Everything You Need to Know About Bringing in Outside Parties to a Land Transaction

The sale of property that predominantly consists of land requires an extension to the set of tools you would normally use in a residential listing. Listing land has unique requirements that necessitate additions to the team of professionals involved in a transaction, even prior to marketing the property. In certain circumstances, adding another agent or even another brokerage firm may increase both marketing power and product expertise. Opening title with a title company or attorney’s office aids the Escrow Officer in getting ahead of any title issues. Bringing environmental and biological consultants on board can provide crucial advice when working on developable acreage with sensitive habitats. Once the property is listed and ready to market, a land planner, economic development agency, and surveyor could inform potential buyers about what is for sale, or what could be produced on the property. Each phase of the process during a successful sale has important and legal ramifications if not completely correctly. Below are details on who the professionals are that we most utilize, when we recommend speaking with them and why.

Who: Surveyor/Engineer

When: At listing

Why: If the property you are selling hasn’t been surveyed, it is advisable to recommend the seller have a survey completed with the corners of the premise marked (for larger properties we like to have them stake the corners with 10′ white PVC pipe). This allows you to convey accurate measurements to perspective purchasers, while having the corners visibly marked so that buyers may visualize the boundary when touring the site.  Additionally, a survey will also bring to light any issues involving encroachments, potentially avoiding costly retrades or cancelled escrows when given the foresight to deal with these problems early in the process.

When marketing transitional land, primarily for residential development, a civil engineer who is familiar with the local zoning code can be engaged to provide a lotting study. Having this study, which shows a hypothetical layout for a residential subdivision in accordance with the minimum development requirements of the zoning code and site constraints, can help support value. Similarly, hypothetical site plans can be developed for nonresidential development sites that show potential layouts and building footprints. An engineer may also be able to provide guidance or connect you with the correct contacts at the municipality to gain an understanding on the ability to access public utilities (water, wastewater, stormwater, natural gas, etc.), along with their distance from the property and whether they have enough capacity to support the proposed use.

Who: Land Use Planner / Architect

When: At listing

Why: Engaging a land planner to provide hypothetical master plan layouts that incorporate a mix of future uses for larger development sites can help prospects understand the breadth of the opportunity, assigning value to the portions of the site allocated to different product types. Additionally, if they are familiar with the local municipality, a knowledgeable land planner should be able to provide a plan that will be well received by both the market and local decision-making bodies.

Similarly, (but more typically for infill development projects) having an architect provide a feasibility study highlighting the applicable development regulations for the site (including maximum square footage or density constraints) and a massing report that shows the maximum building envelope along with architectural renderings of what a potential building may look like. These resources can help purchasers quickly assess the scope of the development opportunity at hand.

Who: Land Use Attorney 

When: Prior to engaging the market

Why: To most local elected officials, nothing is more important than land use. For this reason, when working on a transitional land project it is important for the seller to have advice from counsel that understands local politics and the land use regulatory process. This will help assess the reasonableness and likelihood of success for any offers received that are contingent on development. They can also provide valuable insight during the entitlement process and increase a project’s chances of approval.

Who: Real Estate (Transaction) Attorney

When: Prior to receiving offers

Why: Throughout the sale process, the seller should seek the advice of real estate counsel to ensure they are appropriately mitigating risk. This includes reviewing their current situation prior to receiving offers so that the agent can make Buyers aware of any business terms that are unique to this seller’s specific situation throughout the process of developing an offer. Additionally, working with counsel to review all agreements and due diligence material prior to delivery can mitigate the potential for the seller to expose themselves up to unnecessary liability.

Who: Title Officer/Attorney

When: Prior to or at listing

Why: A title review should be completed as early in the process as possible to ensure marketable title. Confirming how title is vested and addressing any encumbrances (i.e. outstanding liens or deeds of trust, lis pendens, easements, etc.) early in the process can ensure you are dealing with a property’s true decision maker, along with providing time to address any concerns long before you have a buyer at the table.

Who: Water Rights Attorney

When: At listing

Why: For any asset where access to water is currently or potentially a critical component of value, having a water rights attorney provide an opinion on the validity and defensibility of any water rights may be necessary to support any assessment.

Who: Well Driller 

When: At listing

Why: In regions that are dependent on groundwater, it is advisable to discuss the site with a local well driller to determine the feasibility of developing a well at the property, the condition of existing wells (if applicable), and any known issues with the groundwater resources in the area.

Who: Environmental Consultant 

When: Prior to or at listing

Why: Unresolved soil and groundwater contamination can be devastating to the value of a property regardless of the source. Having a consultant provide a desktop report prior to listing the property can help educate you and the seller about any known issues in the area. If there are reasons for concern, an environmental consultant can help develop a strategy to address the concerns and provide certainty to a buyer. If the owner has a previously completed Phase I Environmental Site Assessment (ESA), a report that looks at the current and historic uses of the property to assess if they may have impacted the soil or groundwater beneath the property and could pose a threat to the environment and/or human health) a consultant can review the report and help summarize what was found previously, as well as what additional investigation (if any) may be warranted.

Who: Biological Consultant

When: At listing

Why: The existence of sensitive plant and animal species, or habitats could substantially impact the cost to develop as well as the actual developable acreage of a site. Asking an expert if there are any known species in the area along with any reasons for concern by having an informal site visit completed to look for any indications of sensitive species or habitats will provide increased certainty when engaging the market.

Who: Consulting Forester 

When: At listing

Why: As detailed in the Should I Invest in Timberland Real Estate? post by Clint Flowers, ALC, a fellow RLI member, developing a solid timber management strategy is critical to the successful investment in timberland.  Additionally, if a consulting forester is engaged earlier and familiar with the property, they can help prospective purchasers assess the opportunity and determine if it is the right fit for their investment criteria.

Who: Escrow Officer

When: At listing

Why: Having a trustworthy and capable Escrow Officer as part of your team will help keep a transaction on track. An Escrow Officer can often work with Title in advance of a transaction to address any issues that may need settling prior to getting the property into Escrow. This type of preparation can limit last minute issues and help ensure a smooth transaction from start to finish.

Who: Economic Development Agency (public and/or private) 

When: At listing

Why: For development opportunities and transitional land, economic developers should be made aware of the offering as early as possible. Not only are they a potential source of a buyer, but they can typically provide guidance on incentives, approval processing, and general market expertise. Leveraging their involvement can save time and increase the likelihood of a project getting approved.

Who: Other Brokers/Agents 

When: Prior to listing

Why: Fielding the best team on every deal is fundamental to our success in business. When given the opportunity to work on a project outside of our unique area of geographic or product expertise, a referral is not always possible depending on our relationship with the client. However, partnering with the right team of real estate professionals to provide the expertise you lack will improve your learning curve, expedite the sale process, and (most importantly) ensure you achieve the best possible results for your client. RLI has a vast network of agents across the country with extensive expertise in the various sectors.

Who: Appraiser 

When: Prior to listing

Why: When analyzing a new opportunity, speaking with an appraiser knowledgeable in the market can help establish the most defensible approach to valuing a specific asset along with developing a defensible baseline value. They may also be able to provide verified comparable sales to support your analysis.

As you can see, much of this work is recommended to be completed early in the process. Understanding these aspects of a property and addressing any areas of concern sooner than later can:

  • assist with establishing a defensible asking price of the property;
  • ensure you present a comprehensive offering to the market;
  • help you address buyers questions early and knowledgably, and most importantly;
  • and decrease the level of uncertainty around a property and reduce the likelihood of surprises during escrow that may lead to avoidable delays, price reduction requests, or failed escrows.

While this list has been assembled primarily from the perspective of a listing agent, a buyer’s agent could also benefit from using this as a guide to assist either their clients with due diligence or their own preliminary investigations to determine if a site fits their client’s acquisition criteria. The list is not meant to be comprehensive but, in our experience, it addresses the vendors, consultants, and professionals we engage with most frequently. Establishing a stable base of knowledgeable experts can expand your capabilities and allow you to more effectively guide a client through the process of buying or selling real estate.

This post is part of the 2019 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here
About the Author:
 Matt Davis is a real estate broker with Cushman & Wakefield. He is based in San Diego, CA, and assists clients with the disposition and acquisition of investment grade agricultural and transitional land assets. He is also founding member of the company’s Land Advisory Group and Agribusiness Solutions Team. Matt is a member of RLI and serves on their 2019 Future Leaders Committee.

About the Author: Cynthia Bynum started in Real Estate in 2003 as an investor and acquired her license in the State of Texas in 2009. She was raised on Eagle Mountain Lake and is quite familiar with properties in Parker and Tarrant Counties. Joining Trinity Territory Brokerage firm was the best move for her career. Her specialties range from representing buyers and listing residential properties to commercial, land sales, property management, foreclosures,  and leasing.

How To Maximize Your Listing: Hunting Properties

The Highest and Best Use. All in this industry know the value of this term, but are we consistently applying it in an effort to truly maximize the features of your latest listing? In researching ranch and land property listings across the United States, it is evident that there may be value being left on the table. Sometimes this value can be significant, but agents may gloss over it as just another feature. I’m talking about hunting properties. I’ve come across numerous listings with some of the best access to hunting and/or might even qualify for landowner tags that in some areas are worth thousands of dollars; and the listing has nothing more than a bullet point that says Hunting. In order to maximize the value of highest and best use, let’s look at how we can better represent and convert hunting into positive dollar value.

The Outdoor Industry’s Effect on Land Value

The wildlife recreation industry is a $110+ billion industry and, of that, over $25 billion comes from hunting alone. In the West, agricultural land is rapidly being converted for recreational uses. According to the CCIM Institute, “demand for both improved and unimproved recreational property has contributed to rising rural land prices. An increased interest in outdoor recreational hobbies as diverse as hunting and bird-watching, a graying baby-boom generation that is more conscious of the investment potential in vacation and retirement properties, and low interest rates have come together in the past five years to create a niche market for recreational land.”

How Access to Hunting Affects Property Values

As the outdoor industry continues to grow and access to public lands continues to shrink, land with hunting access has become highly desirable. Hunting properties provide a buyer with the perfect mix of recreation and investment. Passive cash-flow opportunities include the leasing hunting rights, in addition to grazing and leasing land for farming. According to CCIM, in many cases, a hunting lease can bring in more than five times the revenue from cattle grazing. Simply stating hunting on your listing doesn’t sound like nearly enough to communicate the value that the land truly holds in its highest and best use case.

How To Better Market Your Hunting Property

As a broker, how can you leverage the indiscernible value of a property with hunting amenities? A good place to start is to create a section in your listing dedicated to the hunting amenities. You may be leaving money on the table and doing your client a disservice to just list “hunting” as a bullet point. If you are not a hunter or don’t know much about the area, this can be easier said than done. So how can you find out more information quickly and inexpensively? Start with your local Parks and Wildlife office, as the rangers can help orient and qualify your search metrics. Also, consider jumping online and research the area around your client’s property, to see what kind of access public land access is available.

Consider becoming knowledgeable in your states hunting laws to determine if that property qualifies for landowner tags. For example, in Illinois, 40 acres is the minimum required to obtain a Deer tag for shotgun season, whereas western states may require a contiguous quarter-section worth of acreage, or more, to qualify. There is significant value in this knowledge, and it is well worth the time spent researching the finer details. To recap: here is a list of some key items to research and market on your hunting land listing:

  • Hunting Access: What is the nearest public land access or is the property large enough to hunt on
  • Wildlife Population: What is the wildlife population in that area? Big game, small game, waterfowl, and/or upland bird hunting
  • Revenue Opportunities: Does this property qualify for landowner tags and how many? Are you able to turn the land into a hunting lease?

These are three key elements that can offer more value to a hunting property, and a good starting place for any agent. However, if you find a trusted local contact who is a hunter and that has the right tools and knowledge of the area, you can consider putting together a spectacular Hunting Guide that is sure to impress any prospective buyer. There are also a myriad of companies throughout the US with dedicated teams of hunters and outdoorsman, who can help in putting together a complete hunting and outdoor recreation analysis to be used to bring considerable value to the unseen benefits of a property. Consider reaching out to your local RLI chapter or use the Find A Land Consultant search tool provided by RLI for help in finding a consultant who can provide maps with public land access, hunting units, species migration patterns, hunting tag draw odds, landowner tag information, and more.

As land is being converted to recreation and access to public lands is shrinking, there is more value than ever before in hunting properties. The right buyer for a hunting property will know its inherent value, but don’t miss the target in marketing it appropriately, for achieving that highest and best use should be a guiding, as well as an inherent, principal.

Reference Citations

“Hunting for Recreational Properties”, CCIM Institute,

https://www.ccim.com/cire-magazine/articles/hunting-recreational-properties/?gmSsoPc=1

 

About the Author: Mike Miller, MBA, is the Vice President and Co-founder of White River Ranch Marketing LLC. With a background in Automotive and Sports and Entertainment Marketing, Mike is lending his decade-plus of experience in marketing and branding to the farm and ranch land real estate industry via his startup, WRRM – designed to expand the virtual impact of land brokers and their listings throughout the US.

The Best Advice Top Agents Ever Got

A few words can change your life. The advice you get from your mentor, friend, or family member can even change the course of your career forever. Accredited Land Consultants Geoff Hurdl, ALC,, Bill Burruss, ALC, and Terri Jensen, ALC, share the advice that helped shape their successful careers in land.

Know Yourself to Know Others

Understanding yourself is an important part to succeeding in the land industry. You need to know your own strengths and weaknesses in order to improve your weaknesses and play up your strengths.

“Doing the best that I can and to ‘know myself’ have been the underlying themes to my leadership skills,” says Bill Burruss, ALC, winner of RLI’s 2018 Land REALTOR® of America Award.

“These two pieces of advice were instilled by my parents and reiterated by my teachers in high school. Respect for others was also a strong value. It could be argued that I was taught to live The Great Commandment, to ‘love thy neighbor as thyself’. I believe to be successful you have to know yourself. Both my parents and teachers would challenge me by having me evaluate myself regularly. This forced me to understand what I did well, and where I had problems, and ultimately make the needed changes to achieve my goals.”

Don’t Spread Yourself Too Thin

There are lots of ways to make money in real estate. Instead of trying to excel in every single field, Geoff Hurdle, ALC,  winner of the 2018 APEX Wrangler Award, found success by focusing his time and energy on the things he knew the most about.

“My father taught me there were many ways to make money in real estate,” says Hurdle. “One of the most valuable things he taught me was to stick with what you know.  I learned the value of that advice when I strayed from it. It cost me, a lot. I went back to what I knew and I have not looked back again!”

Respect and Hard Work Are Everything

Land real estate is a people business at its core. Respect for your fellow man can help you go far. Burruss also learned that the land industry is one where hard work and a love of land speak louder than race or gender.

“Respect was all about my generation, growing up in the ‘60s. I went through integration in the 7th grade. Within four years, women were hitting the streets in waves wanting equal pay and better job opportunities. Before I became a REALTOR®, I was hired by a person who was gay and then one who was African American. When I started real estate, my broker was female. The reason I got into leadership on the national level was by invitation from the Virginia Association of REALTORS® President-Elect, Nathan Booth, who was the first black president of a REALTOR® state association. All of these people had a great love for their fellow neighbor that I want to replicate. All of them are great because they are great, not because they are female, African American, or gay.”

Terri Jensen, ALC, with National Land Realty also highlights the importance of the three R’s. “Respect for self; respect for others; responsibility for all that I do,” says Jensen.

Hard work is also essential for success in the land industry, as Dan Murphy, ALC, with M4 Ranch Group explained in his 2018 Terra Firma article Getting To The Top: Finding The Apex Of Success.

“Each of us in the industry knows that we only eat what we kill. This industry makes no payment for a second place finish,” says Murphy. “If the transaction does not close, we don’t get paid. Our success at M4 Ranch Group in 2017 is without fail directly tied to the strength, intelligence, and the never-quit attitude of Team.”

Communication Is Key

Making sure that you are not just heard, but understood ensures that you and your client are on the same page.

“If you don’t know the answer to a question, let the client know that,” says Terri Jensen, ALC,. “Do let them know, though, that because of your years of experience, education, and expertise, that you probably know someone who can answer the question.”

The land industry is so massive and there are so many roads to take that it can be easy to feel lost. Listening to advice from land agents with decades of experience can help guide you in the right direction.

Looking to find a mentor in the land industry that can give you the advice that will change your career forever? Becoming a member of the REALTORS ® Land Institute gives you access to a national network of over 1,300 land professionals to connect with and learn from.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

 

 

Five Tips for New Land Professionals

The timber business has always been in my family. Growing up, my dad owned his own timber brokerage company. It was something I was really familiar with. Being on land, buying, selling and trading it, were all things that I was accustomed to. But it was a career path my dad said I should never take.

I always wanted to do what my dad did, so when he sold his business I wasn’t sure where to go with my career. I ended up going to the University of Alabama and graduating with an environmental degree. And soon after, got a job in Mobile, working for an environmental company where I did safety and environmental consulting. I continued that line of work for about four years before I decided to go part-time with them and obtain my real estate license.

I had been looking for a different career opportunity for a while. Somewhere where I could grow and be my own boss. So, in April of 2016, I went to work for National Land Realty (NLR). The opportunity came up through a mutual friend who happened to be a broker for NLR. And I went full speed ahead with only the knowledge and experience in land I had gained while growing up. But it was a challenge I was driven to overcome.

Starting out at NLR as a Land Professional, the first listing I got was in Choctaw County, Alabama. I never really knew how many people were interested in buying land until I got that listing. I ended up generating over five sales on five different properties from that first listing. Closing on that first deal made me more motivated than ever before.

My biggest challenge thus far has been gaining trust within my clients. But trust comes from hard work and doing exactly what I say I’m going to do. Like making sure I talk to the previous landowners, spending more time on each deal… It’s about going above and beyond. And not being afraid to get out there and get muddy.

As a younger and newer Land Professional, I want to offer advice to others out there who are just starting out and want to reach that next level. Here are my top 5 tips on how to get there:

  1. Be persistent.

If I could only offer one piece of advice, it would be to always be persistent. You have to go out and get the business. You can’t just sit around and wait for it to come to you. You’ve got to go dig it up each and every day. Don’t be afraid to ask questions, ask other professionals for help and don’t take no for an answer.

  1. Network, network, network!

Networking is key in the land real estate business. It’s about keeping your name in front of people – creating your personal brand. So, make sure to attend all the outdoor events you can. Get on different outdoor committees and even go to city council meetings. Don’t be afraid to stop at your local bank, coffee shop or co-op store to market yourself and your business. You want to create a culture of, “That guy knows what he’s doing.”

  1. Find a mentor.

Finding someone who’s been in the industry for a while and can show you the ropes can benefit you greatly when you need that extra bit of knowledge on a certain topic or just a boost of motivation. A mentor can also help you see areas where you may need some improvement.

  1. Go above and beyond.

To be successful and get to the next level, you’re going to have to put in the time and the effort. Working longer hours, making those extra phone calls, going to those late-night meetings – all these will pay off in the end.

  1. Be honest and thorough with clients.

Always keep your word with a client. Spend that extra time with them going through each step of the process so they feel confident. You’ll be able to gain their trust and build a relationship with them that could last for decades to come!

Forrest During is an RLI member and land professional at National Land Realty who specializes in acquisitions, sales, recreational, timberland, and conservation properties. This post was originally published on the National Land Realty blog in August 2017.

The Value of Finding a Mentor in the Land Industry

This article was originally posted to the National Land Realty blog

Getting started in the land industry can be daunting. From knowing about the latest land laws to networking to juggling a work/life balance, it’s easy to be overwhelmed. Having a mentor in the land industry can help you succeed as a land agent in more ways than one.

Wisdom You Can’t Learn In A Classroom

Although land education is extremely important, to the point of being necessary for agents that want to maximize their earning potential, there are some things you can only learn from experience — such as how to deal with difficult clients or learning how to balance your time as a land agent. These are things you can learn from mentors. A mentor can also guide you away from mistakes they’ve made in the past and learned from, saving you from making those same mistakes as a newer agent.

The benefits of mentorship can go beyond knowledge in the land industry.  A mentor can also guide you towards success beyond a dollar sign.

“‘Successful’ to me was an individual who worked with integrity, spent time away from work with friends and family, was healthy, financially very well off, and had a process and system to their business,” wrote land expert Jacob Hart in a guest post for RLI. “I have learned you can make more money than you can count. However, if you do not have a passion or dreams to go after with that money, more is actually less.”

A mentor can do more than just help you succeed in the land industry. They can help you define and thrive for success in life as well.

Networking

The land industry is a people-driven business, so networking is essential for a successful career. However, meeting new people can be hard, especially if you live in a remote location or are networking when new to the industryFinding a mentor in the land industry opens the door to meeting their partners, colleagues, and clients, which could grow your own client base. Your mentor will know what events are best to meet clients and other land experts. They can also connect you to people on social media or add you to their social media groups.

Your Field of Expertise

Mentors are especially important if you specialize in a unique type of land or service.
If your specialty is in land auctionsvineyardstimberland investment, or mineral rights, not just anyone can be a mentor.

vineyard

There are so many benefits of having a mentor that we couldn’t list them all in one article. We hope this article has inspired you to seek out a mentor to help carve out a path for a successful career in the land industry.

Interested in finding a mentor near you? You can use RLI’s Find a Land Consultant tool or get in contact with one of our RLI Chapters to get started finding land experts who have expertise in the same field you’d like to be involved in or who are in your area. We may be biased but we also recommend becoming a member of the REALTORS® Land Institute. The biggest membership benefit we hear about from our members is the networking and camaraderie that their RLI membership continues to bring them year after year which basically makes the membership pay for itself because of the referral and knowledge sharing opportunities.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

Training New Land Agents for Real Estate Teams And Brokerages

Once we have a new land agent on our team, we know they will need to learn about the four conversations. Yes, they must learn about things like state specific contracts and compliance issues with your brokerage, but we have found that the most likely predictor of success in the industry is having what we call the four conversations.

 

These conversations focus on proactively generating business and planning activities, instead of just reactively wondering what is going to happen next.

Conversation 1: Listing Appointments

The first conversation is listing appointments. We use this conversation to show new agents that there are tools available to help them focus on their goals and business. This includes both listing and buyer representation agreements.

You can’t help the agents if you don’t have that first conversation. We are having weekly conversations with our agents and looking at where they are compared to where they want to be. This is how my team defines being a business owner.

You first determine what income you want to make for the year. Then, determine how many clients you must represent to earn that level of income. Factoring in your average sale price and commission. Check out Kasey Mock’s piece Ready. Aim. Fire! Strategic Planning for Your Land Real Estate Business for more information about how to set and achieve these kinds of goals strategically.

Conversation #2: Listing Taken

The second conversation is what we call listing taken. After you go on listing appointments, then you have listings taken. Of course, we don’t get them all and some we choose not to represent. If you go on listings and don’t get the seller to list with you or the buyer to have you represent them in their purchase, then we know what we need to improve on.

This is the crossover or what I call the wall of value. Now we are getting ready to earn our commission.

Conversation #3: Closings

The next conversation is closings. To talk about the third conversation, closings, the goal is to take the emotion out of the conversation and create clarity by lifting the fog. Nobody will say no to their own goals. We ask the agents if we can help them set really Big Goals, which helps them to think bigger. If you can’t imagine being successful, it is very hard to achieve.

Conversation #4: Profit.

The final conversation is about profit – not just your gross commission income (GCI). It is possible to earn a huge amount of gross commission and not be profitable. We can track our fixed cost as well as our cost of sales. Leaving us with our actual profit.

These four conversations are a general overview of how we teach new agents to think like a business owner, plan for their future, and not just accept things as they happen. If you need more profit, the best place to start is to either lower your expenses or go on more appointments to increase gross commission earned.

About the Author: Tim Hadley, ALC, is an agent with Keller Williams Realty in Gladstone, MO. He joined the REALTORS® Land Institute in 2017 and is currently a member of their Future Leaders Committee.

 

kasey mockAbout the Author: Kasey Mock is the Director of KW LAND Division at Keller Williams Realty International. Mock is a member of the REALTORS® Land Institute now serving on their Future Leaders Committee. Make sure to check out his break out session diving further into this topic at the 2018 National Land Conference in Nashville, TN, in March.

What’s At Stake With The Disaster Relief Bill?

With dozens of bills passing through Congress every month, it can be hard to keep track of the current state of land laws. One bill that has been particularly hard to follow has been the Disaster Relief Bill. This bill has been debated about and changed for months. As hurricane season approaches, it’s important to know the impacts that the disaster relief bill could have on the land industry.

To understand why the disaster bill is important requires an understanding of the massive impact that natural disasters have had on the land industry in recent years. A series of natural disasters in 2017 destroyed countless crops, livestock, land, and lives. According to a study from Texas A&M, 27% of the state’s cattle population were affected by Hurricane Harvey in 2017. Then, 2018 wasn’t any easier – The estimated agricultural losses from 2018 are estimated to be $5.5 billion for Alabama, Florida, Georgia, North Carolina, and South Carolina and over $3 billion for Nebraska, Iowa, and Missouri. We’re only halfway through 2019, but have already faced widespread flooding, wildfires, and more.

The most recent draft of the bill (which you can read in full here) is still being debated over issues such as disaster relief funding for Puerto Rico and money for emergency boarder security. If the most recent draft is signed into law by President Trump, here is how it will impact the land industry.

Crops and Livestock

With farm debt and bankruptcy on the rise in many areas, the damage on crops from natural disasters has taken a huge toll on farmers. The cold snap in mid-March of 2017 froze thousands of crops and caused $1 billion in agricultural losses. The impacts of these natural disasters last beyond a single crop. Floods can deplete the soil of its natural nutrients, which can take a long time to recover.

The impact of natural disasters on livestock has also put a strain on the rancher’s wallet. Not only is the financial impact of having livestock die bad for the farmer’s bottom line, if the dead animals are not removed in a properly and timely manner, it could impact water quality, the other living livestock, or other natural resources.

The disaster relief bill is expected to provide $3 billion to help recover losses of crops, trees, and vines that were impacted by natural disasters. This will help ease the financial loss for farmers. The grants will also help farmers pay for livestock losses and future crop insurance.

Forests

Wildfires claimed countless trees, properties, and lives in the past few years. Part of the Disaster Relief Bill sets aside money that will go towards forest restoration, hazardous fuel management, and other expenses related to protecting trees from natural disasters; including $720 million for urgent wildfire suppression and $480 million for an Emergency Forest Restoration Program.

Clean Up and Prevention

Preventing and cleaning up the impacts of natural disasters can be extremely costly. Large sections of the most recent draft of the bill include funds for marine debris removal, improving hurricane and flood intensity forecasting, restoring and rebuilding national wildlife refuges, helping rebuild national parks, fixing local roads, and more.

While this bill has been mulled over for months, there may be good news on the horizon. The House recently passed a multibillion-dollar disaster aid package on Friday, May 10th, and the Senate is expected to vote on the bill before a weeklong Memorial Day Recess. This means it is one step closer to getting the final approval from President Trump. Be sure to reach out to your elected officials to make sure they know how important disaster relief is to the land industry, especially private property owners.

One great way to stay on top of the latest land laws is by following us on social media on Facebook, Twitter, and LinkedIn. We cover the most important land laws and news that you need to know!

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

The Great Fake Meat Debate

Not so long ago, the fake meat market wasn’t much more than a few packets of grey tofu dogs that no one touched at the barbecue. Now, the meat alternative industry is a $1.5 billion market. Curiously, production and consumption of real meat are also on the rise. Do these two seemingly-opposite industries have more in common than we think, and can they live in harmony?

It’s nearly impossible to ignore the rise of fake meat. From Burger King planning to roll out Impossible Whoppers by the end of 2019 to White Castle already offering Impossible Sliders, fake meat is everywhere. The sudden and shocking success of fake meat has taken many industry officials by surprise. How could a product that was so niche for so many years suddenly become so popular?

One of the main factors that led to the success of fake meat products is advancements in food science that increase the taste and texture of fake meat. Scientists can now study what makes meat taste so good at a molecular level and replicate it with plant substitutes. Not only can they make the meat taste better, but they can also make the product look more like meat, too. For example, the main ingredient in the Impossible Burger is heme, a molecule that gives blood its signature color. They also use coconut fat and potato protein to mimic a burger’s natural greasiness and texture. Other companies use soybeans, seitan, and Quorn.

Another reason for the rise in fake meat is that Americans have become increasingly health conscious. A recent study from John Hopkins University showed that over 60% of Americans are making efforts to eat less meat.

Health-oriented customers have also played a large role in the rising real meat economy. Americans hit record levels of meat consumption in 2018. According to the USDA, the average American will consume 222.2 pounds of red meat and poultry. Other animal products, such as eggs and milk, have been on the rise as well as Americans trade-in carbs for protein. As high-protein diets become increasingly popular, some adjust their diet by adding meat substitutes to cut back on red meat, while others focus on incorporating high-quality real meat into their lives. The strong economy also lets the majority of Americans afford beef and chicken despite rising meat costs.

While the two industries are both enjoying success, there is concern from the beef industry about the effects of labeling fake meat as ‘beef’ on real meat products. If the value of real meat products is impacted, this could have serious drawbacks for ranchland values. Ranchers are pushing for an official definition of beef and meat. The top priority in the National Cattlemen’s Beef Association’s list of official 2019 policy priorities is to clarify the definition of those words.

“The use of traditional beef nomenclature on alternative products is confusing to consumers and weakens the value of products derived from actual livestock production,” claims the NCBA’s 2019 Policy Book.

The goal isn’t to get rid of fake meat for good, but to make sure that the customer knows what they are buying.

“While at this time alternative protein sources are not a direct threat to the beef industry, we do see an improper labeling of these products as misleading,” said the  Policy and Outreach Director of U.S. Cattlemen’s Association, Lia Biondo, to USA Today. “Our goal is to head off the problem before it becomes a larger issue.”

Luckily, many titans of the fake meat industry seem to be on the same page.

“I think it actually could help us more than it could hurt us because it starts the national dialogue around what really is meat, and if the origin of meat really matters to the consumer,” said Ethan Brown, the founder and CEO of Beyond Meat, to CNBC.

While meat alternatives are still a relatively new concept to American markets, fake meat could have a lot to offer farmers. Since many fake meats are created from plants such as soybeans, fake meat companies could become steady clients of many farmers.

Real and fake meat are here to stay. One industry doesn’t need to fail for the other to succeed. A changing customer base, strong economy, and scientific advancements have all helped both industries become the successes they are today.

Looking to buy some land to start your own real or fake meat empire? Be sure to always work with a land expert in your area to get the best deal for your money.

About the Author: Laura Barker is a freelance writer based out of California for the REALTORS® Land Institute. She has been with RLI since October 2017.

What RLI Is All About – A Personal Story

Our daughter, Jess, and her husband, Brian, are Air Force and were being transferred from Maryland to Texas for a brief six to nine month period. Her husband was stationed in Alabama for three months prior to that and our daughter and 19-month old grandson lived with us during that time period. Jess was responsible for finding a rental home in Texas.  She had planned on making a two to three day trip for house-hunting, signing a lease, etc.

Just like everyone else, we started with online searches for rentals.  No sooner would we find something that looked ok, we would call and find out it was already rented.  Consequently, I recommended she not make a trip and save the $1000+ for a house-hunting trip that would probably end up being wasted time.

So, next steps – Mom to the rescue, as I am an ALC and can network with other land REALTORS® all over the country.  A search through RLI’s Find a Land Consultant tool helped me to find someone in the area that Jess and Brian were being transferred to, and a call was made to RLI Member Michelle Rushing, an agent with United County/M & M Ranch Land Investments.

Michelle was super to work with! From providing information on available rentals and information on rentals we asked her about to even answering texts and emails when she was away from the office at a class! Then, Jess finally found a rental that looked promising and was available; completed the lease application, etc., but the leasing company wouldn’t finalize the lease until she walked through the house.  Creativity again by Mom, I called the leasing company and asked if a proxy could walk through the house on our daughter and son-in-law’s behalf. The company said yes. So, I placed yet another call to Michelle, who graciously agreed to do this for us. She provided great information on the home, the neighborhood and surrounding area, and Jess and Brian were able to move forward with the lease!

I cannot say enough about the willingness of Michelle as an RLI member. I later discovered Michelle had just joined RLI two weeks prior to my call, and she was impressed that she had already received a referral call from the Find A Land Consultant on the RLI website, just because she had invested in being an RLI Member! This to me is part of what RLI is all about – networking, helping each other, and trust in each other… even when members may not have met each other before.

Special thanks to Michelle and I hope to meet her at an upcoming RLI class or event!

About the Author: Terri Jensen, ALC, served as the 2015 RLI National President and is currently a Broker with National Land Realty based out of Minnesota. Of 18,000+ REALTORS® in Minnesota, Terri is one of only 14 to have earned the elite ALC Designation (Accredited Land Consultant).  This designation, through the REALTORS® Land Institute, requires rigorous experience, education, and expertise in the areas of real estate, auction, appraisal, 1031 exchange.

Should I Invest in Timberland Real Estate?

I’m often asked “Should I invest in timberland?” and “If I invest in timberland, is it better than investing in stocks, bonds, farmland, etc. etc.?” My answer is generally “It depends” because the term ‘better’ is almost always subjective… What is better for one investor may not be for another depending on end goals. Understanding the basics of how to establish and achieve your goals in a timber investment is paramount.

Timing Your Investment Goal

We all want our investments to grow in value and make us wealthier, and timberland is just that… a growing investment (pun intended). It enjoys stable, steady growth, paying no attention to the volatility of today’s political world, and that is one reason why many of the wealthiest people in the world invest in timberland as a method of diversification and asset protection. Annualized returns range from 6-20% in my experience, sometimes more, with many factors weighing in, almost all of them related to the demand of the local timber market equally or greater than the actual land related aspects like site quality and stocking.

But, while well stocked and managed timber stands grow in size and value each year, unless you acquire a sizable portfolio, cash flows may only come every 3-7 years after reaching a merchantable size. So, when deciding to invest in timberland, it’s important to be able to service any debt obligations during those periods between cash flows and before buying, understand when you’d like to receive the bulk of the cash flows that will come during the timber’s “rotation” (financial lifetime of the stand). For example, if you intend for your timber investment to pay for your 3-year old child’s college fund, it may be wise for you to buy a well-stocked tract of pine plantation that’s 1-2 years old. This should enable you to buy more acres at a lower price, and those stands should be reaching a merchantable status as your child approaches 18 years old. That plantation will generally see 3-4 thinnings between the age of 15 and 30, all the while graduating into more and more valuable product classes through the process referee to as “product change,” until you ultimately clearcut and begin the process again.

But, if you’d purchased the wrong age class of timber, you may have missed your income window and had to come out of pocket or borrow money while you waited on the stand to mature. Please note: The merchantable age of a stand is subject to several factors, and the age of clearcutting and when you thin may change based on your objectives. The ages of 15 and 30 are just commonly seen benchmark ages in the southeast for private landowners. Finding the right timberland tract for your goals is key to success as an investor in this type of property.

Define Your Management Strategy

Elaborating further, a critical part of investing in timberland is having a successful management strategy. Are you managing for money, for wildlife, or a balance of both? They don’t have to be mutually exclusive, but you’re also not growing trees for future harvest(s) inside those huge food plots you installed to hunt monster bucks and turkey in. So, before or after you buy a tract of timberland, enlist a true consulting forester that acts as your fiduciary, working purely for your best interests, in order to help you establish the best management plan for you. We have many forestry consultants on our team that work hand in hand with landowners looking to balance timberland investment and recreational use as well as landowners looking for pure economic return. Whatever your objectives, without a sound timber management strategy in place, you will leave a lot of money and time on the table.

Another major driver in timberland returns, and possibly the most important, is competition. Timber and the product classes that it consists of are commodities, and the value of those are greatly affected by supply and demand. As such, you want your timber investment to be located in an area with a high concentration of mills that compete for the product classes your timberland will produce, generally within a 60+/- mile hauling distance of that market area (commonly referred to as your “wood basket”.) If you purchase timberland in an area with only a single or few mills, demand for your timber will likely be low and local supply will be high, so the timber prices paid will generally be dictated and depressed rather than driven up by market competition, which negatively effects your returns in both the short and long term. And, once it’s time, it’s harder to sell timberland in an area with consistently low timber prices.

In the past, I’ve elaborated on the importance of site index, site prep and planting, and the many tax advantages of owning timberland vs. other investments, such as basis depletion, a multitude of deductible capital expenditures, long term capital gains treatment, and conservation easements. But, one of my favorite attributes of timberland is how tangible it is vs non-land investments. Timberland is an investment with roots than run deep, providing an opportunity for you to manage your timberland in a way that allows you to spend time with your friends and family outdoors, teaching them about the blessings bestowed upon as land stewards, and the ability to leave a legacy behind that your loved ones can benefit from for generations to come. That kind of return is beyond measure.

This post is part of the 2019 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here

 About The Author: Clint FlowersALC is a top producer with National Land Realty, a member of the REALTORS Land Institute of Alabama, and a member of the 2018 Future Leaders Committee.  He was a NLR Top Producer Nationwide in 2016 and 2017. He also won the 2017 APEX National Broker of the Year award for Timberland.