The Rising Demand for Rural Properties | Guest Drew Ary, ALC

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Welcome to the REALTORS^® Land Institute Podcast, the Voice of land, the industry's leading land real estate organization.

Justin Osborn: Welcome to The REALTORS Land Institute Podcast, The Voice of Land, the industry's leading land real estate organization. This is Justin Osborn ALC with the Wells Group in Durango, Colorado. On today's episode of The Voices of Land podcast, we're talking to RLI member, an Accredited Land Consultant, Drew Ary out of Coweta, Oklahoma. Drew started Ary Land Company with his partner Eric Zellers six years ago. Due to the rapid growth of the company, they brought on someone more operationally minded, and now have Chad Brinson as another partner. What started as individuals extremely passionate about land and people has grown into the number one Keller Williams land team in the nation moving more than $500 million since the company started. In 2022, they were named the 2022 Business of the Year by Coweta Chamber of Commerce.

JO: Drew was also just recently named the 2024 Leader of the Year for Real Producers. He oversees the daily operations and is the visionary of this rapidly growing company. He'll always be in the forefront selling and generating businesses as that is what he loves. When he is not serving the needs of his clients, you can find Drew spending time with his beautiful wife, Trish, and their dog Cooper. He loves the outdoors and is an avid duck hunter and golfer. Above all, his passion for helping others pursue their dreams has always allowed him to truly live out the famous quote, do what you love and you'll never work a day in your life. Welcome to the podcast, Drew.

Drew Ary: Thanks for having me. Honored to be here.

JO: Man, I'm excited to do this. You know, we both dabble quite a bit in recreational land and, you know, hearing your intro here, about the avid duck hunting. We just had three generations of Osborns duck hunting down there in North Texas, not too far from where you're at by the Red River with Brian Glass's company, Red Leg Outfitters, and they took good care of us, man. So I'd love to talk a little duck hunting with you today too, maybe.

DA: Hey, I'm all about it. I love Brian and man, that'd be a fun trip. It sounds like you got treated nicely and probably shot and harvested quite a few birds.

JO: Oh, yeah, yeah. Cold front just came in before we got down there, so the kind of timing was perfect, so...

DA: Can't beat that.

JO: Yeah. You've been doing this for a while and definitely seen the demand for rural properties on the rise, kind of people moving out of the city into the rural areas. What's some of the main reasons you've been seeing that down there in Oklahoma? 

DA: You know, I really feel like the pandemic shifted priorities for a lot of people. You know, we've kind of joked about it in our office as being like the reverse industrial revolution, you know, urbanization through the industrial revolution brought a lot of people to, you know, factories and industrial jobs in more urban areas. And now it seems like it's kind of the opposite due to the, you know, all of the modern technology and industry and people's ability to work remotely. That combined with affordability, we feel that people are kind of moving out of the cities and wanting to be, you know, 30, 40 miles from a major metropolitan area. And, you know, one thing we see is just the sheer affordability. You know, in my particular area, people can buy a lot to build on for, you know, anywhere from 75,000 up to 150,000. And that's kind of what we're passionate about, is creating a similar product with more land in unplatted rural agricultural areas. So it's been, it's been a cool shift.

JO: Okay. And so when you say a lot to build on that's in that price range, are we talking like 2 acres, 10 acres, 40 acres? What's kind of the range there that you're dealing with in that price range? 

DA: Yeah, great question. So the 80,000 to 150,000 for the lot, when I refer to a lot, I'm talking like under an acre inside of city limits essentially. And so then what we try to create is a product that's similar, but more like two to 40 acres in that same kind of price point. So as you get on the outskirts of town prices get more affordable, and so like, what we try to do for our clients is take their generational farms and do what their parents would probably love to see them do and get every dollar they can out of it by creating a product that's not necessarily available on the market and creating parcels, that are kind of that size. I talked about two to 40 acres, but really help them get a premium for their land. 'Cause people would rather, you know, from what we've seen, a lot of people would rather be, you know, again, 30, 45 minutes out of town, but be able to have enough room for a chicken coop and to have their tractor and kind of live in the country.

JO: Yeah, that makes a lot of sense. So what's the magic number for acreage where you're at that you can go down to without having to go through city planning or county planning? 

DA: Yeah. So in Tulsa County, which I live just on the outskirts, I'm in Wagoner County, but in some of our counties here... So Wagoner is 10 acres. If you stay above 10, you can really stay outside the subdivision regulations. Now, if you start creating too many parcels, you have to do a plat wavered subdivision. In Tulsa County, you wouldn't really think it, but it's actually 5 acres or more. So they give you a little more flexibility in Tulsa County. So and it's probably 'cause there's not as much unplatted land left, but yeah, so typically it's that 5 to 10 acres in the area that I'm in. If you stay above that, you can typically avoid the subdivision regulations, the infrastructure requirements and all of that.

JO: Okay. Well, let's hit on something there, you just said a word that I was thinking of, infrastructure requirements. So do you have rural water lines where you're at that you can tap into? Or are you doing water wells and septics? 

DA: Yes, so great question. I would say about 90% of what we do is septic or aerobic. Here we have aerobic systems, very similar system, just more mechanical parts. But so we do... You know, I'd say 90% of what we do for our clients, is aerobic or septic. And then I would say we're probably about 75% rural water. And about 25% of our deals will do wells. So we have some good well data, probably not as good as where you're at, but we can find out pretty easily if a well is going to produce. And we will do certain projects with the water source being well.

JO: Okay. Yeah. See where we're at, obviously we deal with a lot of water wells being out here in Colorado, but I can't go below 35 acres without having to get county planning involved. And so it's a lot more difficult to create lots, which also makes it a lot more difficult to create housing, which econ 101, you know, supply and demand makes our cost of living pretty expensive out here, when you can't go below 35 acres without getting the government entities involved.

DA: Yeah, yeah. That makes sense and does create a little bit more stringent process and requirements.

JO: Now, you mentioned a word that some of our listeners may not be familiar with in regards to septic and that is the aerobic system. And so I've got a crazy bad story as a youth that I didn't realize what an aerobic system was, but why don't you tell our listeners...

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JO: Yeah. Tell our listeners what those sprinklers are that are going off that us kids were running through before we realized what they were.

DA: [laughter] Yeah, Justin. So they say you can drink the water that comes out of those sprinkler hoses, but I'm gonna let the listeners do that before myself. But yeah, so basically an aerobic system has some mechanical parts. It still goes into a tank, but it sprinkles out basically the waste after it's been chlorinated and gone through the process in that aerobic system. So yeah, you basically will have one or two sprinkler heads in your yard. They usually time them to come on during the middle of the night or times that you don't even really see them. But they're a very great private self-sufficient sewer system.

JO: Yeah. So we didn't realize what it was, and we did the redneck slipping side when I was in middle school, got the old big tarp out at the YMCA and there was like this crazy big berm, and we like set the tarp up to where the sprinkler system would hit that, what we thought was the sprinkler system would hit the tarp and we'd go flying down it, and then later we learned that it was the aerobic septic system that we were sliding on. So that was a kind of come to Jesus wake up moment there for us.

DA: [laughter] That's awesome. Oh, man.

JO: Now, these properties you're selling, you're cutting them up. Are you mostly seeing people build houses on them? Are they pulling in modular homes? Are they just creating a dirt track for the kids to ride motorcycles? Kind of what are you seeing for the highest and best use with the end user? 

DA: Yeah. So that's a great question as well. So normally what we're seeing is people that wanna build their either barndominium or custom home, typically they're buying these tracks when they're sub 10 acres for sure. They're buying them for kind of a, we call them ranchettes, they're not commercial agricultural operations, but they're able to have chickens and have their own little gardens and things like that. So that's kind of been... You know, what we've seen is people buying them to put yeah, either a mobile home, or to build a custom home. It just seems like people are really seeking more space, fresh air, kind of a slower pace of life. You know, these rural tracks really appeal to just privacy and some type of self-sufficiency. And then oftentimes there's recreational opportunities like, you know, hunting. Oftentimes we create tracks where, yeah, they may only be 10 or 15 acres, but they have a nice place where they're gonna build at the front and they can put a feeder in the back of their yard and watch the deer come up. So a lot of that is what we're seeing people that really wanna have some space and enjoy outdoor recreation.

JO: Okay. Well, that makes a lot of sense then. And I guess internet is probably important to them if they're building houses out there. Do y'all have good wifi fiber optic, or are people having to go through Starlink? Or tell me a little bit about that.

DA: Yeah. So I've actually had my first experience with Starlink, so it's because there is such adequate fiber. So we had a lot of grants in Oklahoma, like Lake Region Electric is a very rural electric company, and they provide some of the best fiber in the area, so they've got fiber on almost all their lines in these rural counties. And so fiber is very, very readily available in our rural areas. It's kind of funny that I'm actually building a home currently, and I'm doing Starlink because I... And I'm right in town, but I'm kind of just in a black area, that there's no fiber available to. So we ended up doing Starlink on our own personal build, and that's my first experience with it. Almost everything I've sold ever, it feels like has had access to some type of fiber. So there's a lot of rural electric cooperatives and they got a lot of grant money to put fiber in, and it's a great thing here in Oklahoma.

JO: Okay. That's great, man. So I didn't realize you were building right now. That's great. So is this a primary residence for you or a recreational kind of second home, or tell me a little bit about that.

DA: Yeah. Yeah. So it's just me and my wife and our dogs. And so we've lived for a long time in about a 1400 square foot house with a big old shop. And I finally promised my wife that we would build a nice home where we're really happy to have guests. And so we're building our house now on 30 acres, just about 5 miles from our office there in Broken Arrow. So super excited about that. It's been quite the learning process, but good for me to go through as a land Realtor.

JO: That's great, man. So the one you're in now, I'm just... I'm curious, I think I know the answer to this, but is the shop bigger than the 14 square foot house? 

DA: Almost two times. [laughter]

JO: That's awesome, man. I love it. Yeah, I absolutely love it. So are you seeing buyers coming in paying cash for these parcels or are they working with an ag lender? Are you guys having to do owner financing or? 

DA: Yeah. So we kind of see a mixture of all the above. Most people have engaged a local bank. We're seeing some of our banks are doing a hundred percent financing on these rural tracks that they plan to build on. So we've got a couple good relationships with banks where that's an option. Typical note you're doing, you know, 20% down 80% financed in our area. But yeah, most of these people are getting rural loans and/or construction loans. Now, the construction loans will take 90 to 120 days to close if they want to do an all in one, one time closing, which we're happy to work with them on. But most people are coming through and I will tell you, there's a lot of cash in the market.

DA: We've seen a lot of people, you know, that have... Maybe they're in their later stages of raising their kids. Their kids are about to be outta the house. They're about to be empty nesters. We've see them kind of planning three to five years ahead, buying a track that they know one day they're gonna build, you know, downsize, have a little bit of land for them to have their garden, the husband to play on his tractor, the wife to have her chickens. And you know, we see a lot of that, a lot of kind of folks that are planning on being empty nesters the next three to five years, buying with cash and just placing it in that lot. We do see a lot of that.

JO: Yeah. I was talking to another agent in my office just about the uptick in 1031 exchanges that we've seen. And man, there's been so much cash changing hands, it seems like just the past, really, the past few weeks, it's just really upticked.

DA: Yeah. Yep. I agree. We're seeing a lot of cash in the market, no doubt.

JO: So let's kind of, you and I walk through a hypothetical example. I mean, we've got a lot of new land brokers, lot of folks that are trying to really, really represent their client's best interest and get educated. Let's say somebody's going on a listing appointment and they're looking at a 200, 250 acre farm. It's 20, 30 minutes from town, but not too far out in the middle of nowhere. What are kind of some of the key things you're looking for when you've got your lens to say, okay, the end user on this might be that big farm and rancher that wants to keep it whole, but I think I can probably net more money in the family's pocket if they're gonna be open to me cutting this up, because it does have A, B, C going for it. Talk to me a little bit about that.

DA: Yeah. So I think one of the most important things, and you hear it a lot, is price and location. Well, location plays a big factor. So there are these urban... Or more rural areas, that have great access to, you know, whether it's healthcare, shopping, employment, but still being on the outskirts of town. So we really like to look at, you know, road frontages, accessibility to major highways, whether it's on a gravel, dirt or paved road. What kind of utilities are available? Does it have rural water? Does it have fiber optic and electric? You know, we can solve gas and sewer with the aerobic and propane, but electric is very important. So you want to have, you know, electric on readily available. But I would say probably the most important thing is being within that about 3 to 5 miles off of a major highway to be able to commute into town if needed. So we see that travel distances and then the road conditions are a big factor in people wanting to build their homestead on these rural lots.

JO: Yeah. So electric there, I mean, where I'm at, we can't even do overhead electric anymore. We've gotta do underground, it's $20 to $25 a foot depending on what we're having to dig through. It's crazy expensive to pull electricity where I'm at. What are you seeing for average cost of electricity down there where you're at? 

DA: Yeah. So it's much more affordable. I mean, Oklahoma is gorgeous, but obviously, Colorado takes the cake there and that's probably why they're having you guys do underground electric. So I can appreciate that. I wish we saw more underground electric here in Oklahoma. But truly I can span about a quarter mile for about 8000 to 9,000 bucks. So yeah, it's really affordable. Now, that's overhead and that's your mainline extensions that they're doing for you where you get... You know, and that's just the cost of poles and the electric. You also gotta clear and give them, you know, 30 foot of right of way from the ground to the sky. So, that's where you can get into some more cost is dependent on the timber, what kind kind of timber you have on there.

JO: Yeah, that could get expensive, I guess, if you're having to go through eating up some hardwood trees like cedar just to make room for electricity, huh? 

DA: Yeah. [laughter] Exactly.

JO: And you mentioned the type of roads, I mean, where we're at, it's either blacktop or it's gravel, but you know, we had a ranch there in Childress, not far from Oklahoma, and man, the sandy roads would just eat us alive. Do you have a lot of of sand there where your at? 

DA: Yes. Yep. Yeah. And the closer you get to Oklahoma City, the more of that red dirt roads that you get, that'll just wash and cake your vehicle in the winter months when they're sloppy like some... I mean, you can slide around on them. So that's one thing that's a big deal, you know, around that Stillwater, Ponca City kind of out, you know, Western Oklahoma, you get a lot of that. On the east side of the state, not as bad. We have a little bit better roads on this side, a lot of shale as well that they use for the roads off... You know, tons of shale pits kind of on our east side as well.

JO: And do you find that most sellers when you sit down and you kind of go over this scenario with them and you say, yeah, your farm may be worth, you know, this price per acre as is, but if we cut it up and you give me a little more time, I can sell it in pieces and net you a higher price per acre. Do you find many owners that say, no, nobody is cutting up the farm, you're not going down that road? Or do the majority of them say, okay, yeah, I can understand that, let's make some more money? 

DA: Yeah. So I would say it's about 50/50. There's a lot of, you know, farmers and ranchers that really don't like to see land subdivided. But the thing is, oftentimes in the more rural areas, it makes sense to leave them whole. But whenever you get into a more urban area, you know, the conversation with them is, I really break it down and provide comps on the smaller tracks to show them, "Hey, here's kind of what this is selling for if we had tracks, in this acreage range here's what they're bringing." And then really paint a picture of, you know, if we sell it as a 160 or a 200 as a whole, you know, here's the last couple comps that have sold. And really paint that picture to say, "Hey, you know, I get it. If your neighbors are important to you, you don't want certain things."

DA: But then we start talking about deed restrictions, like, what is it you don't wanna see? You know, what is it your neighbors don't wanna see? Maybe we can overcome that and still get you a premium. So we really just kind of talk through what's, you know, what's the goal? You know, obviously if they just say, I absolutely don't wanna split it, we're probably just gonna end the conversation there. But if they're on the fence, we really dig a little deeper and find out what's keeping you from not wanting to gain an extra 20% to 25% in your pocket. And so oftentimes we find out it's things like, you know, well I don't want a subdivision here, or I don't wanna cannabis grow, you know, we see that often. Or I don't want mobile homes. Well, we overcome a lot of that by just placing deed restrictions to allow them to still achieve their goal and still not upset their neighbors or hurt their reputation. So sometimes that's important to them, you know, just as important as anything is their reputation and they don't wanna be known as the people that split up the farm.

JO: Yeah. Yeah. I totally understand what you're saying there. We do a lot of that here. And, you know, it's nice to hear that you're kind of solution oriented. It sounds like I am where you're asking those questions to the sellers. It's not just, no, I don't wanna sell it. And you say, okay, you know, you just walk away, but you try to dig and you try to find out why. And you know, folks, if you're not familiar with that term deed restrictions, it's basically, instead of doing a covenant or a homeowner's association, you literally put a restriction on the deed so it transfers, you know, from one owner to the next. And one thing that we've been doing a lot, Drew, is in response to those we don't wanna see a mobile home, is we put modular homes on permanent foundations as the only thing being allowed. And then we go a step further and we say they cannot be more than five years old, so that nobody is bringing in a 20-year-old modular home putting on a permanent foundation. And we've had a lot of success with that.

DA: Yeah. That's really a good solution. Also, you know, with having them put a home no older than five years old, it also helps with financing. 'Cause oftentimes it's hard to finance a mobile that's more than 10 years old. So if they did sell it in a few years, that would be a benefit to them as well. So I like that. And I like the permanent modular home on a permanent foundation. 'Cause I mean, let's be real. I mean, I actually own a modular home on a lake here locally, and I love that place. [laughter] You know, and they're not always bad if they're well taken care of, you know, it's the ones that get trash piled up outside. And so that's another one that we oftentimes put, you know, is limiting vehicles or junk or sheds.

DA: You know, you don't want 10 movable sheds where they're just moving multiple buildings on there. So yeah, there's things we like to look at there and really conform with the area, you know, what's going on in the area? What do they have? If they have many mobile homes or manufactured homes we oftentimes won't restrict that. But if we're in a more urban area where your average house cost is in the $400,000 range, we're probably gonna be a little more restrictive.

JO: Sure. Well, it makes a lot of sense. I mean, when you look at the price per square foot across the country of what it takes to build now compared to what somebody can do with a nice modular home, bring it in, put it on a permanent foundation, it makes a lot of sense for a lot of people.

DA: Yep. Yeah, I agree. I agree.

JO: Dang man, we've been doing this for a while already. Time flies when you're having fun. I didn't even realize how long we've been doing this. Sorry.

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DA: I enjoy it.

JO: Back to where we're... To the point of wrapping up, what other kind of highlights do you want to have for our guest here before we let you get off the phone and try to go harvest a deer in Kansas? 

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DA: I'm excited about that. So, you know, I think, ultimately there's just so many benefits of rural living, and I think our country is really realizing that you can do so much more with all the tech available, good or bad. Sometimes I think tech is not always good, but there's so much available and so many people are now working remotely and rural living is becoming more and more popular. And so, you know, I just think anybody that's listening, just I can't emphasize enough the importance of due diligence when you're working through a rural development with your client, things as simple as they may say that there's water available if there is a rural water line. But that doesn't always mean that you can get a meter. We've been through that before. We've done a rural development and one they said there were four meters available. Well, the first guy that bought the first track bought all four meters, and then now we're in a bind as far as being able to get meters to the remaining people that bought lots.

JO: Yeah. That sounds like a great story for our dirt debacle episodes, man, I dealt with the same thing right here in Mancos, Colorado, where the rural water district, exact same thing. They would not issue any more taps, so we had to go kind of behind the scenes to some of my old clients and buy some of the taps that they had so that we could get water for a new development. So yeah, lots of crazy stuff when it comes to due diligence. That could be another podcast in itself. But folks, it is so important that you understand really all the ins and outs of this topic. And so you can reach out to Drew, you can reach out to myself, you can find another RLI member who's near you that understands the nuances of owning rural land. And you can find them by going to the RLI Land website under a 'Find a Land Consultant' tool. And then, you know, keep in mind if you want formal training on this so that you can better serve your clients, consider taking a LANDU designation course. There's multiple courses that are offered throughout the year all over the country. Well, thanks for joining us today, Drew, and if somebody wanted to get in touch with you, what's the best way for them to do that? 

DA: Yeah. Please, call or text me at 918-884-LAND. Or you can email me drew@arylandco.com. So drew@arylandco.com.

JO: Smart man, I like that land play on the phone number. That's genius.

DA: [laughter] Took a long time to get, but it was nice when I got it.

JO: For more expertise on land real estate topics, be sure to check out the RLI blog, follow us on social media, and of course, tune in for the upcoming episodes of The Voices of Land Podcast.

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