loam Corridor is only thirty miles wide and runs from the Red River in Cooke and Grayson Counties, south two-hundred miles. The eastern boundary of the sandy loam soil is just a few miles east of Highway 377 and can turn to black land very quickly. The black land is good for farming but most horsemen don’t care for it and will insist on the sandy loam. The sandy loam has such great density and base that after heavy rains the soil will dry quickly. The density and base of the sandy loam soil is what makes it so incredible for footing in a riding arena and also a great composition for growing Coastal Bermuda grass. Coastal Bermuda grows best in sandy loam as it is drought tolerant and can handle heavy grazing and close defoliation. It is also the most economical forage to feed as it is readily available and the next step up in protein value is alfalfa which nearly triples in price.

Climate is another reason so many equine enthusiasts have moved to Texas. They come from all over the United States, possibly where winters are harsh and harder to keep horses trained and ready for competition. Winter in North Texas is inviting with average high temperatures in the fifties and average low temperatures in the thirties. However, there is that occasional snowfall or ice storm that will bring us to a standstill; but, never fear, the sun generally comes out and temperatures rise again in a timely manner.

Location! Location! Location! Many of the largest equine breed shows and specialized events, not to mention race tracks, are located in Fort Worth, Oklahoma City, Tulsa and surrounding areas. All of these cities are a reasonable driving distance from North Texas and on any given weekend you will find breed shows, reining, cutting, halter, working hunter, barrel racing, roping, cowhorse, mounted shooting, team roping, rodeo, racing and ranch horse versatility events at one or all of these outstanding facilities. The proximity makes it an easy day trip to spectate or compete! In November and December these facilities hold some of the most prestigious events in the Western Equine industry hosting the American Quarter Horse World Show, American Paint Horse World Show, Appaloosa World Shows, National Reining Horse Futurity, National Cutting Horse Futurity and the National Barrel Horse Futurity. That is two full months of outstanding competition from the best in the industry.

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During the fall, in these major events, you will find that the international presence is overwhelming. Nationals from Japan, Brazil, Australia, all of Europe and more will travel to the Dallas-Fort Worth area to spectate and also make purchases, both from the equine and retail side of the industry.

The Dallas/Fort Worth International Airport is within seventy miles and an easy drive for those flying in or out of North Texas. Equine buyers, both international and domestic, will fly to Texas to look for their next great prospect or show horse. The horse population in North Texas is unsurpassed. A serious buyer can leave the D/FW airport and drive in a one-hundred-mile radius and access Weatherford, Gainesville, Whitesboro, Tioga, Pilot Point, Aubrey, Denton — and all points in between — to view all the horses that they want in a day!

The breeding business is one entity of the equine industry that keeps traffic flowing. Each breed and discipline are well represented by world-class stallions and producing mares. The pedigrees and records from the breeding progeny are exceptional. Outstanding breeding derives prospects that are of the highest quality for sale and creates even more traffic. Equine breeding and training entities go hand-in-hand as many of the popular stallions and mares are still being shown successfully. With the modern-day technology of embryo transfer, mares can continue to be successfully shown and have recipient mares carry their embryos, which is a very big business in the area.

Horse trainers in Texas are considered to be some of the best in the world. Enter any given barn and find numerous trophies and buckles on display for World Champions, Futurity Champions, Derby Champions, National Finals Rodeo Champions, and the list goes on. The combination of horse trainers and North Texas’ amenities draw owners along with Non Pro, Youth and Amateur competitors, from afar to be a part of the equine community.

The reasons for wanting to be — and the types of people who want to be — part of this area are endless. Horse trainers who move to the area from other states will also have a following from their customers who will also make the move and buy property. Many horse owners are retirees who still have horses to compete or breed with. People who work from home will relocate to get closer to a trainer or the community. Many will purchase a second home for a place to stay when they come to ride with their trainers.

The equine industry is paramount to economic development in so many ways that have been unrecognized by society. Along with successful equine industry you have the supporting services that makes the industry successful, including but not limited to farriers, veterinarians, feed companies, tack stores, clothing stores, truck and trailer sales, and of course Realtors!

Another reason that people covet the North Texas area is the sense of community and fellowship. There is nothing like being able to share your love of horses and the sport with your neighbors and friends who appreciate and understand the industry. Many times your neighbor may have an interest in a different equine discipline since the equine industry is so vast. However, it’s the camaraderie that makes it fun to “cheer” for your neighbor. Horsemen stick together through thick and thin, win or lose. It’s knowing that if you need help your neighbor is there to help and they know horses. It’s the cowboy way of life!

I moved to Whitesboro, Texas nineteen years ago as a professional in the equine industry. I worked at a ranch as a trainer, breeding manager and ranch manager. I love the equine industry and I am still active as a professional judge for the American Quarter Horse Association, American Paint Horse Association, National Reining Horse Association and the National Snaffle Bit Association, along with being a Professional Horseman with AQHA.

I have been a REALTOR®, with Ebby Halliday REALTORS®, for the past nine years and work primarily Farm and Ranch sales. I have my own horses that I raise and show and enjoy them immensely. I will always be a part of the Equine industry that I love as a horseman and a REALTOR®. They go hand-in-hand for me today. Peers from the equine industry respect me for my knowledge in real estate. My experience has helped me become an expert in farm and ranch real estate as I understand the function of land and structures that horsemen are looking for. My true passion is ranch real estate with a hint of equine.

As my brother-in-law, who is a native Texan, says, “She wasn’t born here but she got here as fast as she could!”

lisa-moden1_bcAuthor bio: Lisa Moden is a prestigious Accredited Land Consultant of the REALTORS® Land Institute and has been a Broker for Ebby Halliday REALTORS® for over nine years.  Lisa’s experience and passion for equine has helped her become an expert in farm and ranch real estate. In addition to farm and ranch, she also specializes in lake properties and investment land.

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AgriWhat? How the Emerging Trend of Agritourism Can Help Your Business

What do the following have in common?

  • Pumpkin patch
  • Crop maze
  • Farm store
  • Petting zoo
  • Wedding barn
  • Dairy with ice cream and cheese
  • Pastured pork farm
  • U-pick apple orchard

They are all types of agritourism activities and locations.

No matter what you call it – agritourism, agri-tourism, agrotourism, agritainment – it is cool! More than half of all U.S. states have some type of agritourism language written into their respective state laws. So what does this mean for you and your client? Knowing about the agritourism trends and practices around the country can not only assist you in finding the appropriate land for your clients, but can help your clients find future business opportunities. This follows the “growth begets growth” theory.

What is the difference between agritourism and ecotourism? It depends on the location and governing entity. Confused yet? No need to be. The bottom line is that knowing what is applicable within your sales region will help you help your clients, which in turn helps your bottom line.

Agritourism Operations

To be successful, agritourism operators must follow best management practices on their farms, but also must be welcoming to consumers and offer activities that pique their interest. Seasonality comes into play for all operations, with some farms offering multiple attractions year-round, and some farms offering only one or two options in a short amount of time.

An example of the former could be a dairy farm that produces value-added products for sale on the property year-round. Farm visitors can view cows and calves, see a milking parlor, walk through the processing plant, and end up in a store where they can sample and purchase farm-fresh ice cream, cheese, and other products.

An example of the latter could be a Christmas tree farm. The size of the land to grow trees is of foremost importance since the farm may only be open to the public six to eight weeks a year. However, the farmer may decide to be open for events during other seasons (e.g. pumpkin patches and corn maze “haunts” in the fall, u-pick hydroponic fruit and vegetables in the spring, or pick your own flowers in the summer).

In both of these examples, the land size matters. Having a workable space for the farmer is critical to the operation. However, having a safe place for agritourists is also critical. REALTORS can help farmers determine how much land is needed to conduct both public and private business, and can assist in finding the most usable, arable, visitor-friendly space possible.

In the Christmas tree farm example, space is needed to grow the trees, to prepare the trees for purchase (cut, shake, wrap, load), for customer parking, for tree and other product sales. For this type of operation, when parking is needed, usually LOTS of land is needed to accommodate the customers. If the farmer decides to provide other agritourism activities throughout the year, the acreage needed for those activities must also be considered. These are all things to consider when looking at property before purchase.

Ecotourism Operations

Again, depending on the governing entity, what one state considers agritourism may be considered ecotourism by another. This may or may not matter to your client depending on what they want to offer, but the distinction is important in terms of liability protections for one category over another.

Ecotourism can be any outdoor activity that doesn’t need to be consistent with a farm. It CAN be, but doesn’t need to be. These include kayaking, ATV tours, skeet shooting, zip lining, hiking, and many others. Your clients may want to provide these opportunities for their existing or potential customers, and the land specifications are as important for them as if they were considering offering agritourism. Where you can add value for your clients is by knowing the difference, especially in terms of statutory and legal definitions.

The Future

The possibilities for agritourism opportunities are numerous and exciting for REALTORS®, clients, and consumers. Getting people to experience the outdoors and hearken back on America’s agrarian history is a way to tie us back to the land. By navigating the nuances of agritourism policy and how that can shape a client’s business future, a REALTOR has the ability to help clients achieve their dreams. How many people can state that?

I encourage you to take a look at what agritourism operations exist in your nearby communities. If you get a chance, stop by to see the possibilities for how your clients can take advantage of this emerging trend. And don’t even get me started on the exciting trend of agrihoods …

About the Author: Melissa Hunt is the Chairman of the National Agritourism Professionals Association. Learn more from Hunt on this topic at the 2017 National Land Conference in her presentation on Is Agritourism a Viable Option (For You or Your Client)?

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Recruiting and Developing Our Most Valuable Asset

This piece originally appeared in the REALTORS® Land Institute’s Summer 2016 Terra Firma magazine.

You know it isn’t very difficult for an agent to shine in the real estate profession.  In some cases all they have to do is return a phone call or follow through on something they promised.  I think it is pretty sad that the bar is set that low….

whitetail2You can have a beautiful building and offices, state of the art website and office equipment and you can spend a fortune on PR, social media and marketing.  However, at the end of the day, if your company is not represented by professional real estate agents you are hurting your business, your brand and the real estate profession as a whole.

Make no mistake, when a real estate agent, regardless of who he or she is licensed with, represents himself in less than a professional manner due to his or her poor work ethic, lack of skill or dishonesty, every single one of us in the real estate profession pays the price.

One very common real estate business model is to hire as many agents as possible, offer them a large split and let them beat it out.  Meanwhile, whether those agents know what they are doing or not, they may acquire a listing or two simply because a friend or family member feels obligated to list with them.  This approach is strongly why over seventy percent of the real estate agents will quit this profession within two years.  I feel this business model is extremely unfair to the agents; unfair to the public; and catastrophically harmful to the image of our industry.

Forget the representation of your company for the moment and consider the amount of money that exchanges hands along with legalities, complexities and the consequences associated with the sale and purchase of land.  I believe our objective as brokers and leaders should be to hire the best people and support them through training, marketing and structure.  In essence, we pour everything we can into them to ensure they are successful and in turn we will be successful because our relationship will be bilaterally equitable.

Recruiting

Our primary recruiting resources are online companies like, Monster, Indeed and Zip Recruiter to name a few. We target the nearest major metropolitans to the areas we wish to populate. These companies cast pretty large nets in that they often have sub-chapters/boards and communities that extend their radius. Our collateral resources include: our own career page on our website; social media; LinkedIn careers; The Outdoorwire; outdoorindustryjobs.com; AGcareers.com and AgHires.com to name a few.

What we do not do at Whitetail Properties is try to recruit/steal-away other broker’s agents. When you consider that we work in an industry where we work together through co-brokers and referrals, trying to recruit agents away from other brokers does not feel anymore ethical to me than calling another broker’s client. If agents from other companies call us, we are more than happy to talk to them; however, we will never call them first.

The prospective agent’s initial phone interview is with our HR executive (we provide her with the qualifying criteria).  If the prospective agent makes the cut, HR then sets up a second phone interview with our three-person interview panel. We then rate the candidate on a scale of one through ten on a ten-line score sheet.  If the candidate makes the second cut, we then setup an in person interview.  If the candidate gives a good personal interview we sign them up for the next orientation after they’ve obtained their real estate license.  It’s important that they attend orientation before we allow them to represent our company and our brand.

Basic Foundation

There are a lot of real estate companies that will hire anyone who has a pulse and the ability to acquire a real estate license.  I believe that this, along with a lack of training, is why many people stereotype real estate agents as a bunch of incompetent crooks.

We have four basic cornerstones when considering a new agent:  First and foremost, the prospective agent has to be an honorable person; the prospective agent has to be passionate about land and every aspect of land; the prospective agent has to have a strong work ethic; and the prospective agent has to be professional.

We can teach real estate, but in my opinion by the time human beings reach adulthood we can’t make them love land or teach them to be honorable!

Additional Prerequisites:

  • Financially Stable
  • Ability to work full time
  • Self-motivated
  • Accountable
  • Trainable

Developing Superstars

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We are accountable for and to our agents.  For this reason, we do not allow our agents to represent our company until they have attended orientation.  At Whitetail Properties’ three-day orientation, our goal is to give our agents everything they need to start their career on a successful path.

Weekly Webinars

Our weekly webinars provide our agents with solid career building knowledge. The topics cover everything from utilizing your sphere of influence to recognizing a property’s highest and best use.  Training is not something that you do once in a while.  Training has to be scheduled and repeated on a regular basis.  The key is to keep it fresh, informative, relative, productive and entertaining.

Maintaining Pro-active Contact

It’s important to maintain regularly scheduled calls with agents in order to review, mentor and coach them.  You see, the agents who contact their brokers for assistance are generally the ones working deals.  However, the agents who typically need help the most are the ones we don’t hear from because they are not working anything so it’s very important that we reach out to them and explore what they are doing and how we can help them

Support

Every member of our staff is employed for the sole purpose of helping our agents become successful and continue to grow their businesses.  In addition to the office and administrative staff, the following employees are at our agents disposal: we employ our own graphic designer, marketing director, advertising team, creative director, production department, IT department, compliance officer, accounting department, Chief Financial Officer, Chief Operating Officer, Chief Executive Officer as well as team leaders and brokers.  Of course we did not start off with such an extensive staff.  We realized early on that in order to grow our business and our agents’ businesses, we had to develop a formula where we employed key staff members for every X number of agents.

Experience

The most important thing we teach our agents is that our client’s experience is the single most important part of their jobs. None of us will sell every tract of land we list, but when our ultimate goal is not necessarily to sell the listing but rather to provide our clients with the ultimate land buying or selling experience, we will sell more land.  In addition, we will receive more referrals and elevate the image of our company and of the industry.

There are too many real estate companies who feel making the sale is more important than working in their client’s best interest; more important than building a relationship; more important than being a professional and even more important than being honest.  This has to change.

Our Most Valuable Asset

Our agents are unquestionably our most valuable assets.  However, we can’t just wind them up and turn them loose. Through explanation and repetition we have to instill our company’s core values in our agents.  Our company’s ideology is the foundation from which we’ve grown our business.  Without a solid foundation based on integrity you are not developing or nourishing your most valuable assets.

As I mentioned before, we have to provide a consistent training program.  We have to take every opportunity to mentor and guide our agents and we have to teach our staff how to best assist our agents to ensure their success.  Along with this, we don’t allow agents to simply “hang their licenses” with us.  If we teach, train and mentor our licensees they become our most valuable assets.  However, if we do not teach, train and mentor an agent, that agent becomes our biggest liability!

We take our obligation to our agents; to our clients; to the public; to the States where we are licensed; and to all of our fellow brokers and agents in the industry very seriously.   Although as brokers we are held responsible and accountable for every one of our agents, there is no possible way that we can be present every single time our agents interact with buyers, sellers, customers or clients.  However, we can pour into our agents on a regular basis to ensure they conduct themselves, knowledgably, honestly, professionally and responsibly.  After all, they are our most valuable assets.

perez-danAbout the author: Dan Perez, RLI Member, is the CEO, Chief Broker, and one of the Founding Owners of Whitetail Properties Real Estate as well as the host of the ever-popular Whitetail Properties television show. Dan is passionate about the land business and driven by hiring and developing real estate agents to become multi-million-dollar land specialists.

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5 Ways to Maximize Your Listings

This article was originally featured in the 2016 Summer Edition of the Institute’s Terra Firma Magazine.

I have seen a lot of amazing property listings under-perform or flat out fail from a lack of understanding how to best represent them online. Most of these tips apply to advertising property in any medium- digital or print, but will serve you particularly well online. In our increasingly digital world, there is a lot of noise that can drown out your listing, but with these easy steps, you can stand out and drive buyer interest and leads like never before. Here are my top five tips for how to maximize your online property listing.

  1. Completing Everything
    It should go without saying, but a complete listing and profile is essential. The property should be mapped accurately; titles and descriptions filled out completely; a generous number of photos uploaded; but also, pay attention to the smaller stuff. Things like categories and property types can have a big influence on who sees your property and where it shows up in searches. Often these modifiers work as filters, so if your farm isn’t tagged as a ‘farm’, it won’t show up in a ‘farm’ search. You could be missing out on a massive amount of property searches by leaving these blank.Same with property features like house size and bedrooms. Even if it isn’t the property focus, some buyers will be happy to know there is a habitable structure on the property. Water availability, utilities, property access, proximity to a town, etc. should be addressed if not obvious, and often even if it is. At a minimum, when there is a text box to fill out or drop down to select while creating your listing, you should be entering information into it.
  1. Picture it
    You want your listing to impress the pants off of people, no matter the property. The best way to get an initial response is through great photos. You generally see a two to three times greater response rate from listings with professional photos because they capture people. I’ve seen a weedy lot with a decrepit structure transformed into a landscape you would want to hang on your wall. You don’t want to deceive buyers, but you do want to represent it in the best possible way. If a professional photographer isn’t in your budget, read up on how to take better pictures. All photos should include a focal point such as a structure, fence, tree, lake, livestock, or even a flower. Look at your photos. If you don’t like your photo, neither will a buyer.The technology landscape is changing. Aerial photography and video is becoming more common thanks to drones. 3D tours and street-view technology has made its way into real estate. Mapping technology can orient you to the property terrain and features. All of these technologies are improving the way we tour a property remotely and adding some flash and excitement, but really it is about experiencing the property through a computer or mobile device as if we were physically there.
  1. Reading vs. Experiencing
    The title and description of a listing are nearly as important as photos because they frame the image of the property and fill in the gaps. Think of the photos and title as a hook, and the description as a line- you aren’t going to catch a fish without both.The title should be descriptive and evocative at the same time. The interested buyer isn’t physically at the property, so they need to experience it through your words and photos. What are the properties main features or resources? ‘Elk hunter’s paradise’, ‘mountainous’, ‘vistas’, ‘wilderness’, ‘fertile’. What does the property ‘feel’ like? Use descriptors like: ‘tranquil’, ‘remote’, ‘vast’, and ‘sweeping’. Be creative and come up with your own that fit the property. These words will help form an emotional connection with buyers beyond just seeing a piece of land. Use language and phrases that will resonate with your intended buyer to help them experience it from their computer.Similarly, the description should tell a story. Include all of the essential details–structures, acreage, crops or resources, and make these clear, but go beyond that. What is the history of the land? Who owns it now, and what is their story? What improvements have been done, and why? You want the buyer to care about this piece of land, and a story makes it special (even if it isn’t a very good one).
  1. Forming a Connection
    Not only do you want the buyer to care about the land, but you want them to care about you as well. Establishing trust and conveying confidence up front goes a long way to obtaining a lead, and ultimately securing a deal. You are your brand and vice-versa, so it should be treated and promoted like you would promote yourself. Your logo or photo should be everywhere you are; it shows people you are present in the region and an icon in the industry. The more they see it, the more they will feel you are an established and trustworthy business. Not unlike building a reputation within your community, your reputation and brand online are important to your business.A profile photo and bio can form a further connection. People will recognize you, and may even feel as if they already know you. You are no longer a faceless entity; you are a person, just like they are. If there isn’t a place for this on your listing, add it to the description.
  1. Get it Seen
    You have created a place for the information, now you need to drive people to see it. Post it on social media, add it to your website, print off some flyers and pass them out, pay for a featured ad, send some emails. Promoting the listing is the single biggest contributor to any listing’s success.It is also helpful to review your listing performance to get an idea how many people are seeing your property, and what actions are being taken. Give it thirty days, then take a look at listing views and lead count. These numbers can be helpful in telling you what the interest is like for your property. High listing views means that you are promoting it well, or it is popular in searches. If you are getting lots of leads, then you are doing well, but pay attention to the quality of those leads. Are they just kicking the tires, do they lose interest, are they responding to your attempts to contact them? These could be indicators that you are getting the wrong kind of traffic, appealing to the wrong audience, or potentially misrepresenting the property.

Take Away
To follow up, your property listing should have all of these qualities to reach maximum potential and performance:

  • Fully Completed Listing – Check all the boxes and enter all the information
  • Transport the potential buyer to the property with your words and photos
  • Convey an emotional connection, tell a story about the land
  • Establish trust and form a connection
  • Promote like crazy, and monitor listing performance

Online property advertising reaches a huge audience, and expands the buyer pool to include the entire country, or even world. When used correctly, it can be the most effective property selling tool in your arsenal. Implementing these tips will allow you to maximize your property listings, and lead to more deals closed in less time.

Jean Paul LaCountJean-Paul LaCount was the Head of Marketing for Lands of America and Land And Farm, and has been a digital marketer for the last 12 years.

Timberland Investing

The Basics Of Timberland Investing

HISTORY OF TIMBERLAND INVESTING

Even though landowners have made money from timberland since the earliest sawmills were built, this asset class received little attention from institutional investors until 1974. This was the year Congress passed the Employee Retirement Income Security Act. Before this law was passed, pension funds and endowments were invested mainly in equity and fixed income instruments. The new law encouraged these institutional investors to diversify their portfolios to include other investments like real estate holdings, which included timberlands. Changes in the tax law in 1986 increased the amount of institutional investment in timberlands even further. The new law did not allow U.S. forest product companies to take advantage of capital gains tax rates for timber harvests. With the loss of this tax advantage, many forest product companies began to sell their timberlands to tax exempt investors like pension funds, foundations and endowments.

From 1986 to 2007, most forest product companies realized they did not need to own large amounts of timberland to provide their mills with a steady and reliable flow of wood. They decided it would be better financially to monetize the timberlands and use the capital for investment into wood processing facilities and to improve their balance sheets. During this 21 year period, the total investment in timberlands by institutional investors increased from less than $1 billion dollars to over $60 billion dollars.

The millions of acres of timberlands sold during this period were purchased by several entities. The largest buyers were pension funds, university endowments, charitable foundations and high net worth individuals. The majority of these timberlands are managed by Timber Investment Management Organizations (TIMO). TIMO’s assist the investors in locating and purchasing timberlands and also manage the timberlands for their clients. There are approximately 17 different TIMO’s in existence today. The four largest TIMO’s are Hancock Timber Resource Group, Forestland Group, Campbell Global and Resource Management Service. These four TIMO’s manage over 15 million acres of timberland for their investors.

Instead of selling their timberlands, some forest product companies moved their timberland holdings into Real Estate Investment Trusts (REIT). REITs have better tax advantages than holding the lands in a C-Corporation. The four largest REITs today are Plum Creek, Rayonier, Weyerhaeuser and Potlatch. Together they own over 17 million acres of timberlands.

 

WHY INVEST IN TIMBERLAND?

Historically, timberland returns have compared favorably with stocks but with much less risk and volatility. U.S. timberland investment performance is measured by the NCREIF Timberland Index. This index is published by the National Council of Real Estate Investment Fiduciaries. Over the last 20 years, according to this index, returns from timberland have been almost equal to returns from equity investments as measured by the S&P 500. The rest of the story, however, is timberland investments had less than half the volatility of the equity investments. The volatility of timberland investments over this time period was equal to 10 year treasury bonds. This demonstrates the low risk nature of timberland investing.

Timberland is an excellent addition to an investor’s portfolio for two other reasons. First, timberland is a hedge against inflation. Historical data on timberland returns and inflation show there is a positive correlation between the two. Second, because timberland returns typically move counter cyclically with other asset classes, it provides overall portfolio diversification, which lowers portfolio volatility and risk.

Another favorable characteristic of timberland is trees continue to grow in volume, and thus value, regardless of what is going on in the current economy. If timber prices are unfavorable, the timber can be stored on the stump and allowed to grow until prices become favorable again. This cannot be said for other investments like stocks or gold. While waiting for stock prices to increase, the number of shares of stock owned are not increasing. With gold investments, while waiting for the price of gold to increase, the ounces of gold owned is not increasing.

There is one more unique difference between investing in timberland verses other more traditional investments like stocks, bonds or gold. Timberland is a tangible asset that can be enjoyed while owned. One cannot go hunting or horseback riding on a share of IBM stock or a gold brick. Timberland ownership, however, allows the investor to have a place to enjoy and create memories that will last a lifetime. To many timberland owners, this is the most important characteristic of the asset.

Along with the upside to timberland investing, there are a few negatives. Unlike investing in the stock market, investors in timberland must have long term investment horizons. As witnessed over the last several years with the recession and housing market crash, there is also market uncertainty. Another negative is the fact that timberland is a fairly illiquid asset. It may take 6 to 18 months to sell a timberland property. Timberland investments are also subject to damage from fire, wind, insects or disease. Geographic diversification of timberland properties, timber age class diversification and good forest management, however, can lower these environmental risks.

 

HOW MONEY IS MADE GROWING TIMBER

The value of timberland appreciates in several ways: 1) land appreciation, 2) real timber price increases, 3) biological growth and 4) forest product growth.

Land Appreciation

Unless the timber property is located in an area of high growth, land appreciation contributes only about 5-7 % of the overall asset appreciation. However, the appreciation of the land can be significant if it is located in parts of the county that are experiencing rapid growth. Many times the timberland will develop a higher and better use where the value of the timber component of the investment becomes secondary to the value of the land component. There are many tracts of land that had a highest and best use for growing timber that are now golf course communities, residential subdivisions and shopping malls.

Real Timber Price Increases

The housing crash of 2008 pushed softwood sawtimber prices down to levels not seen since the early 1990’s. Sixty-five percent of the total demand for softwood timber is from construction and two-thirds of this demand is from new construction. Most forest economists, however, predict the future for timber prices is bright. Several factors should help timber prices rebound and reach new highs over the next 4 -5 years.

First, the housing market will slowly but surely rebound, thereby increasing demand for softwood timber. Housing starts have been at historic lows over the last four years. In order to keep up with future demand for housing, this deficit must be made up. Currently, housing starts are around one million units per year. This should increase to over 1.5 million starts by 2017.

Second, exports to China will continue to increase. The U.S. is currently exporting ten times more wood to China than just seven years ago. Most of the timber being exported to China is coming from the Pacific Northwest.

Third, imported lumber from Canada will decrease because of the devastation of Canada’s timberlands from the mountain pine beetle. The mountain pine beetle infestation has reduced timber volumes by more than half in western Canada. Canada provides the U.S. with one-third of its lumber supply. Less lumber being imported from Canada will result in a greater demand for softwood timber in the U.S. Because it takes 40 to 50 years to grow a tree to sawtimber size in Canada, it will be decades before they can import lumber into the U.S. at the same levels as before the pine beetle devastation.

The combined effect of these three factors will push demand and prices for softwood timber to new highs over the next 4 to 5 years. Because softwood timber is the primary product grown on U.S. timberlands, this will help increase returns from this asset class. The long term outlook for timber prices is even more optimistic when considering worldwide demand for paper and wood products is ever increasing but the number of acres devoted to growing timber is decreasing. Thus, landowners who are investing in timber now will be assured of good markets and high demand for their forest products into the foreseeable future.

Biological Growth and Forest Product Growth

Money is made growing timber due to the biological growth of trees and also due to the change in forest product class as a tree gets larger. When a tree grows, it adds more volume and is therefore more valuable. However, not only does a tree add value over time by virtue of gaining more cubic foot volume, trees grow into higher value forest products as they get larger. For example, in the southeast, loblolly pine trees become merchantable when they reach about 15 years of age. Merchantable means the trees are large enough to be sold to a timber buyer for money. At this time, the trees are approximately 7 inches in diameter. Trees this size are used for pulpwood, which is used in the manufacture of paper products. Pulpwood trees are worth about $7.00 per ton. The value of this 7 inch tree is $1.50. In 7 years, this tree will be approximately 10 inches in diameter and can be used to make small dimension lumber. The value of trees in this forest product class are $14 per ton. The per ton price has doubled from what it was when the tree was 7 inches in diameter. The value of this 10 inch tree is $4.50. Because of the combined effects of volume growth and forest product value growth, the tree increased in value 300% in a five year period. If the tree is allowed to grow another eight years, it will be 14 inches in diameter and be classified as a large sawtimber tree. These size trees can be used to manufacture large dimension lumber or plywood and are worth $30 per ton. The value of the single tree will now be $22.50. That is a 500% increase in value over an eight year period. That is the power of the combined effects of biological growth and forest product value growth in timber. Not only do the trees gain more volume growth over time, the value of those units of volume increase over time as the tree moves into higher value forest product classes. This example did not take into account increases in timber prices. When factoring in economist’s projections of the increase in real timber prices in the future, these numbers could go even higher.

 

WAYS TO INVEST IN TIMBERLAND

There are several different ways to invest in timberland. The method selected depends on the investor’s total capital to be invested, the amount of liquidity desired and the amount of participation in the management of the timberlands the investor wants.

A way to invest in timberland that offers high liquidity, does not require a large amount of capital to be invested and does not require active management of timberland is to purchase shares of timber related publicly traded stock. Two examples are timber REITs (Real Estate Investment Trusts) and timber ETFs (Exchanged Traded Funds). The difference between the two is when investing in a timber REIT, only one timber company’s stock is being purchased. Timber ETFs, on the other hand, are similar to mutual funds and are made up of stocks from multiple timber companies.

Another alternative timberland investment strategy is the outright purchase of timberland. This method offers low liquidity but a higher level of control. Pension funds, endowments, and charitable foundations who have large amounts of capital to invest and who do not have the desire or experience to manage the timberlands usually hire Timber Investment Management Organizations (TIMO) to purchase and manage their timberlands. TIMOs typically offer two types of products, individual accounts and commingled funds. Individual accounts offer more control of the invested capital but require a much higher amount of capital investment. Minimum capital requirements of most TIMOs for an individual account are around $30 million dollars. A commingled fund is made up of capital from multiple investors and therefore has a lower capital entry requirement. The amount of control over the investment is less with a commingled fund, however these funds usually offer greater portfolio diversity, which results in less risk to the investors.

Another common way individuals invest in this asset class is to purchase timberland and either manage the timber on their own or hire a consulting forester. These investors may own as little as ten acres or thousands of acres. Typically, a property should contain at least ten acres of timber to be able to sell the forest products to a timber buyer at prices that make the enterprise profitable.

There are many characteristics to a property that make it a good timberland tract. If investors are not knowledgeable about purchasing timberland properties, they should hire a forester/realtor to assist them in their search. Some of the most important things to look for when purchasing a timberland property are: 1) the property should be located in an area that has one or more mills nearby that purchase the type of forest product being grown, 2) the property should have productive soils to grow the most profitable timber species, 3) the vast majority of the property should be able to be logged, and 4) most importantly, the property can be purchased at a price that allows for a good rate of return growing timber.

After a timber property is purchased, the forest needs to be managed properly. A well-managed forest will produce much more valuable timber than a poorly managed forest. If the investors do not have expertise in this area, they should locate a competent consulting forester. A good place to start is to contact the Association of Consulting Foresters of America (ACF). ACF membership has a minimum requirement of a bachelor’s degree in forestry and at least five years’ experience. ACF members also have no conflict of interest with timber buyers or forest industry and are required to adhere to the high standards of the ACF Code of Ethics. To be even more confident a consulting forester has the education and experience to manage the timberland, choose one that is also a Certified Forester by the Society of American Foresters. In order to be a Certified Forester, the forester must pass a rigorous competency exam that measures knowledge and skills, complete at least 60 hours of continuing education every three years and also adhere to the Society of American Forester’s Standards of Professional Practice.

This article covered the very basic aspects of timberland investing. Before committing a significant amount of capital to this asset class, the investor should do their due diligence on which timberland investment alternative best meets their goals. The recession of the last six years has created a window of great opportunity for investing in timberland. As the general economy continues to recover and the housing market makes a comeback, wise prudent investments made in timberland now should provide excellent returns.

King, RobertBob King, ALC, is owner and broker-in-charge for United Country Land & Lifestyle Realty located in Anderson, S.C. King is also president of King Land Company, Inc., which provides forestry and land management consulting services. He holds a BS degree in Forest Management from Clemson University and has 25 years’ experience in forest management and land brokerage.

 

Optimizing Your Website As A Land Real Estate Broker

Optimizing Your Website As A Land Real Estate Broker

This piece was originally featured in the 2016 Winter Terra Firma Magazine

When people hear the term “optimization” they often think of search engine optimization (SEO), but it is so much more than that. Optimizing your website is all about making your website as effective as possible to help reach your business objectives.

When land and ranch brokers ask me to help them optimize their website, there are two fundamentals I hit hard before even talking about search engine strategies. First, ensure you build value into the experience your audience has while they are browsing your site. Second, ensure you build value into the properties your audience is coming to your site to explore. Brokers work very hard to build value into their business through the expertise they deliver, the trustworthy relationships they build, and the solutions they provide, but they don’t always understand how to extend that value through their website. Your website is the single most important tool to represent you online. Ensuring you have the basics in place will go a long way towards extending the same value online as you do, so naturally, in person. So, to build value into the actual audience experience, start by asking yourself these key questions.

  1. When you click on your home page, does it look like you? Your website should be consistent with all of your branding. Your logo, your color scheme and your content should all represent your company. You want people to recognize your name, your signs, your email signature, and your business card. It doesn’t cost any more to make them all match, and it helps people get to know and trust your brand.
  2. Is all of your property information up to date? There is nothing worse than having a potential client request information and having to tell them the website details are outdated. Your website technology and approaches should make the update process quick and easy so you never have a problem in this area. You can even eliminate the need to update your land and ranch properties on your own site by choosing a website provider like us who partners with Lands of America to completely automate that process. The key here is that providing consistent and accurate information builds trust with your prospects and clients, while providing outdated information breaks trust.
  3. Is your website easy to use? You want your audience to find what they are looking for quickly and easily. They do not want to be forced to view advertisements, fill out a form, click through multiple pages, or create complicated searches to find what they need. Take them where they want to go immediately, and ensure your phone number is visible from every single page of your website. You want to make it easy for them to call you when they are ready.
  4. Is your website mobile-friendly? As of 2014, there are more mobile users than desktop users, but many companies still have not updated their technology to make the experience a good one for smart phone users. The “pinch and zoom” method results in text that is too small to read, links that are too close together, and pictures that don’t fit the screen. This frustrates prospects and clients coming to your website to view property details and request information. Make sure your site is truly mobile-friendly.

Once you’ve built value into the audience’s website experience, the next fundamental area of focus should be building value into the properties your audience is coming to your site to explore.  There are a number of things you can do to set yourself apart from the competition and draw more clients, especially sellers.

  1. Use only high quality photography. Do not settle for small, grainy, or even blurry photography on your website. It is a disservice to your company, your clients and often detracts from the property value. If you choose not to hire a professional photographer (which is preferred), at the very least make sure you use the highest possible quality setting on your camera. Many people take short cuts with high quality photography because it costs more and many website providers can’t accommodate it. Choose a website provider who can.
  2. Create property and agency profile films. When I say film, I don’t mean just posting a virtual tour or raw aerial footage taken from your new drone. I mean using video to tell an engaging story about your agency and properties that capture and maintains your audience’s attention.
  3. Use a high quality mapping service. I recommend moving beyond Google mapping of pins and boundary markers to a monthly service. One that drives value into your properties by letting you mark and label property assets such as wells, structures, roads, and other unique features that set your property apart. One that has no limits to the number of boundary markers you can map and, then, easily share all of the mapping details via email. Some even have apps you can use while standing on the property, whether to create the asset details or show a prospect through a mobile device on the spot.

Once you have invested in the online fundamentals above, it is appropriate to start investing in driving more people to your website. You are well positioned to convert those leads to sales, positioning for a better return on your investment.

  1. Include your website address on all advertising and social media. You may chuckle at this one, but you’d be surprised how many people over look this critical opportunity. Whether it’s on your listings, in a trade journal, on social media, or in the home town paper, prominently (and proudly!) display your website address. One caution, if you do not intend to manage and maintain your social media sites, do not create them. Neglecting updates to your social media can create negative results. Social media sites are an extension of your business and you must have someone manning the desk to build trust.
  2. Provide regular email communication with your clients. Everyone knows the best leads come from client referrals. Staying in front of your clients with valuable information is very important. Ensure you have a database of clients willing to receive emails from you and reach out to them regularly with new properties, updated property information, highlights of sold properties, or something engaging, like a link to your agency profile film on your website. (Use your website as a convenient place to opt in or out of such mailings.) Ask for referrals and always include your website address in your email signature.
  3. Invest appropriately in SEO and internet marketing. I say “appropriately” because it can cost quite a bit to get your company to rank within the top three spots of an internet search page. Your company, broker, and agent names should be built into your website pages to generate free, top search engine placement, but beyond that, you should anticipate spending a minimum of $3,000 – $6,000 per year for a good internet marketing campaign. When choosing an internet marketing company, avoid those who guarantees success without demonstrating a significant plan involving trial, error, adjustment, and continued investment to see what works. Ask for research that demonstrates the best key words for high ranking in your business and in your region, and analyzes how your competition is placing. Choose a provider who commits to regular traffic reports to analyze what is and is not working and understand that success is based on many factors out of your control, which change all the time. For instance, if you spend $500 in a month to ensure a key word important to your region places you on the top three results of a search page, but your competitor spends $1,000 in a month for the same word, your competitor will out rank you. This is how it works, so you need to approach internet marketing as an evolving strategy requiring long term investment, both in time and money. Your goal is to build a foundation that tells the search engines you are a reputable player so they send the traffic your way. You are competing with others trying to do the same.           

As you can see, optimizing your website is all about making it as effective as possible to help reach your business objectives. I always remind people there is a lot you can do to reach your business objectives before investing in search engines, and even social media, despite the current hype.

Ciesiensky, MikeMike Ciesiensky is the President & Founder of LandBrokerWebsites.com, a Crystalcore.net division. Ciesiensky is experienced in helping land and ranch brokers create websites to meet their business objectives. Ciesiensky presented at the 2016 National Land Conference in Dallas and is a partner of the Institute.