Ranch Investor Podcast

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Episode 11 | Unveiling the Future: Land Market Projections for 2024 from Top Land Appraiser


Every property holds a unique story, capable of significantly enhancing its intrinsic value. However, historied properties, or properties that have been on the market for some time, can also present challenges, influencing a property’s market performance. From properties burdened with stigmatization to rich histories that become legends, some listings linger on the market for an extended period, while others sell quickly.

In this episode, Colter and Andy share their expertise and offer practical insights on harnessing property histories to your advantage and ride the narrative. They also delve into strategies for accurately assessing a property’s true value, one that aligns seamlessly with your ranching ambitions. 

Speaker 1: 0:00
the first time I paid someone to change the oil on my vehicle. I I seriously I don’t know if I slept that night.

Speaker 3: 0:07
I had such like I don’t know?

Speaker 1: 0:10
I guess maybe insecurities around, am I going to be disavowed? Am I less of a man? Welcome to the Ranch Investor podcast. I am Colter DeVries, your three year host. I’m an accredited land consultant with the Realtor Land Institute and an accredited farm manager with ASFMRA American Society of Farm Managers and Rural Appraisers.

Speaker 4: 0:32
The Ranch Investor podcast is the most downloaded and informative industry specific content that intrigues while entertains.

Speaker 1: 0:41
Before we get started, as usual, I’d love to hear your feedback. So if you have a recommended guest or a subject, please let me know. I’m back. I’m back. It’s been a while it has been.

Speaker 3: 0:55
I’ve been back too, developing my business, developing my team, deep into team development, basically, which is pretty exciting to watch.

Speaker 1: 1:06
Is it hard to keep up with the Montana ranch market right now?

Speaker 3: 1:09
You know, it kind of felt this week. Maybe it’s just because I was back in town, you know, generally, no, it’s been pretty slow, been pretty pretty. Last week was pretty slow. But I was doing some catch up today and thinking, boy, it feels like things are maybe heating up. But I’m on the site right now 357 listings, that’s right where we’ve been all year since summer.

Speaker 1: 1:37
Headed into the Christmas break. Yeah, and normally we do have a lull, a winter freeze.

Speaker 3: 1:44
Yeah, although sometimes they’re depending on, like the year. Sometimes there’s a little spike like regime change, if a new presidency is coming in bullshit.

Speaker 1: 1:54
Oh, I was waiting to see what happens with the election. Yeah, exactly, yeah.

Speaker 3: 1:57
So fires and sellers both and there have been times over time where there’s either an actual or perceived like taxation change, right, like change in the state of 1031.

Speaker 1: 2:11

Speaker 3: 2:11
Capital gains. So sometimes you see, sometimes you see motivation at the end of the year. I don’t think there’s anything this year doing that.

Speaker 1: 2:20
Well, I like to tell people in passing at the grocery store who ask me what’s it like, what’s the ranch market doing, how’s business? I say I’m no longer competing with other brokers, I’m competing with the banks. So the banks offerings yep, 5.5% risk free. More people seem inclined to put that money whether it’s cash, you know, or capitalizing on stocks, put that into CDs and at 5.5% risk free, that is what your annual return, annualized return historically, is on ranches, and those are not risk free.

Speaker 3: 3:01
So alternative investments competing with real estate.

Speaker 1: 3:04
Yeah it’s yeah, not alternative, it’s just the cost of capital, the. You know, if you’re going to get 2% on an annual yield, which is best case scenario, then 4% appreciation annualized there’s your 6% annual return. You could, if you think in the slightest way that this market is top heavy, that you’re as Andy Ron says or guest today as he says, if you’re pre-paying inflation, if you’re buying in appreciation, then yeah, you’re going to be inclined to just go CDs today. And I say I’m competing with those damn bankers.

Speaker 3: 3:42
I don’t see any deals out there. I don’t see any low hanging fruit in their ranch investment market right now. I made an offer on one.

Speaker 1: 3:51
Yeah, personally, really yeah For the online syndication, uh-huh. So I figured this one’s been on the market a while, it’s got some hair on it and so it missed the best market in history. It’s been out there over two years and I was like, oh they, even though they haven’t done a price reduction, which is a red flag, I was like, well, it’s worth taking a shot. I mean, it’s my own time in writing up this offer. And. I need to load it with contingencies for online syndication, because I still got to register the offering with the SEC and write up the PPM.

Speaker 3: 4:28
And then, that is to say, have a legal entity that’s going to buy something.

Speaker 1: 4:31
Well, I’ve got all the. The back end is completely formed. I’ve got the infrastructure built, even the back office for fund management for K ones, even the accreditation process, the approval process, the escrow funding all the entire infrastructure is built. It’s finding a decent product to offer and I thought this one was worth my time and they, they just flat out rejected it, ghosted me. It was like I felt like I was in the dating pool again and in my, my swipe left went nowhere, didn’t even respond, didn’t even respond.

Speaker 3: 5:12
Was it? Was it a real, real low baller?

Speaker 1: 5:15
No, I actually wrote it. What I thought was five to 10% higher than anyone else in the market. Wow Cause I was like, if I’m going to ask for all of these contingencies, they’re going to want to see what’s in it for me.

Speaker 3: 5:31
And so so you did. It is an unusual level of contingencies, and I’m absolutely standard Okay. Yeah.

Speaker 1: 5:37
So yeah, and one with hair on it that missed the best market in history. Why not take a shot at that one?

Speaker 3: 5:43
I wonder if the seller has that perspective on their listing.

Speaker 1: 5:47
Well in that. So even the listing broker, which I’m not going to name names.

Speaker 3: 5:52
They ghosted me and I I we should have extra content for pay.

Speaker 1: 5:58
We should have a next hour and share all the names Patreon account for for getting the real dirt.

Speaker 3: 6:06
You got to go to the dark web, to see it. If you want the real dirt. This is the kind of thing we dream about.

Speaker 1: 6:16
Yeah. Although then, uh, launch into a tangent, then I feel like we might be abusing that privilege, that power, and going on a canceling campaign just out there, just canceling people left and right.

Speaker 3: 6:31
That’s the problem. It’s hard to cancel people in our industry, exactly.

Speaker 1: 6:35
Yes. Very no one for better or worse. No one wants to put their name on a complaint to the department of labor.

Speaker 3: 6:42
Yeah, and what would that do anyway?

Speaker 1: 6:44
Yeah, so I made the offer and I actually gave them a week and a half to consider it, because it was loaded with contingencies.

Speaker 3: 6:53
Can you share some of those just broad strokes?

Speaker 1: 6:55
Yeah, one was contingent upon raising. So the the ranch, I made an offer of 5.28 and the contingency one of the contingencies was contingent upon actually raising 5.5 via online syndication.

Speaker 3: 7:12
I mean that’s that’s a unique funding mechanism, but it’s not unusual to have funding in general be a contingency, so that’s not too crazy yeah.

Speaker 1: 7:22
That was just a basic financing contingency essentially. Yeah. And I mean that’s the way some do diligence and that is another basic contingency inspection. Yeah, and so I didn’t think they were out of line. I did ask for six months to put this together and I gave them a week and a half to consider it. The listing broker ghosted me, didn’t even tell me verbally, declined. So the due diligence is six months. The due diligence was only three months. Okay, that’s not. The financing contingency was six months.

Speaker 3: 7:56
Okay, so that’s. That’s unusual, that’s a long time.

Speaker 1: 7:59
Yeah, well, when you’re doing something new and different. Yeah, proven the concept, the, the minimum viable product, the proof of concept, beta test here.

Speaker 3: 8:07
But like you said, they missed the, they missed the market. As far as I mean, the market is, we can talk, we can get into this. You know it varies by property type and whatever, but the market, the market is at the least flat, if not declining on most properties.

Speaker 1: 8:23
What about the trophy properties?

Speaker 3: 8:24
Yeah, that’s a different story.

Speaker 1: 8:25
Yeah, this is not a trophy property, so it and the reason I was. But does the seller know in their mind it’s probably got gold and lithium underneath of it.

Speaker 3: 8:37
They’re surely they’re. Listing broker didn’t take out enough ads in the Wall Street Journal. That’s why. That’s why it didn’t sell yes.

Speaker 1: 8:44
Yeah, well, and I’m, I mean, I have my opinions of his, his performance in customer service as well, and I I’m sure to be critiquing my peers, my competition, that’s not professional, but I, you know, I don’t ghost anyone. Right. At the very minimum. I’ve never done this, but at the very minimum you can at least send someone a text and say right, verbally declined. Yeah. So I had to follow up and try and try to get ahold of the listing broker.

Speaker 3: 9:16
I feel like you’re going to slip. It was editing available, yeah.

Speaker 1: 9:22
That’s right, Ray play. Pay close attention.

Speaker 3: 9:27
Was it going to be?

Speaker 1: 9:28
a beepers or just going to cut it out. And uh, so this one actually did check some of the boxes. Location, elk scenery, that’s pretty much it. And there was so value add. There’s a play for value ad that I could see. I know the neighbors, I know the area, it’s my home area. So you know, I felt like I had a competitive and comparative advantage there to come in, step in and add value to the place. Well, if you get it bought at the right price, Right, and so no, they you ask about does the seller know that it’s not a trophy property? When they ghosted me and then finally, after like eight missed calls over days, it took probably two and a half weeks to hear back from the listing broker. I did get a text. Oh sorry, Super busy. They said the price was too low, super busy, not selling anything. Yeah.

Speaker 3: 10:28
And super busy in this volume yeah, deprived.

Speaker 1: 10:31
Yeah, don’t bullshit a bullshitter telling me you’re super busy. I know otherwise, right, and so I wanted to be like well, mr Broker, I didn’t, you know, I wanted to say this over the phone text message. I just said, okay, thanks. But I wanted to be like, okay. I think what the situation is either your seller is shit, you’re listing a shit, or you’re doing a shit job. Pick two of them. It’s got to be two out of three.

Speaker 3: 11:01
Yeah, it’s. It never ceases to amaze me, the lack of professionalism. Actually, you know, I mean I, of course I tell people, just like a lot of industries, you know, 20%, 80% of the work’s done by 20% of the people. I think it might be more like 90, 10 in real estate, absolutely.

Speaker 1: 11:18
And I look back on the craziness of 2020 and 2021. And I know that I wasn’t perfect with customer service and professionalism and I do. I think there are protocols and and expected procedure, expected professionalism that I probably fell short in a lot of ways, but it was crazy back then Right Crazy on my end, crazy buyers we had. I had a lot of preppers and a lot of tire kickers, disingenuous people watching the TV series Yellowstone. I shouldn’t create excuses. I do know that during the craziness, the frenzy, that I wasn’t perfect by any means, but today I think today’s a really good opportunity to be as professional.

Speaker 3: 12:07
Well, you know, I mean, I spend an inordinate amount of time Montana Land Source and you know that’s the value proposition. You know we track stuff down, we check everything. You know what the my data on Montana Land Source is not broker managed, which I think sets me apart from any other.

Speaker 1: 12:25
You can’t be influenced.

Speaker 3: 12:26
Yeah, any other site you go to and so in an inordinate amount of time tracking stuff down, just lots of time and the hell of it is is, you know, probably probably six, at least 60%, maybe knocking on 70% of the brokers out there are crap. So you know it’s just dealing with legitimately unprofessional people. Then you get into the true professionals and the reality is a lot of them are really busy and really struggle to right the producers legitimately struggle with you know busyness and I’m always not. I feel like I’ve got great. You know relationships and people wanting to talk to me and stuff. But you know I’m not a cash buyer either, right. So those those hot times, right they’re, they’re hopping, actually selling stuff and making money, and I’m not, I don’t represent that. I’m more like a long-term, you know relationship kind of thing. But so between busy guys, between the ones that are super busy and hard to get a hold of and the ones that think they’re busy, I don’t know what they think, but they just suck.

Speaker 1: 13:30
I’d like to see a case study between volume brokerages that have lots and lots of listings, volume dealers versus the bespoke boutique type. So in small independent offices, maybe one man shows, like myself. Well, I’d like to hear see a case study done on customer service and I’m not going to mention there.

Speaker 3: 13:53
I’m not going to mention a name either, but there’s several volume dealers. Well, I just noticed this actually recently.

Speaker 1: 13:58
I hadn’t really thought about it and there’s even more independent guys. Yeah, we should be customer service.

Speaker 3: 14:03
Yeah, but there’s a, there was, there’s a, an outfit that was was the volume dealer, I would say, in Montana for years and they, they, they clearly had a model. They’d take any listing, I think under almost any circumstances. They just, you know that’s what was their business model more of a, more of a volume and you know certain percentage is going to hit. So that was their model and they dominated volume across the state and they’ve almost disappeared. Their volume has gone way down. I don’t know what’s happened. Ebs and flows, yeah, I don’t. I don’t think it’s really the market as much as I’m just guessing some kind of internal shift with that, with that firm. I would I would guess, I don’t really know. Change of leadership and strategy, or working in the CRM, like the founders you know, have kind of moved on or I don’t know something. I don’t know, but I just noticed that the other day. It’s like, oh right, that that outfit used to dominate volume, um, but you could, you could predict a hyper to your point about. You know data or stats on that. They had a high amount, they had a high volume, but they had a high fallout rate, right? So a high percentage of what they took on didn’t end up selling and that, that, that is expensive when you’re just your overheads.

Speaker 1: 15:18
You need the transactions to first reach your break even and and you’re taking on listings that aren’t bringing in the income and you have that high marketing budget. That’s fixed cost for a lot of us.

Speaker 3: 15:29
Well, and you know, another thing I’ll share actually, my business is down a little bit for the first time. I’ve always and I well, I say down, I’d say rate of growth is down. I’ve always been growing but my rate of growth is down and I think it’s. There’s been a handful of one-off guys and retirements kind of I might I might categorize as semi-early or right. Yeah, they got a big win and this is a good time to go.

Speaker 1: 15:55
They’re going, barry Sanders going out on top.

Speaker 3: 15:58
One great client and you know I, you know I love my, I love my good clients. I mean, some of these guys call and they’re just as apologetic as hell, you know, just like, ah, idiot, so sorry, blah, blah. I was like, hey man, you know you’re, you’re retiring, you’re moving on, you’re cutting expenditure. Right, I get it, I’m, I can be cheap, you know. But one guy basically was like yeah, you know, I think I’m kind of out, think I’m kind of retiring, and can I pull the plug? Of course I say yes, but then a couple months later he’s like ah, got, you know, got a got a little deal flow kicking up, so I need you back. Yeah. And he was. He was apologetic then too, and it’s like hey, that’s why I got month to month subscriptions. Jump on, jump off every other month if you want. I’m I’m good with that.

Speaker 1: 16:41
You know Well, as we enter the Christmas break here and we’ve been talking about the difference between trophy ranches and how there is a plateauing of seemingly everything else what’s going on with the trophy ranches. There are some big listings that hit the market week by week and and they do sell.

Speaker 3: 17:03
Yeah, there’s been some big sales. I mean CA is is privately.

Speaker 1: 17:09
Yeah, that was like a consolidation of a of a prior syndication.

Speaker 3: 17:13
Yeah, so it was a sale, resale. You know, the whole, the whole place sold, of course, just a few years ago and that was, that was our record breaking. And then the, and then it was the, the main unit, the main because it had multiple units, so it’s the main unit that just resold. And you know, we can’t share percentages and, honestly, well, you, you, throughout appreciation, rate yourself that you had determined on that, but what’d you say? 30%, 30 or even a little more in two years, two years, yeah, yeah, so that does not represent the bulk of the market, I would say in any way, but we seem to see these because you know that it’s just a highly, highly unique. You know there’s only a few of those.

Speaker 1: 17:56
They can’t normalize that Right and I would say something like that 30% annualized return on two years is more of like an opportunistic flip. It’s not an annualized ride. The appreciation Right, right, that was very, very unique property that it’s like a Monet We’ve said it before, kind of a once in a lifetime.

Speaker 3: 18:17
You know, these properties are kind of once in a lifetime. Well, right yeah, until two years go by.

Speaker 1: 18:24
Once in a lifetime, every two years, especially for these old guys buying almost definitely once in a lifetime.

Speaker 3: 18:30
Yeah, right, like Murdoch. What was he knocking on? 80 years old? Yeah, a lot. Um yeah, in South West Montana, I mean.

Speaker 1: 18:39
Speaking of syndication, I see that a Frank Lloyd White right. Frank Lloyd right. You know the architect. Yeah, he’s known for what is it Modernism?

Speaker 3: 18:51
Yeah I think something like that right, a very modern contemporary modernism, or his own style.

Speaker 1: 18:56
You know, it’s Frank.

Speaker 3: 18:58
Lloyd. Frank Lloyd Wright style yeah, Define, he’s defined a style yeah.

Speaker 1: 19:03
So there’s a Frank Lloyd Wright house not selling on the market and for what? You know what the seller is asking? And I see in an article that they are going to fractionalize it Wow, and they’re going to syndicate it. They’re out, they have six units. So you, you buy a unit in an SPV special purpose vehicle, the LLC that owns the house.

Speaker 3: 19:29
So you’re buying a sixth. You’re buying a sixth of a house, Yep. So it’s going to be like a times like a. Frank Lloyd Wright timeshare. Well, it is.

Speaker 1: 19:36
Picasso has the same model. Picasso, one of the former founders of Zillow, started Picasso and that’s one eighth interest in a second home or a vacation home, and when they started the minimum was 350,000, but they also ran into low supply, as I’m struggling with low options, low inventory, and now the minimum I don’t know where it’s at 450,000. 500,000. If you want a one eighth interest in a home, and it’s it is you pick the home that you’re going to be buying into, the LLC, the SPV, so it’s Malibu, aspen, ibiza, london, whatever. And that’s what this, the seller is trying to do. They’re, they’re, they’re saying, well, we can’t get our price for the buyer, let’s fractionalize it for a higher value.

Speaker 3: 20:34
I mean, haven’t timeshares kind of become a joke of of an investment, right, aren’t they? Aren’t they the case study for a bad way to spend your money? I mean, you’d think so I’ve never looked into it because there’s so much negativity around them. Well, there’s ads for multiple companies for getting you out of your timeshare Because like, yeah, it’s a contract, it’s you’re actually buying a property, right.

Speaker 1: 20:59
Did you know that you have a right to time? Yeah, I would figure so. So, you have a, an interest, a title, you have an interest on the real property in a timeshare. So I mean their, their rules or regulations are so much different because you have to be licensed to sell timeshares specifically, right. Right, that sounds familiar and that’s probably what you’re talking about. Sounds familiar and that’s probably because you know so many people got fleeced, right.

Speaker 3: 21:30
Regulation. Let’s just create a special certification for this, yeah.

Speaker 1: 21:35
Sector. Yeah, I mean again, I’ve I’ve never looked into. I don’t know of a timeshare. I’m sure there are some in Montana.

Speaker 3: 21:44
Well, yeah, what’s kind of coming up for me and I was actually talking to an appraiser recently about this, you know, for a while especially, I guess it started up maybe 20 years ago sort of a fractional line it wasn’t really a frack. Well, kind of a fractional line is interest, you know, these ranch developments where you have your home site but then you’re kind of shared, communal.

Speaker 1: 22:05
Common area yeah. Common area maintenance yeah, yeah.

Speaker 3: 22:09
And those largely failed, I would. I would say there was a few high profile ones that dramatically failed. And then even the ones that were successful, like well, kind of big sky, like Yellowstone Club kind of, was a I think was an early model there. You know, same idea because you you have your condo or whatever but you’re part of a shared overall the lodge and all this kind of stuff. But one of the arguments made on those markets, and then Foley, who did Rock Creek Ranch kind of a similar deal, kind of a shared amenity. But one of the arguments is you know, do those guys have their own community of buyers because of who they are, and they can just pick up the phone and say, hey, I think you should consider this and right.

Speaker 1: 22:53
Yeah, it’s not exactly an open market, right, it’s pretty limited and exclusive to their group of friends and individuals.

Speaker 3: 23:00
Well, and this is I’m, I’d interest to hear your response to this, with your, with your syndication, with your syndication strategy. You know, one thing, kind of inherent forever in owning Montana land is not being in bed with anybody, if you can help it. I mean, that’s kind of the mystique, is what’s the joke? You know you can. You can shoot or take a leak off your deck. Yeah right, that’s the, that’s the. So shared ownership of any kind kind of goes counter somewhat to the, to what’s been the sort of culture behind, for sure. I was how does your model address that? Or you know, yeah, get out from that.

Speaker 1: 23:44
Yeah, I was. I was looking at the livestock value of a ranch, so grazing income fee income 25 bucks an acre Well, like less than that. But, but roughly. If you capitalized it, it seemed like, depending on the trophy ranch location, 15% of the value. And as you go east to Montana or Eastern Montana, northern Great Plains, eastern Colorado, whatever. It might be a little higher 30%, so 30% of the value is derived from grazing, from agriculture. So now you’re looking at 8560 to 85% is something else location, exclusivity, privacy, rights, full control, recreation, and yeah, so it’s bragging rights. How? Yeah, absolutely so. What is the value in democratizing, fractionalizing that other 80% of the value with that? Would that deteriorate the market value to each one limited partner, each one unit in the SPV?

Speaker 3: 25:00
I mean it’s being tested with Picasso and the Frank Lloyd Wright House and other other specialized assets, and I mean counter to what I just said about it being part of Montana. I guess, if you call it land ownership culture, that you know you own it and do whatever the heck you want with it total control. But on the flip side of that it’s a lot of work and a lot of hassle and a lot of right, and there’s obviously a lot out there about generational shift, like experiences over, you know, outright ownership, kind of thing. So then it’s like well, can I have a partial ownership in something? And, yes, I have less control, but I also have less risk, less maintenance, hassle, work.

Speaker 1: 25:44
I think that’s what’s being being played out and tested is the generational shift, consumer tastes and preferences. Do you know? One thing I run into a lot is guys who want to buy a ranch for the hunting for the elk and say that they’re going to leverage it and the annual payment is 350,000. Like I had one guy tell me he goes Colter, that’s a pretty expensive elk.

Speaker 3: 26:08
Yeah, exactly it is.

Speaker 1: 26:10
Well, and he said Colter, Last year I took my family on hunts guided outfit outfitted my whole family Alaska, northern Canada, my my bill for taking my family around the world was $400,000. If I were to get into a ranch where the P&I if I were to leverage it, no cash out type of a deal in the P&I was $400,000 a year. I’m stuck to that one ranch Right.

Speaker 3: 26:41
It’s kind of like buying a cabin versus a camper travel trailer. Yeah.

Speaker 1: 26:46
Yeah, and there’s. There’s pluses and minuses for each. I know with, anecdotally, my family, my in-laws, their cabin on Holland Lake. That’s where all the memories are made. Right, they’re not made in the RV. Right, yeah, yeah, yeah, and it’s sentimental, it’s very there, is. There’s feelings around place, sense of place, sense of community, sense of going back and the memories made. It’s personal, it’s very subjective and, yeah, you know, it’s a ranch isn’t for everyone. Guided outfit hunts are not for everyone, right. They’re not for me. I prefer jumping in the Ford Raptor with my friends, with beer and other things, screaming through the sagebrush, doing 65, chasing down an elk, that I don’t want an outfitted guided hunt.

Speaker 3: 27:39
Right, right. You want the redneck, the authentic redneckery, I mean. I don’t know about authentic it just it just is, it just is yeah. So you got to freshen me up with your fractionalized ownership. Then what? What are the amenities and the perks that and investor in that? Those are benefits.

Speaker 1: 28:06
So those are not rights. As with the timeshare you actually you’re buying rights with when you buy into an SPV, you have investor rights.

Speaker 3: 28:19
You don’t have real property rights, and that’s what you’re, you are marketing both invests, it’s, it’s investment, it’s an investment and it’s also a recreational opportunity. Yeah.

Speaker 1: 28:32
I believe personally that it should always be treated as an investment first. Yeah. I feel that way about my primary house, my primary dwelling residence.

Speaker 3: 28:42
Well, otherwise, you know, you, like we were kind of saying the $400,000, like you know, throwing money at, I mean, there’s only a few people that will just not care, not care what the investment value right, throw, correct, basically millions of dollars of what it would take and just to play like that’s a, that’s a unique.

Speaker 1: 29:00
That’s what we think and a lot of people, I think, project that onto the wealthy elite, that, oh, they’ve got throw away money.

Speaker 3: 29:09

Speaker 1: 29:09
Right, it’s an asset. First it has to have a compelling reason to take money from somewhere and put it into something, because you know early opportunity costs.

Speaker 3: 29:22
Yeah, early in my career I was talking to a buyer you know the classic, you know out of state, very wealthy out of state buyer, bought a, bought a place, and I was able to deeply interview him. He was great, he, you know, was happy to really talk to me and so I really, you know, rolled up the sleeves on it and he, initially he characterized his invest, his purchase, as 75% recreation, 25% investment. You know it was the family, recreational aspect was. You know he was putting that top on the list and kind of an investment too, right, right. But after talking to him for a while that flipped and he admitted as such he’s like, oh yeah, I’m, you know I’m definitely not losing money on this thing. And he ended up realizing now this is, it’s an investment that I get some play value out of, recreational value out of. And I assume you’re kind of doing the same thing, because I know you and I know you know focus it’s, it’s a, it’s a sophisticated investment, has to be vehicle with some recreational benefits, benefits. Yeah, right, that’s the model, yeah, and like I know from your marketing and talking to you that, making that accessible to people that like you and I can’t afford to buy our own multimillion dollar range for that same. We might if we could afford it. We might do that on our own, but as it is we would be stuck with a 20 acre in one of those in one of those crappy rural subdivisions the horse ghettos that you do not go to unarmed. Yeah, yeah, yeah.

Speaker 1: 30:59
If I’m going to take $150,000 in my opportunity as a horse ghetto, right rural subdivision, or a 180th interest in a 20,000 acre ranch. You know I’d have to cost benefit and that’s apples to oranges. But you know, find a way to do your debits and credits charts, your pluses and minuses, and see which one works out best.

Speaker 3: 31:27
So here’s a question for you as part of that recreational opportunity tied to the IEG operation, like you know getting to help brand and those kind of things or is it mostly focused on, like hunting?

Speaker 1: 31:38
No, those, those enterprises are separate, separate leases and part of the partnership agreement, the, the private placement memorandum. You, as a limited investor, you have tax benefits, you have your tax at passive investment rates. You cannot influence the decisions or the happenings, the activities around the SPV. So you couldn’t approach the manager, me and say well, I think we should plant an orchard of apples. Like you know this, this new gene of apples come along, is going to kill.

Speaker 3: 32:23
I think we should do a conservation easement on this property. I think we should reintroduce.

Speaker 1: 32:27
Yeah yeah, you can influence the manager in any way. Delaware case law, where so the entities are registered, it’s ranch investor. One LLC is the SPV that is registered in Delaware. Delaware case law states that you can’t sue the manager for mismanagement. You can’t sue them for poor performance. I want my money back if you had any part in influencing the outcome of the economics and finances of that SPV. So you also can’t go to the tenant and say, why don’t you let me ride with you? Because you know, things happen.

Speaker 3: 33:06
Yeah, you might want to think it’s funny though, because I’ve seen different situations like well, like I knew once a scenario where a retired Chicago couple but they had they had come to Montana seasonally like they had summered in Montana or something for decades love Montana, so he finally retires and they, they bought a small parcel in a ranch. And I don’t know if this was formalized or not. It might have just been an informal agreement. They had a great relationship with the overall ranch, but I think it might have been formalized. Some recreational rights. But the wife especially was super horsey, so she got to ride, she got to gather cows, they got to help brand, but when they wanted to and they didn’t have to and they didn’t want to, but so for them it was a dream come true. They’ve got their 20 acres or 10 acres or whatever it was their retirement dream home and a whole ranch to engage with at their discretion. And again, the horse. The wife was particularly horsey so she loved to saddle up and chase cows with the ranch crew and I think she did that quite a bit. And you know, you know about brandings and stuff like that and I’ve been, you know I’ve been to brandings in Boseman, outside of Boseman, where half the participants are drunk urbanites, no, urbanites from Boseman. Yeah, I knew a ranch that he kind of tapped into that. Oh, he did like horsemanship and stuff, so he was getting money from people for, like you know, training horses and stuff. And then these people would come out and brand and have that quote unquote authentic experience of branding and your brandings were very different, yeah. Getting yelled at by. Yeah, getting screamed at. Those are the brand.

Speaker 1: 34:48
Kicked in the phase, kicked in the.

Speaker 3: 34:50
Those are the brandings I grew up. Yeah, I got those stories from.

Speaker 1: 34:54
There’s always yeah, there’s always cousin Eddie, who’s way too drunk by 11 o’clock. And then he wants to do all the roping too and he he’s just taken forever to catch a calf and drag it out and someone’s like all right, all right, the owner of these cattle needs to go tell cousin Eddie to get off that damn horse. That he’s done.

Speaker 3: 35:17
I was sure my kneecaps were broken when I was about 12 at a calf kick both my knees and I went down. I thought I was. I thought I was a cripple.

Speaker 1: 35:29
So here’s, here’s a story, because I’m supposed to personalize this podcast, right.

Speaker 3: 35:33
Oh, really, is that what your team tells you?

Speaker 1: 35:36
Yep, they tell me, bring in more anecdotes. Person personalize it. I forget how old we were middle school. I would say that’s probably about the start of drinking age in Montana. When it’s just middle school, 13, 14, yeah, so at one of my we used to have the circuit of brandings neighbors helping neighbors going all over the county, mostly the guys who had like over two or 300 head. They’d bring their crew and turn along to make it shorter and then then they would drink whiskey all through the night in a wall tent and play poker and, uh, piss off the wives and have the unlicensed children drive them home at three in the morning. But it is all county roads, so it doesn’t matter, right? Better than a drunk driver.

Speaker 3: 36:25
Well, us middle schoolers, unless the, unless you’re sneaking beers too. Well.

Speaker 1: 36:32
I’m not sure which was the better driver. Yeah.

Speaker 3: 36:36
Beginner’s luck.

Speaker 1: 36:40
At least we still have our vision. I mean those guys some of them were sold old and drunk, they were blind. They were blind before they were drunk, right Right. So we, we decide that well, when no one’s looking, we’re going to sneak away a few cases of a beer, probably Bud Light at the time, I hate to say. Yeah.

Speaker 3: 37:01
That was an E on a go in marketing yeah.

Speaker 1: 37:05
So we, we take these 230 racks of Bud Light and we’re like, well, damn it, we got to keep these cool somehow so they’re not just foamy and warm when the branding’s over. Right, we need them cool so we can drink them when the branding’s over and go ride our bicycles and fish and hunt and shit too. But we threw them in the irrigation ditch and we’re like that makes perfect sense.

Speaker 3: 37:29
Right, Keep cold water. Well, the water. Some might not know that the water in Montana tends to be pretty frigid.

Speaker 1: 37:34
Well, and we were two, three miles from the mountains.

Speaker 3: 37:38
Yeah, so cold, yeah, super cold water, yep.

Speaker 1: 37:43
And and yeah, the cardboard box did not last. And a few days later his dad was out irrigating and just finds, you know, beer cans all over his, you know in the orange canvas dam and spread out over the field.

Speaker 2: 38:01
And yeah, we got a call, they knew exactly where that beer was from.

Speaker 3: 38:06
Yeah, yeah, so you know, agricultural recreation is a thing too. Getting, getting to play cowboy, I mean hell, you could come up with a whole Yellowstone thing, you could I, and I prefer to just leave that to the individual.

Speaker 1: 38:23
It’s all subjective, it’s you’re limited by your imagination, your creativity and some of the liability in terms of use and risk. But when it comes to this issue is the hardest to figure out when fractionalizing a ranch, because the reason, as we have said, the 80% of the reason you buy a ranch is for recreational purposes, exclusivity. You don’t want to be out there with John Q public. So how do you one? You’re trying, I’m trying to optimize for two things. One, you want people to come in at a higher investment than the minimum. So you don’t want a bunch of people doing the minimum $50,000. If it’s 50 or the minimum 100 or 150, whatever it is, you want people to come in a little higher. So trying to optimize for that. But then this idea of fair, equitable, egalitarian, who who gets the use? When that’s the hardest issue to crack and that’s what I worked on who’s the better shot?

Speaker 3: 39:30
Who can drive better under adverse conditions?

Speaker 1: 39:34
And a special tag if you have. And they’ve all say most of them are out of status and they’ve built up their points and they’ve applied for this unique tag in your area. They want to make damn sure that they have the ranch themselves when it comes time to hunt. And so how do you, how do you manage for that group program and allocate those days as a benefit, not a right? How do you do that In a way that’s also best for the investment, when the manager is incentivized by optimizing returns?

Speaker 3: 40:13
So you have a lot of interests there, right, right, yeah, I think that’s kind of what interests. What makes it interesting to me is, yeah, it’s kind of a case study and looking at managing rights differently. You know, I mean obviously we got the standard model, own outright, but we’ve got other things I mean obviously conservation, easements and different.

Speaker 1: 40:35
You know, unique rights situations, I guess you’d say, but yours is highly unique and one of my personal values is bringing more people out here, people who are invested, who have an alignment of interest with the community, the ecology, and it’s about a free market solution to compete with locked gates on trophy ranches To a locked gate that benefits one person, one family. Let’s bring more people out.

Speaker 3: 41:05
Well, actually, you know what else comes to my mind. I remember the podcast you did with Dallas right, dallas Mount who owns Ranch Management Consultants? Yeah yeah Him, because you guys were talking. I loved that podcast actually it’s one of my favorites and you were talking about this issue of you know, out of state ownership and trophy ownership and like effect on culture and he threw out he’s like you know, some of the multi-generational generational places are the most inefficient worst managed, poorly managed. Yeah, yeah, yeah. So not only the locked gate for kind of trophy kind of thing, but what about the locked gates for just the old, you know, the multi-generational that’s starving to death financially and maybe even culturally? Right, they’re trying to hold on to. This entity. I know that’s part of your thing too is how to provide value in different ways and how to monetize the resource in different ways that are creative and meet needs, you know, and that model, the old family ownership, when the other pieces aren’t there, to make that place thrive economically, ecologically and otherwise. Right, Maybe an alternative, like maybe an old time family place, diversifying and maybe that allowing that family to actually prosper on that place in a different way than trying to cover all the costs on their own. You know, try to try to run a cow outfit to pay for the place, which is almost impossible. That’s Will.

Speaker 1: 42:30
Harris of White Oaks Pastures. He’s been on the Rogan podcast twice now.

Speaker 3: 42:35
This is the Southern guy right, yep, joeja, isn’t he like Colonel Sanders kind?

Speaker 1: 42:40
of oh, yeah, yeah, yeah.

Speaker 3: 42:42
He’s very smooth, yeah.

Speaker 1: 42:44
Super articulate, though really Incredible. They actually, him and his daughter might be coming on this week.

Speaker 3: 42:49
Oh my gosh.

Speaker 1: 42:50
Yeah, we’ve been in talks. She sounds like she’s actually taken over. Will might be retiring. Wow, might need to cut that out.

Speaker 3: 42:59
Transition play you just leaked, yeah, yeah.

Speaker 1: 43:05
So I’ll probably check on that first before we release that one, but they’re going to come back on this podcast. But Will and I disagreed about having specialists and I was of the I still am of the mind that you should have a livestock specialist and ecology land specialist. You know, the livestock specialist is trained in animal science, has a degree in animal science. You need, you need finance and accounting. On my family place that’s me my brother, wyatt, is the Oklahoma State grad with animal science. You need someone who’s good with equipment that’s my other brother, right. And then I think today you need hunting, recreation, tourism, and we are, we. We say sexist things on here, but a lot of times that falls on the wife. It’s a good enterprise, you know, a well paying enterprise.

Speaker 3: 44:01
You need a semi expert on programs and legislation and regulation. If you want to go down that route, I mean, don’t you have to? I mean, aren’t you sure what they want to?

Speaker 1: 44:10
Yeah, I mean I guess you have to to compete with your neighbor, to compete with the United States, you have to take the government money and this NGOs that are out there.

Speaker 3: 44:21
You’re right. But I mean, even if you don’t, you know, participate in those programs, I mean it’s still might affect you if you’ve got endangered species or certainly if you got sage grouse or I mean it’s not fully optional, isn’t it? In some ways, I mean you got to at the very least sort of be up on some things, because it can really harm you, so will was of the mindset that specialists, they optimize for they’re, they’re siloed, they’re mono variate, they’re only good in some areas.

Speaker 1: 44:52
You know right, it’s holistic and I do believe in thinking and acting holistically, but I also think we should be the best at some things right and so he was of the mindset. No, he’s anti specialist, I’m pro specialist. I do think on Today’s ranches, when it comes to that recreational Opportunity that is being monetized, that there should be consultants in place who are thinking about well, this is a cash cow now, so why would we not feed that cash cow?

Speaker 3: 45:25
What came up to my mind immediately was I used to turn my own wrenches. In fact, I rebuilt the car when I was 19. I used to turn all my own wrenches on my cars and but then, you know, I got kids and I’m trying to build a career and I was trying to put a frost plug and I in a radiator and with antifreeze in my face, in my eyes and almost stripping the threads and Two hours in on a job that would have taken a legitimate, legit mechanic 20 minutes. That was when a switch flipped for me like I’m doing more harm Than good here and of course, I had that scrappy attitude and no money. So it’s like I got to do everything, but at some point you realize you’re doing nothing well and I I’m actually still dealing with this in my business like I’m really. I think my check-in when we started was Most of my time lately has been really focusing on building my team and I’m starting to feel, you know, and I’ve there’s been, there’s been tasks I have struggled so mightily to get out from under and that’s it’s not worth my time, like there’s their jobs that should be able to be farmed out. I’ve struggled to do that but Makes no sense for me to. And I love, you know, I love mapping, I love GIS still, and part of me could just be in the silo and do GIS because I like it that much, but that’s not where my time is best spent by any stretch, you know. So it’s, it’s an inefficiency at the least. Yeah, me doing that.

Speaker 1: 46:44
But yeah, you didn’t have the competitive advantage To fix your own car. Someone else with the shop downtown had all the tools, had all the training, had all the knowledge, expertise, focus Yep, they, they had the competitive advantage. If you didn’t have a job, if you were unemployed and broke, you would have the comparative advantage because your opportunity cost would be zero.

Speaker 3: 47:10
Yeah, I was gonna say because you don’t have any opportunity.

Speaker 1: 47:12
Yeah, so you, you, in that situation, you to fix your own car if you’re, if you’re jobless. You’d have the comparison, but you know I do get the appeal.

Speaker 3: 47:21
I got to admit there are part of me that missed those days because I was, you know, I was growing food, I was fixing cars, we were raising our own kids. We were frickin damn near making our own clothes. That was I was. I was part of the Kind of hippie homesteader. Was the fantasy build my own house, raise my own kids, raise my own food, fix my own cars, right, super? It was really captivated by Self-reliance and but I remember, boy, I think having kids really started to turn that around. It’s like Jesus, where is, where’s the nanny. Where’s? Where’s grandma and grandpa? Where’s the nanny? Where’s the bookkeeper? Where’s the right Like? I think I don’t. For me, anyway, getting older, the specialists starts to kid and then, and you know, developing a career when you start to build what? What’s relative incredibly high value relative to when you had no marketable skills.

Speaker 1: 48:20
I’m almost of the different mindset now that I have two girls, two months and three years old, that I’m I’m kind of almost getting back to the point where, like I need to take on more prepping. Like. I should go bury a storage container, get my brother’s excavator Out on my parents ranch and start loading that thing. For you know, I watched Leave the world behind on Netflix.

Speaker 3: 48:48
Yeah, I saw that too, and and now with the new movie.

Speaker 1: 48:51
Civil War coming out this spring. It’s got me in the mindset like, hey, I need to be a little more sovereign and self-reliant and I might I might move away from specials. I should maybe fix my own damn car.

Speaker 3: 49:05
Yeah, well, there’s an extreme there, if you know, and we all know specialists that you know can do essentially nothing else but their specialty that’s pretty anemic. And my, you know what I mean. It’s there’s something about being you know, and I I don’t really turn my wrenches anymore and stuff like that, but I sure can you know, I, you know, and I can change a tire, I can change my. Well, I can, you know, and not being able to do those stuff would not feel good, you know. And you and you wonder about younger generation. That seem, seems like our culture now maybe feels like just pushing people right into that way of life, rather than being broke for ten years and having to figure everything out and do everything yourself. I mean, there’s a lot of character building in that. And, and you know, back to the debate with sorry, what’s his name? From the south will. Harris yeah, I mean that’s. Isn’t that a just a steadfast rural value of being able to do? Anything.

Speaker 1: 50:01
Like a judgment of character yeah, yeah, yeah yeah and I mean I can attest one of my Like identity crises of the many long which one are we talking about?

Speaker 3: 50:14
Any more context with that coming from a?

Speaker 1: 50:16
frugal Dutch family, homesteader family, which comes with its own culture of you don’t pay anyone to do anything, you do everything yourself, right? The first time I paid someone to change the oil on my vehicle. Mm-hmm. I Sears. I don’t know if I slept that night. Yeah, I had such Like yeah, I guess maybe insecurities around, am I gonna be disavowed? Am I less of a man, right?

Speaker 3: 50:40
Am I am I?

Speaker 1: 50:41
am I not the, you know, the farmer, the rancher, the do-it-yourself, get it done? Yeah, pick yourself up by your bootstraps, because I didn’t change my damn oil. I paid somebody else.

Speaker 3: 50:53
Well, you know you’re making me think too, and you know my career is in Rant, you know ranch appraisal and I mean Montana land sources. You know more of a digital Decks, desktop kind of thing. But I take great pride and you know I can show up on the ranch and I Can do just about anything. I mean, not I did, I didn’t grow up on a ranch, I grew up, you know, peripherally. You know like like settling a horse is a bit of a stretch for me, but I can ride, I can. I can’t rope, so there’s there’s limits, but I can help sword, I can help brand, I can change a tire, even maybe on a tractor. I mean. You know what I mean like that kind of, but what about? Reconciling the bank statement.

Speaker 1: 51:35
Oh Jesus, if we call those soft skills or what, but you know those are just as important as fixing the hydraulics on the tractor.

Speaker 3: 51:44
Yeah, you know, I mean this is kind of a segue, but I feel like growing up in Montana. So I grew up as a city kid by Montana standards. I mean I’m a Billings kid, right, yeah, but and I don’t know if I was highly unique, it didn’t seem like it. It seemed like all my friends are the same way. We all were tied to ranches outside of town. We were at brandings and went hunting and fishing and, looking back, it was kind of a great Lifestyle because it was like the. It was both. I had foot in both worlds, you know like you know all the town stuff. But and it was a little different back then. It was easier. I mean we still have pretty good access to Open space and whatnot if we want, but things have gotten busier, things have gotten, you know.

Speaker 1: 52:24
Does it feel like you’re further from the ranch?

Speaker 3: 52:28
You in my like work and career now?

Speaker 1: 52:31
yeah, just I mean not not geographically, not proximity, but just where your life is Does it feel like it takes more effort, more time to get out there and do those things? That you’re further from that? You’re like more removed, further removed from that culture, that experience?

Speaker 3: 52:48
a little bit, but yeah, my artwork keeps us pretty tied to that. I mean, even even the ranch broker community yeah right, is pretty ranchy and all that kind of stuff I do. You know I miss that’s what I miss about Riding appraisals, because I haven’t been riding appraisals, I’ve been focused on Montana Land Source, which is more of a desk, desk duty kind of thing. So yeah, I’m at the desk and the computer a lot more. I miss the Inspections, inspecting ranches and going out and finding sales. And you know it’s funny, I do more ranch to. I jump at ranch tour opportunities now because I I mean in the past I was ranch touring all the time. Right, I used to roll, you know I someone tried to get me to go to some kind of structured ranch tour and it’s like I do this every day, like why the hell would I do that? now I’m like, ooh, a ranch tour. But I’m actually pretty excited because I do think I’m making headway on getting myself out of some of this work that’s desk related and I do want to do. I want to go out and inspect the ranches that are on the market and, you know, call you up and say, hey, take me, what do you think about taking me to your next listing? I’ll, I’ll do some content and you know that kind of thing.

Speaker 1: 53:52
I think you should get a little back to the land. It’s almost like bringing an anecdotal experience, Because you’re you’re all data driven right and your now. It’s data also Needs to be balanced with anecdotes, so if you show up, what you see in person on foot is Completely different than what you see from Google Earth. And, being average, I’m a brochure.

Speaker 3: 54:18
Yeah, yeah, I think you should.

Speaker 1: 54:20
I think you should do more.

Speaker 3: 54:21
I’m excited. I’m excited for that and even, not even just the ranch. You know the ranch itself, but even more networking opportunities, like I went to the last day of the stock growers, you know, at the northern and was. I don’t know why I was surprised, but how many people I knew there and how many I mean clients, but also you know customer clients, but also just, you know it’s, it’s, it’s. Even though our population has really swelled and things are changing, it’s still a small world, you know, especially here, we still have that.

Speaker 1: 54:50
Oh, very so by and large still just one long main street.

Speaker 3: 54:55
I saw, I think, an ad or something or a post for a winter fair popped up. You know if in Lewiston and I got a little, or oh, I should go to. You know I’ve done that in years past and had a good time. Yeah, stuff like that get out in the country more.

Speaker 1: 55:08
Yeah, especially as Western Montana becomes much more distant.

Speaker 3: 55:14
Yeah, eastern Montana right, right, yeah, so no, I think this industry, thankfully, even when I spend a god-awful amount of time, you know, at the computer, still, even just the people I talked to on the phone and the meetings I go to and that kind of stuff keeps me a bit connected, you know and I do, I still am out on the road, I still do Go look at stuff you know, and travel.

Speaker 1: 55:41
Well, I encourage anyone to check out Montana land source. You have awesome updates, statistics. Appreciate that. Keep. Keep checking in seeing where this market’s going. As we enter the Christmas break of 2023. Let’s see what the new year has to offer us. Any final thoughts?

Speaker 3: 56:00
Yeah, I mean, I think it’s gonna be calm for a while, I think. I think we’re in the calm after the storm, you know, and that’s just the way it’s gonna be other than the trophy ranches. Yeah, but if you got a trophy ranch it’s just gonna fly off the shelves apparently.

Speaker 1: 56:15
We’ll see what happens. These interest rates are certainly throwing a wrench in a lot of, a lot of brokers business, which always surprises me.

Speaker 3: 56:24
I mean, with the level of cash buying, you would think that the high-level Land market in Montana would be insulated from that, because there’s very few Finance-based purchasing but we’re not talking about that leverage, we’re talking about opportunity cost right, right, yeah, but I just I that’s. It fascinates me because again a Tertiary view. You could easily say oh, interest, what, what? What interest rates have to do with Ranches in Montana, which are almost always bought with cash.

Speaker 1: 56:53
Yeah well, I mean, when CD rates are 3%, you’d rather have fun with your money. Yeah, you don’t want it in a CD yet 3%, but when they’re up at 5 and a half and 6, then then a fun little ranch. You know you have to have those tough conversations with your wife. Well, thanks for coming on. Yeah, thanks, good to be back. Anyone who has feedback, comments, questions, be sure to reach out to me or Andy Montana. Land source and ranch investor. Thanks for tuning in. We at ranch investor are very interested in hearing your thoughts, your opinion, your wants, desires, hopes and dreams. Everything on ranch syndications, ranch investment, ranch real estate syndications and DPP’s direct participation programs.

Speaker 4: 57:51
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Ranch Investment Market and Competition
Offer Rejected for Property With Potential
Shift in Real Estate Market
Investing in Ranch Recreational Opportunities
Debating the Value of Specialists
Hands-on Skills in a Changing World
Ranch Investor