Tips on Generating Multiple Incomes From Your Property

This article was originally posted as a guest post on LANDTHINK‘s blog.  

“Buy land, they aren’t making anymore.” Mark Twain’s quote isn’t just hilarious, it’s true. Land is a limited resource. People get so caught up in trendy stocks that they sometimes forget the fundamental value of land.

What makes land such a unique investment is that you can use it to generate multiple streams of income. Before you read on, take a look around your neighborhood. Are there already seven other U-Pick operations in your area? Do all your neighbors grow and harvest the same type of timber at the same time? If lots of other landowners are doing it in your area, you might want to explore other options.

Having multiple streams of income is all about out-of-the-box thinking.  Here are just a few ways you can make more money off of your land.

Agritourism 
Agritourism can be a great way to make a little extra money on the side. Agritourism is any sort of activity that brings tourists to your land, and the opportunities are endless! Each land type offers its own unique range of ways to make extra money.

  • If you own an apple orchard or grow sunflowers, consider U-Pick or hosting different fall events. These could include hay rides, festivals, or selling fall treats like cider and pumpkin pie.
  • Ranchland? Consider horseback riding or boarding horses.
  • If you own a vineyard, you could do tours or host samplings. Maybe you could pair different wines with cheese or fresh fruit from your land!
  • Farmland? Host a corn maze or pumpkin patch activities in the Fall to attract visitors.

Air B+B/Rent Out Land For Campers
You might not view your land as the ultimate romantic destination, but other people might. The rental industry is booming, and there are tons of people looking for a country getaway. Websites like Airbnb.com allow you to list your guest room or cottage for the price of your choice.

If you don’t want people in your home, you could also rent out your land to campers. Camping can be profitable as long as you’re okay with a little wear and tear from people sleeping and eating on your land. One investment we’d suggest if you go this route? A Porta-Potty.

Lease Out Unused Land
You can lease your land to farmers who need extra land. This is especially helpful if your soil type is good for what farmers grow in your area. While this can be profitable, leases can get tricky very quickly. You’ll want to work with a land consultant to make sure you are getting the best possible deal for your land.

Host Events
The average couple spends thousands on a wedding venue, and rural and country weddings are a current trend. If you have a picturesque property or rustic barn, you can host a variety of events on your land to bring in extra income.

Make Energy
Renewable energy is a great idea if you don’t mind a few eyesores, like overhead power lines or turbines. Harvesting wind or solar energy on your land can make some extra money. You can either sell the power or use it for yourself to slash your energy bills (the latter more applies to solar energy). While this can be a great way to generate multiple incomes, having energy on your land could limit what you can do on that part of the property. Make sure you know all the benefits and drawbacks before making a decision on this one.

If you are interested in learning more about whether or not solar power is right for your property, don’t miss the REALTORS® Land Institute’s September 2018 Hot Topic Webinar on Solar Panels: A Good Idea for Your Land?

These ideas are just the tip of the iceberg. There are hundreds of ways to generate multiple incomes from your property. We hope this article inspired you to find one perfect for your land!

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

How To Build A Pond Or Lake

I had the privilege of selling some property to a great couple and they had a ‘must have’ requirement; they wanted a property suitable to building a lake and we found a great property located in Harris County, GA. The property was heavily wooded with a stream flowing through the property and the property had a great lake site and suitable soils. The contractor estimated the final lake size around 4.5 acres. Using a topographic map, I estimated the watershed area to be about 110 acres. Generally speaking, the watershed area should be about 4:1 (4 acres of watershed to 1 acre of pond or lake). Due to the size of the proposed lake and the intended use, the owners were able to get a permit through the NRCS (Natural Resource and Conservation Service) to construct the lake.

The number one attribute that buyers are looking for is water features such as a pond or lake! The addition of a pond or lake will add lots of value when it becomes time to sell. A pond or lake provides lots of opportunities such as fishing, canoeing, water source for irrigation, increases the aesthetic value of the property and much more.

Generally, the process starts with clearing the trees and brush. The brush can be burned and some of it can be used to build fishing habitat or structures for larger fish to hide and ambush their food sources.  A portion of the dirt is removed and used later on for constructing the dam for impounding the water. Another important issue is the presence of clay. The clay is used to key (core) the dam, creating an impermeable layer inside the dam that the water can not pass through. That is why land with a high content of sand is not suitable for constructing a pond or lake. The topsoil is stockpiled and used later to dress up the dam so the dam can be vegetated.  Beware…keep the trees on the back side of the dam cut.  When tree roots die, they can become channels for water to seep through the dam.

Use a professional to design the pond and dam. A 100-year rain event can destroy a dam if not properly designed with a spillway to handle the runoff.

For the most part, contractors are now using siphoning systems to control the water level. Metal pipes and valves tend to rust over time. I went back from time to time to document through pictures and video the construction process. This process took over 1 year!

Some of the pictures in the video were taken to show what to do if you are building a pond or lake for trophy bass fishing. The pond should be deep at the shoreline. This is designed to keep shallow water plants and weeds from invading your pond or lake. Also, structures should be left in the lake to improve the habitat for the fish. Often these large bass will use these structures to ambush bait fish. Also, notice the shallow mounds built in the pond, these are great for spawning bass and bream!!

 

The take away is this…if you are planning to buy land for building a pond, agricultural purposes, timberland or whatever, use an Accredited Land Consultant. You need someone advocating for you that understands land and land brokerage. This person needs an in-depth understanding of topographic maps and watersheds.

This article was originally featured on Kent’s blog Land Blog…Get The Dirt! He writes about all things land, from timber to selling land to lessons learned from his 40 years in the industry. Check out his blog for more excellent content!

Kent Morris, ALC, is a Registered Forester and Associate Broker who has experience in fields such as timber appraisals, harvesting, thinnings, and timber sales.

Using Video to Close More Land Deals + Better Serve Clients

We’re living in the golden age of video. Video editing software is cheaper and more user-friendly than ever before, millions of people head to streaming sites like YouTube every day, and smartphones have basically become tiny video cameras you can take anywhere.

Land experts are (or should be!) making the most out of the advancements in video, too. Video is used for everything from taking stunning shots of properties to reaching clients on a more personal level. We reached out to a few expert Accredited Land Consultants (ALCs) to find out how they use video to close a deal.

Drones

Drones are taking the land industry by storm. They can do everything from watering crops to monitoring livestock. Drones also make excellent videos. You don’t have to worry about getting your thumb in the way of a shot or your hand shaking as you hold the camera. Drones also give you incredible birds-eye shots of properties that you can’t get anywhere else.

Drew Ary, ALC, with Keller Williams Advantage in Coweta, OK, likes how efficient and high-tech drone videos are.

“Taking multiple 5+ second Drone videos during a listing appointment and using the DJI app to patch them together to make a 30-45 second video of the property immediately after flying is the quickest route to getting a John Hancock… what a way to show a client you are on the cutting edge of technology,” says Ary.

The Personal Touch

Video allows clients to connect with you on a personal level. It’s one thing to read an article about an agent, it’s a completely different thing to see and hear them deliver the same message.  Wendy Johnson, ALC, with United Country Texas Landmark Properties in Royse City, TX, uses the personal touch of video marketing to connect with clients for long-lasting relationships.

“Video marketing is providing me a good return on investment. I receive leads that I have been able to convert to listings and buyers,” says Johnson.

Johnson’s video of a Texas ranch shows off the gift of personal touch. Everything from the instrumental music to the smooth shots of every corner of the ranch pulls you in and makes you want to learn more about the listing.

“I believe because of the content marketing that a video can offer. I am able to utilize it in selling my properties as well as to engage an audience which can facilitate long-term relationships, which builds trusts and confidence in both myself and clients,” says Johnson.

Beyond Properties

Videos showing off your properties are great, but that’s just the tip of the iceberg. About Me videos on your website are a great way to let your clients know a little more about you and your business. A great example of this is a promotional video like the one Drew Ary, ALC, created. Ary talks a bit about his experience in the industry while you look at sweeping views of Oklahoma land.

You can create:

  • How-To’s/Informative videos (Great content for social media. It shows off your expertise. For example, RLI has videos explaining our education program and member benefits.)
  • Promotional videos of your brokerage
  • Compilation videos (Show off your most successful sales!)
  • Videos that tour the neighborhood of the property
  • And much more! Don’t be afraid to get creative.

Video is king in 2018 and is looking to keep its throne in 2019. It’s easier than ever before to create videos, and thanks to social media and sites like YouTube, more people are tuning in. Making the most out of video is a great way to expand marketing and reach new clients like never before.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Timberland is Timberland… Right?

The majority of our market in the Southeastern United States consists primarily of timberland. One of the biggest problems I encounter with both Buyers and Sellers of timberland is that they don’t understand the value components of timberland tracts and what questions to ask to determine them on a tract by tract basis. A bigger problem is that many times, neither does their agent. Understanding what to look for in timberland enables you to be a smarter seller, buyer, or agent.

What makes a good timberland tract? A combination of important factors come into play with timberland: soils, site preparation, stocking/ stand density, and as always with real estate: location.

Soil

In regards to soils, you want to ensure that the soils are capable of growing the species that perform best on that site and grow at a rate competitive with other species/products in your timber market. And while you can take actions to enhance your soil’s growth rate like fertilizing or mechanical site prep applications like bedding, the better your soils are to start with, the faster you’ll see results from your timberland. Learn what site index rating the property has for the species you intend to grow or the species it’s already stocked with. The site index correlates closely with the yield of your forest. It acts like a score; that score is the height of that species at a certain age. The higher, the better. A site index score of 70 for loblolly pine in a plantation setting, the most common species see in timberland in our market, indicates that under normal conditions, a dominant and codominant loblolly pine would be 70 feet tall at 25 years old. Always remember that Site Index is species and age-specific and can vary greatly by both, so before using a tract’s site index rating to make a financial decision, be sure to confirm what base age is being used.

Site Preparation

Regarding site preparation, an analogy I use frequency is a vegetable garden. Which grows best – A garden that was tilled and sprayed or removed competing weeds, etc. or one that was planted directly into the soil without any site preparation? The prepared site of course. Timberland is no different, especially in a plantation setting. Reducing the initial competition through chemical and/or mechanical site preparation applications can greatly affect the long-term yield of timberland.

Stocking/Stand Density

When it comes to stocking and density, understanding your goals is key. Some saplings, speaking primarily of pine here, are genetically designed to grow fast but not necessarily clean, meaning more limbs and wider growth rings, both of which can affect the stand’s ability to grow lumber grade logs and poles (in pine stands). These stands will be more prone to produce products that are pulp and chip-based throughout their financial lifetime, also known as a “rotation.” Regardless of the source/type of seedlings you have, stand density can also affect the quality of your timberland. Wider spacing equals fewer trees. That helps them grow in diameter faster, but may limit vertical growth and the natural pruning that occurs in a properly stocked stand. Beyond that, a more simplified explanation can be fewer trees potentially equals fewer harvests and less money over the lifetime of the stand.

Assuming all things being equal between two tracts of timberland, location can be the most important factor in determining which is more valuable. Logging and hauling costs are the first expense that comes out of the gross income generated by a timber sale. The closer your proximity to mills that process the products your timberland will produce, the less it will cost to harvest that timber and the more competition you’ll see for that wood, both of which yield a higher net income to the landowner. The net income from a timber sale is also known as “stumpage”. Stumpage is the rate most experts are quoting when asked about current timber prices. Location can also determine what types of weather you can perform harvests in, which affects when you can bring your timber to market. Tracts with logging limitations due to weather concerns, such as wet natured or floodplain tracts, can be restricted to selling during the dry season vs tract with dryer ground or abundant road frontage that can be logged year round. Being able to sell your timber in a wet weather market can allow you to take advantage of huge swings in timber prices because when supply is limited, demand rises, and prices along with it. I’ve witnessed timber prices go as high as four times the norm due to wet weather logging demand.

I’m often asked how “the timber market” is doing or “isn’t timber down right now?” It’s important to remember that timber is a commodity and there is no single “timber market”. Every species can produce several product classes, each has their own market with contributing or limiting factors, and the current value of each product class is driven by supply and demand. One market may be down while another is up. Arming yourself with a true expert in timberland is imperative to ensuring your maximum yield is reached as a buyer or seller of timberland.

This post is part of the 2018 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.

Clint Flowers, ALC 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.

How To Increase The Equity Value Of Your Recreational Land

My days are spent working with buyers and sellers of recreational and tillable land. So when I was approached about writing an article about recreational land it was a no-brainer. My fellow Minnesota agents and I do seminars every year at our state’s Deer Classic and the topic is “Land Buying & Selling 101”. During each seminar, we do a Q&A and we typically find many of the questions are about building equity in a current property or future property.  Although I live and work in MN, this information will hold true for many recreational properties and almost any place whitetail deer call home.

In my opinion, the cheapest and most effective thing you can do to grow equity and value to your property is purchasing some trail cameras. Buyers are always asking me to see trail camera photos from the property for sale.  When we check the analytics of our listings, it is proven that a listing with good trail camera photos vastly outperforms a listing without them. In addition, I personally advise my new buyers to go buy a thumb drive and save trail camera photos from day one, even if they have no plans of ever selling. It is great to be able to show a buyer 2-10 years of trail camera photos and allow them to see the quality and quantities of deer using the property.

The next low cost and high return item would be “road appeal”.  Much like curb appeal on a house, that first impression of a property will have a lasting effect. Start at the entrance of property; even if your property is not completely fenced, installing a simple yet sturdy gate that is lockable with a chain and adding a “no trespassing” sign, will add appeal for a buyer.  This low-cost item gives buyers a good sense of security and sets the tone of what they are going to see when viewing your property.  If you have spent any time on a farm you know there is a good chance of coming across an old junk site.  Removing these items can be time-consuming but in the long run, it will be build value in your property and make it more marketable when it comes time to sell. Clean up any trails you have on the property so when touring the property it is easy to navigate.

A property that is mainly used for whitetail deer hunting in a managed neighborhood is highly sought after. Creating a so-called managed neighborhood will take a great deal of work as well as time but will give you an abundant return.  I’m not going to discuss how a so-called management group should be run as that is an entire article in itself.  Ideally, you want your property to be in the center of this management group. Reaching out to all the neighboring landowners of your property is where you start.  Once you get them on board with a management plan ask them to reach out to their neighbors and so on and eventually you will have a large area of landowners all working towards the same management goals.  Sounds easy, but I can tell you it is not. This will take a lot of time and you will most likely have some people that will not want to participate and that is ok. The goal is to try to get as many on board as possible and work on growing the group.  This typically will take years, but keep in mind the value you are adding to your property.

The next few items are more labor-intensive and cost more money to complete and maintain. If you watch any hunting show or spend any time around an avid hunter you know that food plots are a huge factor when it comes to hunting whitetail deer these days. Just remember when it comes to food plots bigger isn’t always better.  Making sure you locate the food plot to maximize the hunting and access on the property is more important than the size of the plot. Having several well-placed food plots and keeping them maintained every year will be not only be a great increase in value, it will also help make memories when hunting season comes around.  In my opinion even more important than a food plot is water on a property. Not all properties will have flowing water on them.  Even those that do may not have the water in ideal locations for hunting. If your property is lacking a water source I personally would add this feature before I would add a food plot.  This can be as extravagant as hiring an excavator to install a pond in a location for natural run off to hold water or as simple as taking a 55-gallon drum and cutting it in half and digging it in the ground.  I personally use a product made by a local company that holds 100 gallons of water and has a trough for the water to sit in and allows all kinds of wildlife to drink from it. I have 5 of these on my property and they are all located in great travel and staging areas I hunt. I do have to fill them a few times a year but since they are mobile they give me the option to relocate them.  Since they are portable I can make location changes based off of my hunting observations. I can’t do that with a pond made by an excavator.

A good trail network will allow you access in and around a property.  The extent of the trail network needed will depend on the topography and makeup of the land. I personally deal with the rolling bluffs of Southeast Minnesota so creating access from the bottom to the top is almost a must if you want to get the most for your property.  Most landowners do not own excavating equipment so I highly suggest asking around to find out who others have worked within the area to do such projects. It is in your best interest to do your research and get references prior to hiring someone.  A quality bulldozer operator can accomplish a lot in a short time. Most first time buyers are nervous about what it will cost to create a good trail network.  I have even encouraged sellers in the past to invest in a trail network as it I knew it would make their property more marketable and they would see the return on their investment.

Hunters from Minnesota we are used to hunting in extremely cold weather.  In my opinion, the old saying “you’re not a real hunter if you sit inside a blind” has gone out the window in the last decade. Box blinds are here to stay and the more hunters that hunt out of them the more buyers want them on their property.  As an example, our state’s Deer Classic event this year included at least 7 different manufacturers of enclosed deer stands. If a manufactured stand is not in your budget you can also build it out of lumber, just make sure it is clean, sturdy and safe. From there adding quality sturdy ladder or hang-on stands will also increase your property value. Stands are something every hunter wants and if you have created a great location for them and they’re of good quality you will always get your money back out of them plus you get to enjoy them while you own the property.

“Has this property been surveyed?” is almost always asked when I’m showing a potential buyer a property.  In my territory, the land is not flat and often times you can’t see from one corner to another.  Spending the money to hire a professional surveyor to mark your property boundary corners as well as points between the corners will make a buyer more comfortable when purchasing your property.  It also allows you to easily establish or maintain your property line. This can also be helpful when doing any logging, adding a trial system, food plots, water locations or even hanging stands and posting your property.  With anything, I would suggest getting a few quotes on this project and asking around on who someone would recommend. If you are not in a time crunch to get this done I would recommend asking the surveyors what time of the year they are least busy as they may give you a better price during their slow time versus their peak time. In my area, the downtime is during the winter.

These next three improvements are much more expensive but can add some serious value to your property. They are not going to be good for all buyers and will require more thought than the previous improvements I have mentioned.  These three items, in no particular order, are 1) adding a driveway, 2) bringing in power and 3) drilling a well.  A couple questions you need to ask yourself or your group of owners are “Will this improvement be something almost all future owners of this property see value in?” and “Could it be any cheaper to do it later versus now?” Adding a driveway that is easy to travel won’t get cheaper with time and will always make the property more enjoyable and user-friendly.  Bringing power to the property will also be worth your investment. This can become costly if you are having the power brought in a significant distance.  However, I have talked with clients that had power brought to their property for almost free and I have met clients where it was going to cost them $10,000 or more to get power to their property. So this one can get tricky, if the cost to bring power to the property is extremely high and you are not going to use it for a length of time it might not be an investment you will want to add to your property. The last of the three items, drilling a well can vary in cost all over the country. Personally, I know the cost is pretty significant in Southeast Minnesota.  However, when I tell a buyer there is a well on the property they all understand what cost went into it and they see the value. I do not see the cost of these three items getting any cheaper by waiting.

Now we are going to talk about the biggest decision that can add value but at the same time affect the marketability to the greatest number of future buyers of your property.  I get people all the time that ask if they will get their money back out of a cabin if they built one.  My advice is to keep it simple, yet clean and functional, don’t get elaborate or install high-end finishes if you want to make sure you get your money back out of it. It is best not to overbuild as it will limit future potential buyers. As soon as you make a cabin or house addition to a property you immediately take some future buyers off the table. The goal is to not eliminate too many of the remaining buyers by building something that is either too personal or elaborate that it would shrink your potential buyer pool so small you will not see your return on your investment.  Don’t get me wrong if you want to build a custom log home on your reactional land and you enjoy it for 20+ years, go for it. You will get your return out of the use and enjoyment.  If you have a short-term plan for the property then stick to something simple.

As you can see there are many different ways you can increase the equity in your recreational land. These improvements may take years or even decades and can vary drastically in cost but they are all great ways to increase the equity value of your property while enjoying it.  I will leave you with the one thing I always ask while giving my seminars. “In a show of hands how many of you have ever made any memories on your 401k or stocks or bonds?” No one has ever raised their hands, but I can promise you every single landowner in America has made memories on a piece of land they have invested in. Owning land is one of the best financial investments you can make in your lifetime and the memories you make on it while you own it will be your favorite return on investment.

About the Author: Bob Stalberger, ALC is the Land Specialist in Southeast MN for Whitetail Properties Real Estate. Stalberger is the Realtors Land Institute Minnesota Chapter President and a recipient of the Apex Awards 2017 Top Twenty Producer. Bob specializes in selling hunting and farmland and has been an ALC since 2016.

The Six Most Common Mistakes When Buying Residential Land Real Estate

You’ve probably heard home buying horror stories before. Everyone knows someone that got stuck in a mortgage they couldn’t afford or finding out too late that their dream house was crawling in termites. Residential land buying mistakes are very different from home buying ones, but both have lasting consequences. Here are some of the most common mistakes made when buying residential land and how to prevent them.

1. Not Working With A Professional

Why spend all the money on a land expert when your neighbor Bob down the street has bought residential land before? Maybe Bob doesn’t have much experience in the field or any certifications, but he’ll do it for half the cost!

Even though it might save you dollars and cents in the short term, not working with a land professional could cost you serious money down the road. ALCs have a world-class education in land and years of experience under their belt. They know the ins and outs of the industry. All of the rest of the mistakes on this list can be avoided by working with a land expert.

2. Not Stepping Foot On The Property

Google Earth is an amazing tool. You can use it to view the history of any property and tour the neighborhood. However, no online tool can replace the experience of actually seeing a property in person. You and your agent can best spot any issues with the land that might be too small for Google Earth to pick up. Walking around a property can also help prevent our next mistake…

3. Assuming ‘Buildable’ Means The Same Thing Everywhere

In some areas, the word ‘buildable’ simply means your city or county permits you to build on the land. This definition has nothing to do with the land type. It only means that you are allowed to build on it. In other areas, it means the land type and characteristics are good to build on. It’s kind of like how ‘sweet tea’ means tea brewed WITH sugar in the South while the same words means tea with sugar added AFTER the tea has brewed in the North.

This is an uncommon issue in the land industry, since most sellers give their buyers the information they need to distinguish between the two. However, there may be some vague listings and possibly less than honorable people willing to take advantage of people who don’t know the difference.

4. Not Knowing the Lingo

Land lingo can be confusing. Not knowing the language of residential land buying can end up in you buying the wrong property or buying in the wrong place. Here are some words you will definitely need to know to get started:

  • HOA/POA. Home Owners Association or Property Owners Association are groups dedicated to the upkeep of common areas of a property and protecting the property’s values.
  • Restricted subdivision. This is a type of subdivision where deed restrictions are put in place by the initial developer to protect property values. Homeowners will be required to follow these restrictions.
  • Unrestricted subdivision. In unrestricted subdivisions, these areas do not have POA or HOAs that enforce restrictions that protect property values. However, they are not excluded from state or county-imposed deeds.

5. Skipping The Tests

We know, we know. No one likes shelling out extra money when buying land is already so expensive. However, these tests are the key to making sure you aren’t stuck with a property that has environmental hazards, the wrong soil type, or any other disaster waiting to happen. These tests include (but are not limited too):

  • Title searches
  • Soil tests
  • Land Surveys
  • Environmental tests
  • Appraisals

6. Thinking All Fees Are Included

Fees and extra costs are like cockroaches: if you see one, there’s probably ten more hiding somewhere close. In an article for realtor.com, Chris Chapin, a REALTOR® with Douglas Elliman, points out all the little costs people forget about.

“There are substantial expenses for getting land ready for construction,” Chapin notes. “You will need a survey, permits from the municipality, and health department approval. The site must be cleared, graded, and excavated. Departments of local, county, and state governments can be involved, all with associated fees, of course. The process from identifying a parcel for purchase to receiving the certificate of occupancy can take a year or more.”

Staying informed on the land industry and working with a land expert are two of the best ways to avoid these common mistakes. We hope this article can help you avoid and overcome the most common mistakes when buying residential land.

Make More Money Off Of Your Timberland

Timber prices are at a record high. The tragic wildfires of last summer and trade disputes as well as an increase in demand for new residential housing have all caused the price of timber to skyrocket. With low supply and high demand, timberland owners are sitting on a potential gold mine. To make the most off of the high prices, you’ll need to tread carefully. Here’s how to make the most out of the booming market.

Check The Timber Mills

Is your local log mill looking for a particular kind of log? Many mills are willing to pay extra for logs that meet their specific standards and may dock your pay if they do not. Some mills even pay less for logs that are larger than usual. This means you are getting less money for more timber! Scope out the pricing of your local mills to find out where your tress will make the most money.

Long-Term Gain

Patience is the name of the game when it comes to timberland. Prepare to lose money for the first few years because you will need to spend money planting and taking care of the trees. Since timber doesn’t provide immediate returns, many people might be hesitant to invest.

However, timber has historically produced strong long-term returns. Many financial websites, such as CNN Money and Investopedia, recommend investing in timber as a way to diversify your portfolio. The returns tend to move countercyclically to other markets, providing your portfolio with a safety net. Not only is investing in timber a smart financial move, it is a good investment in your land. Timber is a hearty, relatively low maintenance tree that will produce steady returns for years.

To Cut Or Not To Cut?

When you cut your trees doesn’t only impact your current crop, it will also determine the growth and health of the next generation of trees. With prices at a record high, it can be tempting to cut down your trees as soon as they mature. Try to plan harvests around times that would benefit the saplings as well as when your timber is at its highest value.

Best Practices

Taking care of your timber now will result in high-value trees down the road. Regular thinnings, regeneration harvests, and timber stand improvements (the culling of undesirable trees and saplings) are all practices that result in healthier (a.k.a. more valuable) trees. Healthy trees mean healthy saplings and a whole new generation of high-value trees. It’s a never-ending cycle of profit!

Sky-high prices and an increasing demand have created a modern day gold rush. Although it can be tempting to chop down all your trees and cash in on the craze, long-term planning is the best option for you to make the most money off of your timber.
To learn more about timber, be sure to check out the newly updated LANDU course Timberland Real Estate on August 1st being hosted by the RLI Alabama Chapter.

This article was originally posted to the National Land Realty blog.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

The Great Grazing Debate

What’s the first thing that pops into your head when you hear the word ‘holistic’? Daily meditation? An all-kale diet? Yoga retreats that cost more than most houses? For some people, it’s holistic planned grazing (also called HPG), a system that supposedly increases the health of your land. Like anything that has a lot of supporters, it also has doubters. So, is this method going to save our lands? Today, let’s explore holistic planned grazing and if it is right for your land.

Holistic planned grazing caught the attention of the land community after a 2013 Ted Talk by Allan Savory, a Zimbabwean ecologist and farmer. He claimed that, contrary to popular opinion, reducing the number of animals on the land actually made the land condition worse. He concluded that the natural grazing patterns of animals is actually better for land.

Savory’s TedTalk, which currently has over four million views, sparked a debate in the land community. Some blogs, such as GrainNews, are singing the praises of HPG. Others, like the Sierra Club, are more suspicious of this new method.

So, what exactly is this practice that is causing so much controversy? Simply put, holistic planned grazing is a pattern of grazing that mimics how wild herds would have grazed on the land before it was cultivated. In theory, this practice will help the land return to a more natural state. HPG will be different for every landowner based off of their amount of livestock, type of land, soil type, and your overarching goals for improving the land.

Holistic planned grazing isn’t just letting your cattle out into the fields and hoping for the best. In fact, it requires quite a bit of planning and tracking. Timing is key when it comes to holistic planned grazing. Have your livestock stay in a pasture for too long and you run the risk of overgrazing. Too short a stay and the land will not reap the full benefits.

Many farmers who have tried this method have reported positive results. In one study, organic dairy farmer Dharma Lee tracked the health of their land over three years. Here is what they noticed:

  • A 120% increase in the number of grazing days per year, from 76 days to 167 days per year, which translated into an annual savings of $27,300 for them.
  •  A drop in feed cost from 60% to 48% of the total cost of production.
  • Improved profitability, with a gross margin of 41%.
  •  Increased carrying capacity of the land, with a 68% increase in grass harvested by cattle on the pasture.
  • A significant improvement in livestock health, with a key indicator – mastitis – dropping from 73% to 3% within the herd.

You can read the full study here. Other landowners have reported similar results in their land.

“Holistic management is a method of managing livestock in rapid rotation to increase greater production, sustainably, and profitably,” says Jennifer Sandy, a cattle rancher.

As we mentioned earlier though, not everyone is a fan of holistic planned grazing. American ecologist Dr. John Carter believes that HPG relies too heavily on personal anecdotes and not enough on science. He also points out that the study ignores the negative effects of intense trampling on a land’s water storage and plant productivity.

So, is Holistic planned grazing right for your land? That depends on a number of factors:

  • Are you trying to improve the health of your land?
  • Do you have the time/resources to plan and carry out moving your cattle?
  • Can your land recover if your livestock occasionally over or under graze an area?
  • Do you want your landscape to mimic its original growing patterns?
  • Do you have enough livestock to cover the land? And if not, does it make financial sense to invest in more livestock?

If you answered yes to all of these questions, HPG might be great for your land. Be sure to watch the original TedTalk, see what other landowners have to say, and work with a land expert in your area before making your final choice. Since it is a newer method, only time will tell if holistic planned grazing is the future of land or just a passing trend.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Top Crops for 2018 and How To Make More Profit On Them

Crops can be profitable for a variety of reasons. Some are staples of day-to-day life, some flourish in specific climates, and some are popular because they are trendy (think superfoods like kale and avocados). Today, we’re going to take a look at what makes these five top crops so successful and how you can make even more money off of them.

When choosing our top crops, we’ve factored in three key things:

  1. Profitability (of course!)
  2. Demand (both historic and recent)
  3.  Value (current and predicted)

Of course, some of these crops might not be right for your specific land and the current tariff war has temporarily lowered the value of some of the crops on this list. But we think these five crops are excellent investments in the long term.

Corn

What Makes It A Top Crop: Corn is in everything! It’s used in animal feed, plastic, penicillin, sugar substitutes, whisky, ethanol, and so much more! While the demand may fluctuate, there will always be a need for corn.

How To Make More Money: At the Illinois Soybean Association event, successful corn farmer Randy Dowdy shared his secrets to success, saying “The difference between a good farmer and a great farmer is timing and attention to detail.” Dowdy kept a close eye on his expenses to see what his return for investment was, and was able to determine from that what he could cut back on.

Dowdy is also a huge fan of minerals. “You want 300-bushel-per-acre corn? If it takes a certain amount of nitrogen, a certain amount of phosphorous, and a certain amount of potash to make a bushel of corn, my question is, how much magnesium, molybdenum, copper, iron, sulfur, calcium, manganese, phosphorous, potash, boron and zinc does it take to make a bushel of corn? Yields are based on limiting factors,” Dowdy said. If all this sounds close to a foreign language to you, it’s a perfect example of why it is so important to find a qualified expert to help with your land transaction. You’ll need to consider everything from ROI to soil type when determining if this is the right crop for your prop.

Pork

What Makes It A Top Crop: Technically, pigs aren’t exactly crops, but they are still in high demand. A strong demand and high prices make pork a great “crop”.

How To Make More Money: Make your own feed. Feeding pigs can be a huge money drain.  Here is a great recipe for making your own pig feed.

Raising the most in-demand pigs ensures you can get higher prices for the same amount of meat. Some popular ones are the American Yorkshire Pig, Berkshire pigs, and Durco pigs. We have lots of other helpful tips in our recent article on how the Pork Industry Brings Home the Bacon.

Sorghum

What Makes It A Top Crop: The USDA predicts that sorghum will return $74 per acre for the 2018-2019 year. While this is a lower return than some of the other plants on this list, in many high-altitude areas, hearty sorghum can be more profitable than corn. Other countries like China buy tons of sorghum as a cheap feed source or to make alcohol.

How To Make More Money: Don’t invest all your money in sorghum just yet. Recently, China imposed a 179% tariff on sorghum. Previously, sorghum was the number one import from China. While this crop has hit a rough spot internationally, it still has a ton of potential. We suggest waiting until the tariff war dies down though before growing this crop.

Soybeans

What Makes It A Top Crop: Even in the face of a tariff war, America is the leading soybean producer and exporter in the whole world. Similar to corn, soybean has a lot of uses, such as animal feed, cooking oil, biodiesel fuel, and more. Plus, as consumers become more health conscious, it is also often a great way to get plant-based protein.

How to Make More Money: Similar to sorghum, we wouldn’t recommend buying soybeans right now. In the future, check out the tips from Dan Arkels, winner of the 2014 Illinois Soybean Association yield contest, from his article on agriculture.com:

  1. Get the right soil. Arkles recommends soil that holds water well and has excellent drainage. “My soils are black, tight, and deep Muscatine-Sable type of soils,” said Arkles.
  2. Plant early. Early planting allows soybeans have an increased flowering period. “A soybean plant is light-sensitive, and it will flower as late as the season allows,” he says.
  3. Weed management. Did you know that around fifty percent of waterhemp seeds are viable nine days after flowering? Removing waterhemp plants before the harvest prevents future waterhemp.

Marijuana

What Makes It A Top Crop: While still illegal in some states, marijuana is medically legal in 30 states and recreationally in nine. Its new legality makes it an incredibly trendy crop.  It’s currently the fastest growing crop in America. Hemp, marijuana’s non-psychoactive cousin, is still illegal, but there is a huge push to legalize it in Congress.

How To Make More Money: This one is tricky. Since legal marijuana is not federally legal, you want to make sure to work within the law. One way to make more money is knowing all the products that can come from this plant. It has uses in medicine, helping veterans suffering from PTSD, beauty products, and many other uses.

Even the best crops can have slumps. However, we hope this list got you thinking about ways to make more money off of your crops or even new ways that you can make sure you’re getting the highest and best use out of your property. If you’re thinking of purchasing land to grow one of these Top Crops, make sure to Find A Land Consultant near you. Purchasing and managing land real estate requires specialized expertise!

 

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Investing in Land 101

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” — Andrew Carnegie, billionaire industrialist

When it comes to investing, land has always been a solid choice. Many finance experts agree that investing in land is an excellent way to diversify your portfolio. There are also plenty of famous billionaires who have made their fortune in land. Today, we’re going to break down the basics of investing in land real estate.

Investing in Land vs Investing in Stocks

Before we look into investing in land, it’s important to know how it is different than investing in stocks. When you buy a stock, you own a tiny piece of that company. When the company profits, you profit. When you buy land, you choose exactly what you want to do with that land. You can transition it to another land type, lease it out, or just hold onto it and wait for the value to increase (we’ll get more into these investing methods later in the article). You have a lot more control when investing in land.

Investing In Land

There are many different ways to invest in land real estate, but today we’re going to look at the top three most popular with land experts.

1: You can hold onto the land until the market is great and you can sell it for a profit (also called the buy and hold method). Since it relies heavily on the market, this is usually the slowest way to make a profit. However, if you buy a quality piece of land during a market dip, you can sell it at a profit when the market is strong. Buy low, sell high!

2: You can invest to transition the land to its highest and best use. Transitional land is a booming market. This method will cost more, but if you find the perfect use for your land, you can make serious money off of your transitional land.

3: You can lease the land out to farmers or hunters. This requires more work but can get you a steadier profit. You’ll definitely want to work with a land expert like an Accredited Land Consultant (ALC) on the contracts to make sure you are getting maximum profits on each lease.

Benefits of Investing in Land

There are many benefits to investing in land real estate. Here are just a few.

  • Diversify Your Portfolio. Land is an excellent way to give your other investments a safety net. If you invested all your money in stocks, and the stock market drops, you run the risk of losing most of your savings. Investing in land gives you safety even when other markets are down. Over the last twenty-five years, farmland has produced 5 percent annual return on average. Cha-ching!
  • Limited resource. Ever wonder why people pay thousands of dollars for tiny apartments in San Francisco and New York? It’s because land is a limited resource, and desirable land will always be in demand. As Mark Twain once famously said, “Buy land, they’re not making it anymore.”
  • Low effort. One thing many people love about investing in land is that it usually requires minimal effort, especially if you are using the buy and hold method. This is a huge benefit for farmers and land real estate agents who have very little free time.

Drawbacks

Even though there are a ton of benefits to investing in land real estate, there are some factors you need to be aware of. Even though we think investing in land is an excellent idea, our goal is for you to make the best educated choice for you and your land.

  • Taxes can be tricky. States and counties have different laws for taxing investment land. Here’s a great guide to understanding exactly how much you should be paying in taxes for different types of land.
  • Previous uses. Previous land uses can impact the land’s value and what you can use the land for. For example, some land uses can result in environmental hazards that will cause the land value to plummet. Sometimes, it can be difficult to track down the previous land uses, especially if the land has had many owners. Luckily, if you are having trouble finding the previous uses, you can always use this Google Earth hack to see the land’s history!
  • Patience. Depending on your method of investing, you won’t see returns for anywhere from six months to many years. You should only invest money into land that you won’t need in the next few years. No one likes the waiting game, but good things take time!

Investing in land is a great way to build wealth and save up for retirement. Be sure to consult with a professional and know the hottest land markets to invest in before making any big decisions with your savings.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.