Ranch Investor Podcast

a deer standing in a field

Episode 9 | The Untapped Potential of Montana’s Ranch Landscape: A Transformative Vision


Ever wondered how to make the most out of your land? 

Whether you’re a landowner, public land hunter, angler, or someone who loves to explore the outdoors, this episode will change the way you see a piece of land. We’re joined by Drew Hedrick, the owner of Tightline Property Brokers, to provide you with a rare look into managing and optimizing land. 

Drew’s team is full of specialists who have charted a new course in utilizing recreational properties in Montana, and they’ve got plenty of wisdom to share. Tune in now! 

For more insightful land management and practices, visit the Ranch Investor website

Colter DeVries: 0:01
I’m Colter DeVries, owner of Ranch Investor Advisory and Brokerage Services. As a former commercial nag banker, my main reason for doing this podcast is to simply gauge the market’s appetite for crowdsourcing investment in a Ranch real estate fund.

General: 0:15
The Ranch Investor podcast, curated by subject matter experts to give you immense benefit, because we believe your time is valuable.

Colter DeVries: 0:27
All right, I’m Drew Hedrick. Thanks for coming into the Ranch Investor podcast. Thanks for checking out my new office.

Drew Hendrick: 0:34
Yeah, happy to be here. Pretty cool setup you got.

Colter DeVries: 0:37
Just dropping in. It’s a pleasure to finally get you on after we have worked on a few recreational deals. I considered you my specialist for the Big Horn River and some of the other amenity type properties fishing lodge. You are the guy who’s out there brokering and fly fishing and guiding hunts and all sorts of hunts. So a waterfowl fly fishing.

Drew Hendrick: 1:03
Yeah, don’t give me trouble with the FWP, not guiding, not guiding. I do not have a guides license. I do spend a lot of time with other people, taking other people and enjoying other people. But yeah, yeah, absolutely Spend a lot of time down in those markets and just I mean, what better lifestyle, right? If you love to fish and hunt, then to try to deal in those kind of properties. That’s about as good as it gets.

Colter DeVries: 1:28
As a land broker, farm and ranch broker, do we blur the lines and operate in a gray area of unlicensed guide and illegal outfitting?

Drew Hendrick: 1:39
sometimes I don’t know. I would say yeah, absolutely, especially when you figure your family into it. My wife has recently got into hunting and I’m like man, am I? This feels like a true guided position. Sometimes Now the kids are getting to that age, bro, they’re starting to come along, and I’m like man, the tips aren’t very good, you know.

Colter DeVries: 1:59
Well, if your wife is the customer, then the customer is always right.

Drew Hendrick: 2:03
That’s absolutely right. That’s what I’m afraid of.

Colter DeVries: 2:06
Well, I wanted to get you on because you are specializing in wreck properties and, as I mentioned, you’ve done the riverfront, you’ve done the lodges, the amenity properties, the high end luxury, the archery bowl, elk hunting. You know the land from Western Montana, how it will differ to Eastern Montana, pines and central Montana, different elk herds up there. And then the tags and we’re going to get into the tags and the regs. That’s going to be a hot button topic. But I’ve noticed, since you and I worked through the craziness of 2020, 2021 when our phones just wouldn’t stop ringing because we had Montana, you know we had rural listings that were appealing to everyone else in the United States that wanted to come here. I’ve noticed that your business you are now broker with tight line, which must be a fishing reference.

Drew Hendrick: 3:12
A little bit of yeah, a lot of fishing reference and some life reference there too, I had. You know, one of my favorite things that I picked up along the way from a guy was you know, keep a tight line. Keep a tight line to your family. You know, slack is evil. That is a well-known term in the fly fishing world, and I think it applies towards your family too and applies to everything in business, and that’s kind of where a lot of that came from.

Colter DeVries: 3:34
Oh, I like that. Yeah, I mean, I think it’s fine. You’re the supervising broker and what I’ve noticed is you’ve built this team around you. That, in my opinion, why I brought you in here to put you in the hot seat was to ask you built this team around you responding to something in the market. I see a farmer on your team. I see a cattleman on your team. I see a former, I think, BLM, FWP, beer of land management and then fish wildlife in parks in Montana. I see some of these skill sets and trades that complement what I think is maybe an unmet need or demand. You’re responding to something. Tell me about that.

Drew Hendrick: 4:22
Well, I mean, for me, we all want to provide the best service we possibly can, right, and for me, I guess I didn’t want to. I wanted to provide people with something that I thought maybe wasn’t out there. As far as the market and the demand, I mean we live in Montana, right, the demand is here and the demand is not changing. The demand has gone up considerably, like we were talking through the craziness and that demand for recreational property is higher probably than it ever has been. So we kind of took the approach of not wanting to hire 100 brokers and have a bunch of brokers under us. Let’s go out and get some people that as consultants and I’m fortunate enough to have really good what I can call consultants close, you know, close within the family, whether you know, fwp manager for the well. First of all, my dad had five brothers, so all of which were kind of in the outdoor space, whether it be a timber consultant. My uncle, mike, managed the CMR Wildlife Refuge a couple times and retired out of there. My dad worked at the Bureau of Land Management, you know, and was a commercial fisherman. So we’ve got all sorts of stuff and just wanted to collect those guys and you know we’ve got a great guy out of, out of Highwood, a guy named Wes Berklin. They’re a hundred and some year old farm up there, fourth generation putting up a ton of ton of weed up there. Just a true guy. You know, mid 30s wants to be part of the, wants to be part of the lifestyle right which seems to be kind of can be a little bit fleeting in our kind of age groups. So cool guy to have around. But as far as the need we’re meeting, yeah, I think you know Montana is changing as far as the demographics, the how the land is being used, and I’m sure we’re going to probably get into that. But I think the land use and what’s being, what’s being done with the land and who’s using that land is is on the change and I want to. I want to make sure we’re doing the best job for those people, that we, that we can.

Colter DeVries: 6:35
You’re. You’re, in my opinion, you’re navigating a very challenging client base because my experience I can just reference an example and anecdote from today I shot off an email to a gentleman a substantially high net worth who is looking for what I consider to be a smaller recreation property and it checks all the boxes of it’s got to have water, turkey, elk, timber, terrain, views, a lodge. You know, doesn’t have to be a great lodge, but utilities, infrastructure needs to be there, right. And I’ve heard this one a thousand times, 10,000 times since 2020. So we, we know, we know what, inherently, what he’s looking for, and to me that’s a small place, but I don’t think he knows what he’s looking for. And so when I pitch him something and when I give him a presentation and I put a 1900 acre place in front of him and I say this checks your boxes, it’s got the, it’s got the small lodge, it’s got the water, it’s got the Turkey, elk views, terrain, utilities, it’s got. It’s got what you want. And then he responds back that’s too big. You know, I’m at a thousand acres max and I’m like, I’m like arbitrarily a thousand acres, like. Why that? To me there’s no damn difference between 1900 acres and a thousand acres in Eastern Montana.

Drew Hendrick: 8:09
Yeah, there’s some. There’s definitely a lot of a lot of truth to that and it depends, right, I mean, it just depends on what you’re looking for and what every buyer you’re right has a very specific, specific need and want that they actually will end what the will end up in. But I don’t think most of them know right out of the gate what that is, and maybe it may take three or four properties you know in and out of them in order to find what it is that they actually want.

Colter DeVries: 8:36
Right and then getting to the bottom of that. I think about the negotiating book Never Split the Difference by Chris Voss. I’m not sure if you’ve read that. For anyone listening, I highly recommend for life and business. But it helps you negotiate with your wife, helps you negotiate with your kids. Never Split the Difference by Chris Voss. He talks about getting to the black swan. There’s always some underlying factor that people just don’t readily disclose that is kind of influencing the decisions or motivating their. It’s a motivating factor of some sort and it’s those, that type of clientele. It’s very tough to get to that black swan. And with him I somewhat feel like I cracked it when he said I’m I don’t want an operation, I don’t want to operate a large cattle ranch, and I’m like 1900 acres is not a large cattle ranch. And I never mentioned anything about you having to operate it. That was never part of my pitch. What their preconceived notion. He just thought all these acres, you must have to run cows and you must have to have a manager and you must have to ride herd on the foreman and the manager and track your expense reports. And I’m like no, this is a simple leasing operation If you want to lease it at all.

Drew Hendrick: 9:59
If at all. Yep, when you look at the numbers of what it’s going to return for you, man, maybe you don’t at all, maybe that’s not, maybe that’s not even an aspect in your consideration.

Colter DeVries: 10:09
Well, let’s talk about those numbers, because you and I were talking earlier. You believe, or maybe you’re seeing the values, the prices of recreational amenity ranches. Today we are starting to price conservation, recreation, it’s starting to be priced in it and naturally that’s. I don’t know how you get the yield out of that, the annual yield out of that, without giving up that benefit, cause usually you want to keep that benefit exclusive to yourself. But you’re saying, and I agree, we’re approaching zero on cap rates. But if we’re at a gross cap rate of 1% and that’s driven by agriculture, usually hay, grain and cattle, so if we’re at then we’re talking pretty mountain foothills is gross cap rate 1% there is a way to bring in that revenue from recreation to add another 1% and nominally people are gonna be like oh, 2%, big big deal. That’s less than half of what my savings account yields right now which we can get into that cause that is affecting the market in some areas. But 1% on top of another 1% is a 100% improvement. So how are you responding to that? If there are more people who are willing to place a higher value on the ranch, the land base, because of the hunting and recreation, do they need to monetize that? Are they gonna have to feel like they gotta get some ag income off of it to make it work for them? I mean you’re not gonna leverage that and I think that’s a good thing to do. I mean you’re not gonna leverage that and pay 7% on your loan.

Drew Hendrick: 12:03
Right, right, yeah, I mean, I think, the ag. I think for most of these guys the ag aspect’s always gonna be an aspect, right, Even on the bigger stuff. Everybody’s got accountants and they’ve got you know, they’ve got the IRS, they’ve got people around that and they’re not dumb. If you have acquired enough to have a large ranch, if you have something sit in there, more than likely you’re gonna want it to give you something back, even if it’s not optics. So on the other side of it, for the people that are just, I guess I have seen an interesting and let’s kind of maybe switch a little bit to like the smaller sized stuff. What I’m starting to see a lot of is people interested, not ultra high net worth people, but the people interested in the let’s call it, the like 3 million and under type range that want, absolutely want, the hunting value out of it. They want that aspect. They want, whether it be elk, turkeys, deer, whatever it might be, but that buyer range needs income and they need the ag income. But, as we all know, that ag income, that ROI, is not quite there for what these kind of people need. So therefore, we’re seeing a lot of, we’re seeing a lot of sub-leaves. Like, hey, I’m gonna buy this ranch but it has to work and I’m gonna figure in half and the least this maybe the first half of the year. Or maybe I’m gonna say, hey, I’m gonna give up a deer lease on it and I wanna hunt the elk and that’s figuring in. Especially in these smaller places, that figures in a lot into the ROI for people in order to just make it work, Because with interest rates, what they are, a lot of those people are financing, Whereas you probably know better than I do what the numbers are in that like five to 10 million plus range. I mean, how much of that’s cash?

Colter DeVries: 14:13
Well, what I’ve been hearing is they are leveraging it. They’re still leveraging it as high as they can go. A lot of times farm credit your other banks will go up to 70% debt to equity and of course it’s not going to cash flow at that. It doesn’t cash flow at 20% debt to equity, but these are. They have outside wealth and they have predictable, stable, high net worth incomes where they are paying into the P&I. So they are leveraging the hell out of it because they’re getting a rec asset recreational asset for 20% down, 30% down, and we’re seeing that at very large scales. I mean we’re talking 50 plus million. Guys are coming together, they’re syndicating with their buddies and people aren’t having to come with a lot of money down because they are going to leverage it and they have lots of cash flow from other areas. I would agree with you, though it’s amazing the rights that come with ranch real estate. In Montana you could sell off or lease off your Mildere but not your hunting, or not your whitetail deer, your elk but your pheasant, your black bear but not your cougar.

Drew Hendrick: 15:33
And that brings us back to Mr, something we’ll also get to and what’s carrying over into this conversation, which is the monetization of the game animal right, and it’s a. You know, that’s always something that’s been at the top of people’s minds for a long time. As this, as the value of large animals or of recreation hunting as a recreational is changing and as that value has gone up, you start to look at these game animals and you know a big elk has a large price tag on it and that’s nothing more than you know. Monetization of the game animal and the game animal right and at least in Montana, is the ownership of the public, no matter where it lives.

Colter DeVries: 16:21
You’re getting into, yes, and this is such a multifaceted conversation because you have private monetization of a public asset and you also, but you also have that that asset provides a public good provided by private landowners. So that is a very complex situation that we’re seeing play out in very drastic ways, and I want to talk about the drastic way. I’m referencing Drew is the Wilkes Brothers. Are they the number one landowner in Montana, Number two?

Drew Hendrick: 17:01
They may be two.

Colter DeVries: 17:04
So they’re in the top three, top three Central Montana. And this is hearsay, gossip, rumors, but it’s been said that for many, many years I think they’ve had their ranches for 20 years about that they would herd elk back onto their holdings. So if the elk were naturally moving and migrating off of their land base, which the N-bar is some 140,000 deeded private acres, they were able to either feed elk hay and keep them on their land base or just use helicopters haze the elk back onto their own place. And it’s been said that that herd has grown from 3,000 cows to upwards of 7,000 plus cows. And what that has done. Now is you have local ranchers, the neighbors, who are very fearful about disease and an outbreak, brucellosis, other livestock diseases, that if it gets into that cow elk herd it will get into the local livestock industry and it’ll spread like wildfire. 9,000 head of migratory elk. You can’t contain that, you can’t control that.

Drew Hendrick: 18:31
Well, I mean, I guess getting back to starting the initial conversation there of helicopters and drones and there’s with spending a lot of time up there in that kind of Louis town country and loving the big snowy and the little snowy you’re always hearing those stories right Of. This has happened. We saw a helicopter come over and it was flying the boundaries. Was it hazing out where they check in the boundaries, making sure nobody was coming onto their place, or was it making sure that nothing got off? And that’s a fine line there. So, yeah, you hear all that stuff no different than cutting the fences back, cutting the trees back from your fences, maybe 40, 50 feet, To open up a wide area that an animal would have to cross in order to get out of that side. Those are land rights. Right, you can do that if you’d like, and I don’t know what those numbers are as far as the setbacks, but I can tell you I’ve seen that that’s a wide swath that you cut on either side of some of those fences.

Colter DeVries: 19:42
Well, you and I are on, we’re in a quagmire, we’re at a difficult point because for me I would like to monetize the public asset via a direct participation program, a special purpose vehicle, pooled investment, syndication of hunters and outdoor enthusiasts, recreational people who can’t buy a 30,000-acre ranch on their own, but pooled together they can buy that and I think that the elk would sell that. So I mean, in one sense I am someone has pointed out that I would be monetizing the public good, the wildlife. I do earn a living off of selling private land and you enjoy hunting those elk. I’ve gotten back into a little bit of hunting lately and definitely fly fishing, and you also. You access BLM for a service state. You do utilize the open lands to the public. So you and I are kind of in this tight spot where we don’t know what the right answer is. And someone pointed to ask me what if you were to own a 30,000-acre ranch and you are our neighbor, what is your game management plan? And I’m like well, I defer to the fish, wildlife and parks. I know that they’re not perfect. They do take public insight meetings, which a lot of people think are bullshit, but I defer to them. They are the biological experts? I am not. Where do you stand on this? Where are we going with that? We’ve got the public land hunter. We’ve got the Wilks. We’ve got the private land hunter. We’ve got the cattleman next door. Everyone seems unhappy, drew.

Drew Hendrick: 21:34
Yeah Well, I 100% agree, especially in our state, because with the, I mean, it’s not just that everybody’s unhappy, it’s also the management side of it, right, and let’s start with the Wilks, for example. I give back to that example of hey, if you’re going to win or not, I don’t know exactly what that number is, maybe it’s 6,000 head, maybe it’s 9,000 head. That’s a transient L-Curt, like you said. So you run the neighbor exactly next door that wants to monetize that asset. Or they want to protect themselves, whether it be to protect their grass, protect their herds, whatever it might be. You’ve got the public land hunter that wants them to push back into the public land. Nobody’s ever going to be happy, I don’t think as long. I just don’t think it’s ever going to work. So the FWP is in a tight spot, right, they’re in a very tight spot because they’re trying to manage all the different interests. So what’s the answer, with not having full participation from all landowners, which you can’t require and never would want, that’s a completely un-American thing is just to go in and say, hey, we’re going to require you to do this on your land. You cannot do that. That’s a basis of owning a large piece of property or owning your own home for that matter that somebody can’t come in and say, hey, you need to cut your grass or do this what it’s going to be. So without full participation or being able to control large swaths of land which in no way do I advocate for you’re always going to have a conflict because you’re going to have small private interest on large assets and a large draw or a large demand for those assets to take them off essentially of those places. So I don’t think there’s. And then you’ve got the FWP kind of caught in the middle and, for instance, that area up there. I don’t know how many cow tags they’re given for that area, but it’s a guarantee I mean you can sell. They’ve upped them and they’ve upped them. Now we’ve pushed that season out to mid-February. So you’re hunting cows into cow elk into mid-February and the fact is it’s just not moving the needle and it never will move the needle without that participation.

Colter DeVries: 24:10
Well, and we get into the carrot and the stick. And I had an economist on here a couple episodes ago who said government farm subsidies, farm programs both sides of the aisle prefer the carrot. We’re going to incentivize new management, new production behaviors, new practices. We’re going to do it with the carrot instead of the whip, instead of the stick, and that’s great. That’s going to work for a lot of the family generational ranchers in that area. But there isn’t a carrot big enough to move the needle with the Wilks. They don’t care about a subsidy.

Drew Hendrick: 24:46
Absolutely they don’t. So that’s where the elk are right, the people that family owned ranch. In a lot of these scenarios, if you have an elk problem, say, in that area, they’re the ones that are happy to do it for free, right, because they’re happy to let you go for free, or maybe a small trespass, or more than likely it’s in block management, so you have some control, which is a fantastic. One of the great things that Montana is doing is a block management program for hunters, so they’re the ones that are going to be allowed on access anyway. So it’s, I don’t know, I got sidetracked. I kind of got sidetracked down that rabbit hole.

Colter DeVries: 25:30
Well, tell me about how it feels the conflict of interest Now. You, your broker. Your business will improve with more landowner tags. It will a little bit. That has correlated. Your business might improve with some more outfitter tags. The state of Montana might improve with more non-resident tags. But you are also, you utilize these resources, you are a resident hunter and so you’ve kind of got this almost conflict of interest. But it’s just, it’s a quagmire, it’s a tough place. Tell me a little bit about that, because we’re going to get into tags and I hear from so many other brokers and out of state uh, either non resident hunters or people interested in buying ranches in Montana that your gosh, your tag system is the worst. It’s not good for landowners, it’s not good for the elf haters, it’s not sure as hell, ain’t good for me, the non resident and. But yet our resident hunters feel like they are still getting shorted. It seems like that’s kind of what I hear.

Drew Hendrick: 26:43
Uh yeah, I mean like goes back to I had nobody’s. Nobody’s seems like ever is ever happy, um, all the way. As far as on the con on the conflict of interest, uh yeah, like you’d mentioned early after lean on the science a little bit and I don’t know how great the FWP science is but it’s what we got. It’s what we got right and they’re they’re getting pulled a lot of different ways. But the conflict of interest for me is um, I don’t know, I’m a, I’m a public land hunter and I truly believe that we need to have the best public land hunting and experience that we possibly possibly can. Because, as this, as the world of hunting begins, continues to monetize, um, it’s, I’m worried about how it’s going to, how it’s going to, you know, drive our, our kids, essentially out of that world. I’m, I’m terrified to see what the public lands will look like in. You know, in 18 years, when you know my, my youngest son, when he kind of goes off on his own and he’s wanting to kind of get into his, into his hunting prime, I guess what’s public land going to look like? Um, or what is what’s hunting going to look like in general? Because it’s, you know, with, uh, with the new, even the new things, like, you know, our friends over at land trust, right, I mean, that’s a new, that’s a new idea, uh, and and it’s. There’s two different ways to look at that too. You look at that on the same aspect of the conflict of interest of hey is you’re, you’re selling, you’re selling these things in a fractional way. You’re you’re selling access and and then, on the other, you know, I, when we caught uh Nick at uh up there, I jumped him on it. Right, I’m like, hey, I took that side of it. I’m like, hey, you’re selling off the you know the interest here for hundreds. You’re making it a lot harder. You’re making my kid go out and spend $100 a day on somewhere that he used to be able to go on for free, and he had a great response to that. And the only reason I jumped him is I really wanted to see how good his response on the other side was, and it was pretty good. You know it was that, hey, a lot of these places are are places that you wouldn’t have, wouldn’t have had access to anyway. And if you’re willing to go spend which we’re a family of six if you’re willing to go spend $150, really, is what it takes to go to a movie anymore? Is it? Is $100, not worth it for you to go and spend that day with your, with your kids, uh, on a place where you know you’re not going to run into somebody. You know I’m not going to be walking through the trees and have a, you know, a barrel pointed in my, in my face, on public land. You know there’s that aspect of a tune it was. It was a great point. And that’s where we start to get into this conflict of interest kind of thought process right Of the world’s changing, especially in the hunting world, and we’re all trying to figure it out on what’s what’s best. But in the end, all right, the free market’s going to win out and that’s that’s where we’re involved with as well, the free market. I’m not making the market, you’re not making the market. The market is evolving and you and, I think, are just kind of trying to stay in step with it. At like a lot of these people are, and no different than their answers, right, I mean, these are answers. And farmers, uh, and the sportsmen and the people like the, you know, the back country hunters, everybody’s kind of trying to kind of move with what this market is doing, because one person, one broker, one agency is not going to stop the movement of this country or of demographic shifts.

Colter DeVries: 30:31
Right. And to circle this back to your brokerage tightline and what I’ve seen for the team you’ve built around you, it is good to see you’re responding in a way that you have a cattleman on your team, you have a farmer, and so it’s good. With this education and this conflict of um, um, I want to buy this place for hunting but, gosh, damn Drew, I need, I need the $3,000 of income. I spent $3 million on this place. I, you know I actually do need the $3,000 of income from that, from the hay. And so I mean, if you can help be part of the conversation where you say, well, um, you know, maybe let’s, let’s, let’s hay at one year, graze at one year, rest at one year, type deal, or let’s, if you really need to do the hay, don’t let your neighbor talk you into just alfalfa. That’s not going to benefit your bird species, you’re not going to benefit the deer. He’s promising you the highest lease. You know that. Oh, you’re going to get a $4,000 a year from alfalfa. You know, let me be part of that conversation. And then also the people who want to kick off cattle. It’s like, well, cattle are going to ruin everything. We should get rid of them, and so to have you, as a sportsman, involved in those agricultural conversations. The free market is happening and I see that with your business, you’re responding to that.

Drew Hendrick: 31:54
And that’s what we’re wanting to do, right, I mean, we’re wanting to take a property and let’s essentially try to have everybody win, let’s try to maximize that property and keep it in production. Right, and because I truly believe that we need to keep these places in production, obviously there’s, there’s, you know, people like, say, the Wilks’s, or Cronkie, or some of these guys that you know, or Turner, that don’t necessarily need maybe a lot of the production and can turn it over to the wildlife. But you know, I believe that the vast majority of people need some production and these properties should have some production to them. Right, it’s us who are in that world. Production’s good, right, I mean, we want production, it’s good for the, it’s good for the world. We’re producing an asset that this country and the rest of the world wants and we need to keep doing that hands down. So what kind of our thought process was? You know, we would not got a group of consultants, the guys that are just good in their area. They’re not brokers, they’re not salespeople, they’re like, they’re good at what they do. And then we want to take. We want to take a ranch, say a 10,000 acre ranch, or maybe it’s a, you know, maybe it’s a 200 acre farm, small ranch, yet and let’s say, hey, okay, you know, let’s, this front portion is really providing, no, no, true ag potential. Right, maybe it’s for whatever reason that it might be, but the back half here that’s, you know, maybe butts up to some, to some river, or it butts up to some public land, something like that. Let’s, let’s find a way to maximize this piece of land and, you know, to maximize both value for yourself but value for the land as well. So maybe we take the front half. It’s two acres dead ground, maybe. That’s where, maybe that’s where some housing needs to be, not on the back, not a trophy place in the back. Let’s maybe do that on the front. Then let’s maybe take, you know, this good portion of the front that’s more set up for, set up for good alfalfa, or maybe it’s good irrigated ground. Let’s take a, let’s, let’s do that for our production and you’re, maybe you’re a hundred ton there, right? So maybe we’ve got a little bit of income here in the front. I don’t advocate for selling it off, but maybe you sell off this portion to a local guy who needs a place to live On the back end. Maybe we look at somebody like Nick, like DeCastor, you know, and then, hey, this is maybe, this is maybe a good portion the recreational side. It gets leased out via that or a small hunting lease, and you take micro, micro portions of these ranches and truly maximize them, not only for well, essentially maximizing the ROI on them, but in the same time trying to really trying to keep the spirit of those places in production.

Colter DeVries: 34:44
Well, I just drew. I want to point out you heard it, you heard it here first on the Ranch Investor podcast a broker who does not want to chop the place up and sell it in parcels.

Drew Hendrick: 34:59
No, I mean, that is out there, right? I mean we all take those calls of like, hey, this, because when you start looking at where’s the value, a lot of times especially some of these, you know maybe coming out of the coast or you start looking at the values and for some of it that is where it is and I’m okay with that. I think if you’re not, you know not, certain things are tough to see go. But you know, if you’ve got a 10,000 acre ranch and you know 500 of those acres border the highway and they’ve been used, you know, to kick your cows in for, you know, for a few days, if it’s not overly productive, then what’s the highest and best use of that particular spot? Right, maybe it is some sort of a breakup play on that, but in order to? But by doing that you’re able to keep the rest of that place in production, because you’ve created enough, you haven’t harmed that, you haven’t really harmed that ranch that much or the surroundings, but by doing that you’ve been able to keep the rest of it in production and intact. So that to me, is, I think it plays a role in the maximization of a, of a, of a ranch.

Colter DeVries: 36:14
Well, and you get into the value of a view shed and when you chop a place up and you put roofs out there, that that does affect the future value. And I don’t fully understand it, because consumer tastes and preferences change and 99.9% of Americans won’t know the difference. You know, 30 new roofs out there Isn’t going to mean much to them, but it does affect the view shed. I mean obviously affects the view shed significantly, but it does affect the value too. Case in point Drew, you brought up the CMR refuge. I was just up there last weekend, north of Winnett, montana, in petroleum County. The Missouri River Brakes, south of the CMR refuge, the reservoir, the Muscle Shell River Brakes. That is the single most isolated part of the lower 48,. That is the single most oh geez remote area and wilderness in the continental United States. Elk District 410, would you say the most coveted in Montana.

Drew Hendrick: 37:26
If not second, probably first or second depending on 700 right next door. You’ve got. Well, no, I mean for me it’s probably the Elkhorn’s right. It’s that area in that right around Helena there. Yeah, it’s one or two depending on, probably depending on what side of the state you’re from. The West side guys, they think the Elkhorns are about as good as it gets.

Colter DeVries: 37:49
But driving around there there have been some rural subdivisions and there’s some newer roofs out there where I was just blown away. I mean you’re 30 miles plus from Winnett, which has a population of I don’t know 80?.

Drew Hendrick: 38:04
Yeah, I was gonna say 50, 80. 80 at best 80 when a lot of people are fishing the lake, maybe when there’s a walleye tournament.

Colter DeVries: 38:11
Yeah, If the lake is high enough to get to the boat, I was like yeah, so you are out there and there are new homes and I was just blown away that who the hell would build out here? Why the hell would they build out there? And it is sad to see, because that is such a rugged, remote area, to see it chopped up and develop like that. So, but the free market will win in the long term. That’s just. I’m part of that short term issue and my life let’s hope is another. What am I? 35? So let’s hope it’s another 50 years. That’d be good.

Drew Hendrick: 38:53
Yeah, and then you know, and then you know, your mind will go into a data drive. You know yeah, and then your mind will live on right.

Colter DeVries: 39:03
Yeah, now we’re getting into some black mirror shit. I’m not trying to go fully on my skin.

Drew Hendrick: 39:08
You know it’s not real good.

Colter DeVries: 39:11
But yeah, I mean in the feelings around that we have data, we have information but at the end of the day we just know our feelings the best, and the feelings I have when I see that, it’s kind of sad.

Drew Hendrick: 39:25
Yeah, it really is, which you know. You’re right, the free market’s gonna do what it’s gonna do, and I think about that exact same thing. If I’m especially like that area is a good. That’s such a great example of like why you know what drew you to this. If you get a half inch of rain, you’re not leaving the guy going off.

Colter DeVries: 39:45
Yes, yeah, you are stranded.

Drew Hendrick: 39:47
You’re not even walking out because you got 10 pounds of mud on each shoe. You’re not even walking out. But you know one good thing obviously they’ve done that you mentioned the remoteness is the CMR right and just the fast amount of public land. And if you have never seen it, even for me you know we spend quite a bit of time hunting up there, hunting mule deer up there, when there used to be a lot of mule deer up there which there really no longer are. It still blows your mind Every time you go up there. The expanse of it is absolutely incredible and the expanse of public land a lot of it. So with that much public land it’s tough to see the private land aspect of it throw more roofs on there. But you know, thank God for the forethought, however long ago, to put all that public land in place that can’t be built on.

Colter DeVries: 40:39
Well, I was told that East Coast Americans, or just urban Americans, maybe those outside of the West or the interior basin, whatever it is that they look at Montana and they think that’s the frontier. But Montanans look at Alaska and say, no, that’s actually the frontier. But if I mean when you see the refuge, the CMR, and the breaks, the Missouri River Breaks, that is like frontier, like it’s incredibly remote and open and vast and rugged, it’s incredible. And if there’s people on Facebook, instagram, someone from my team will be posting videos. I got some trophy bull elk videos up there. So jump on some social media. I mean, I guess we’re everywhere and I guess someone on my team will be posting it here in the next few weeks If they want to check out some elk from that area. Drew, I do want to get into some more of what I’m doing and get your thoughts on it, some feedback, cause you’re all about more access and whether land trust is bringing more access or not. So I hired a PR gal and she’s out of Missoula, she’s worked for some of the conservation groups and she is strategically helping me with messaging. And this came up If I’m going to fractionalize a ranch, am I part of the problem that I’m taking access away from the Montana well one, the Montana resident hunter, or the United States public lands hunter, as a PR expert, which I trust her to be, she said well, no, you’re not taking access away. This was always private and I drew. I want to hear your thoughts. If I take a Powder River County, if I take a $4 million ranch in Broadus which is also a trophy elk district two of the records have been pulled out of there in the last eight years or so to the state record bull elk If I take that $4 million ranch and I bring in 50 limited partners but the hunting access is exclusive to those 50 LPs, it’s actually 80, sorry, $50,000 each 80 LPs. Is that a net positive? Am I part of the problem or is that a net positive?

Drew Hendrick: 43:18
Net positive for who? That is the question, right? I don’t think it’s a negative, for I don’t see how you can see that as a negative for your average hunter, your average local person. If you have never had access to that place, you know some of the problem comes and the conflict there comes. If, hey, this place is coming out of block management, you know, maybe you start to run into some things there where it appears to be appears to be a net negative. Short of that, if you’ve got a place that even maybe they allowed five people a year or 10 people a year, and now you’re into 80, maybe that to me is a net positive, right, and I think that’s a fair way to look at it. I don’t think there’s a correct answer for you to say, okay, I’m either good or I’m bad, and I think it’s just a. It’s a following of, it’s a following of what’s happening and you are providing, you’re providing land and opportunity to people who weren’t there. Now you can start to get into the resident non-resident and I guess we’re just assuming that these are non-residents, but they don’t have to be right. I mean, these are absolutely. I’m hoping that there’s some residents involved there too.

Colter DeVries: 44:43
I’m too, and it could even be outfitters.

Drew Hendrick: 44:46
Oh, that’s interesting aspect, whether now me as an LP, I’m having a hard time with that getting outfitted, but I don’t know, maybe I’m not, maybe that’s a portion of again we’re back into the return.

Colter DeVries: 44:59
Right. So if it does get outfitted, it just improves your return. You might miss out personally on the experience, but financially it’s going back to your pocket.

Drew Hendrick: 45:10
So again back to the give and take of these places and the maximization of the give and take from the recreational, back to the back to the ROI. You know, I think as long as, as long as the state and I hate to put anything on the state as long as we can keep good, solid public land access and another tout for the block management program, as long as we can keep programs like that on board, I think we’re going to be okay. I think this side of it is going to be okay of the local resident public hunter. So I call it a net positive. I mean, if I’m going to boil it down, I’m going to say yeah, that’s probably a net positive to the world in general. And then you have to look at it like you and I do, we’re passionate about the land. Is that a net positive to the land? Right, and that’s something that we all want to look at. And at that last was it the for land’s sake presentation? We kind of had some round tables there and we were meeting a couple just having an open discussion with some of the guys at at Hall and Hall, and you know it was that same give and take of like, well, this guy, you know the large landowner, he shuts it down. He shuts the land down to for agriculture, say, you know, we’re going to, we’re just or for cows, we’re going to kick cows out of it and we’re going to basically just manage this 10,000 acre ranch for elk. Okay, well, you know that’s not a net positive for the average person. It’s definitely a positive for the wildlife, but is that a positive for the land? You’re essentially, you know there may not be anybody harder on the land than somebody truly trying to to grub out a living, you know, on on tough ground. Oh for sure, right, you know, when you talk about regenerative stuff and that’s kind of the focus there of there’s nobody harder on the ground than somebody who is really trying to trying to scratch it out. And that’s not a negative against them at all. They’re doing what they can to make it work and but purely talking on the ground. So who’s, who’s the right there? Right, was it a net positive or is it a net negative?

Colter DeVries: 47:29
Well, and there’s an argument to be made that the, the, the sacred cow in politics, the family farmer. The family farmer who’s leveraged 60% and scraping by, like you said, I don’t see that being a net positive for the wildlife, for for the land, for the ecology. That is something that can be addressed and people are going to shoot me for this, but the family farmer quite often is not in the best interest of the holistic system, because they got to make it work and they have the ultimate decision, they have the ultimate authority and year to year decisions are made. There’s not a lot of forward planning, there’s not a lot of drought contingency plans and, like you said, if they’re going to overgraze, the piss out of it or or hay every year, even though the yield keeps going down and down and down, that’s also not. That’s not the optimal solution we’d like to see. Yep.

Drew Hendrick: 48:33
I agree. And you start looking at what’s the? It’s the net positive for who, right and for what? Are we talking about the land? Are we talking about saving the, the family rancher, and that, that family lifestyle, right, that Western or that Eastern Montana? You know all the planes, that that ranch lifestyle and that family which you know we’re all passionate about it. There’s just, there’s so many factors in play, no different than the L.

Colter DeVries: 49:00
Yeah, cause that that gets wrapped into what I think what people are kind of protecting there is conservation of culture and conservation of community, and that that kind of comes. Um, that’s almost like a battle with conservation of wildlife and ecology. Cause, yeah, you want to, you want to thriving, win it Montana, you want to see it go from 50 to 80 residents that’s good for when it and you want jobs and you want family farmers. But, uh, you also want, uh, healthy forages, you want healthy wildlife. You, you want healthy tourism, people coming to hunt that wildlife.

Drew Hendrick: 49:36
So I mean yeah, I mean you look at it from that aspect as well. I don’t know where the places that you’re talking about, but say it’s brought us Montana for, for, or it’s win it, or it’s Eklaka right, say you take those so that that ranch has not let anybody on, or maybe it’s let two or three friends or whatever come, people come, they stay at the ranch house, they go home. What you’re talking about is maybe 80 people mostly at least somewhat high net worth or medium net worth to where they have some disposable income to spend on something like this are now coming into those, are now coming into those, those communities, and there’s a there’s quite a bit of upside financial gain for those communities too. So maybe you’ve you’ve traded somewhat of the local family, family owned aspect. That the other side of it is, the is the economic side too. There’s additional income coming in Always trade offs. There’s always trade offs and that’s back to that mark. You know, the free, the free market and capitalism. And the world’s changing. It just continues to change and none of us are going to stop it.

Colter DeVries: 50:43
Well, I can’t bring you on in the last 10 minutes without getting some secret sauce from you. Where are you long in the market today, August something, 2023? Where are you long? Where would you put your money next to an investor if you were a GP and you have a obligation to maximize returns for your limited partners, Drew, and it’s your money you’re putting in hurt money. Where are you long? And also, where are you short?

Drew Hendrick: 51:11
Are we talking? Location or are we talking? I hate to give up the location. Oh, you’re going to be.

Colter DeVries: 51:17
You’re going to be one of them because, okay, I have a Kevin what? Red star painting hanging on my wall and I bought that at an auction, competing with someone who’s a pretty good, I guess, art investor and fan of Kevin Red Star. And I was like, hey, I’m novice, I’m new to this, I’m taking an interest in it. I go who are you following? Who’s the up and coming star? Where should I, where should I be looking for more paintings to invest in? And she’s like I’m not telling you. I’m like what I thought, that’s what this network like you guys like. I thought we shared notes. I guess I’m not part of the community yet. No, you’re not. You can’t buy one, never at a star in the end.

Drew Hendrick: 52:00
That’s not how it works. That’s like buying, you know, that’s like buying a 160. 160 somewhere.

Colter DeVries: 52:08
Like hey, hey, guys you know All right.

Drew Hendrick: 52:12
Well, you don’t have to give up too much ingredients, so in that you know, on that front, I am in a GPLP type situation. Similarly, we’re looking, we’re looking at stuff right, we are looking, trying to stay within the model of of what essentially tightline is doing, which is the maximization of the of places. So, starting as we’re starting to see the state shift, what are areas that are that are shifting there? And, as I’m saying, shifting I’m? I’m thinking maybe values transitional real estate transitional real estate, right Places that maybe aren’t Boseman and not necessarily transitional in the fact of come into development side, but maybe that values are at a are at a happy medium ish to where there’s still some return on the ag but that the recreation is good enough to where it has a marketable approach. You know there’s a good portion of far Eastern Montana that that you know you may have a huge expanse but your upside is probably, you know you’re, the hunting aspect of it is probably antelope and Montana doesn’t have the best antelope hunting in the around. You know you’re going to go to Wyoming or you know, if you want close, close antelopes. So that’s probably not the the location that we’re necessarily looking. We’re looking at places that we think will appreciate, you know, that are going to be attractive, that are going to appreciate nicely, still have a, still have a good recreational upside to them and honestly, like everybody’s looking for a Montana, we’re looking for water. Right, the state revolves around water, revolves around consistent water, because what doesn’t ag revolves around it, the wildlife revolves around it, recreation revolves around it. It’s all about the water. And then you know, second is trees and you get water and trees and you’re probably going to have probably going to have elk, and that’s why you get that third one in there, you know the elk everybody wants the, everybody wants the elk. But if I’m talking about, if I’m talking about a sweet spot I think in Montana that’s, people are going to want to be. I think it’s in this small, the small acreage, diversified properties, and those are probably like that under three million mark that are going to provide, that are going to provide some income and people are going to want to keep it for themselves, for the recreation, something that you can maybe have half down or maybe even you can leverage 25, 30% down and it’s maybe not going to quite cash flow, but it’s enough for you to justify. Hey, instead of going and spending seven, eight thousand on an elk hunt, you know, maybe I’m, maybe I’m losing seven, eight hundred a month here and I actually own something. So I think that is the way and those are just the calls that we’re getting right. I mean, I’m sure you’re getting these same calls of that that five, ten million dollar buyer. There’s not near as many of them out there as there are these, the semi average people who, you know, want a place to go and want to, but but need a little income as well. So that’s, that is the sweet spot.

Colter DeVries: 55:47
So what I hear, drew, is that you and I went from competing for sellers. We were competing for the same sellers and the same buyers as brokers. Now you and I, as GPs, are going to be competing for the same properties and the same everything you said. I’m like. I think I know the ranch he’s talking about. I think I know the area of the town. I think we’re gonna be competing for the same properties. And my question to you and the audience I’d love to hear everyone’s feedback on Drew’s presentation today. Definitely, let us know what you think, because we want to hear from you. We want to know more, drew. Are we going to be able to get people to drive three hours from Billings from an airport?

Drew Hendrick: 56:32
That is a fantastic question.

Colter DeVries: 56:35
Or three hours from Bozeman, or three hours from Great Falls.

Drew Hendrick: 56:38
Or are people willing to drive five hours because that way they can fly into Bozeman instead of Billings? Yeah, that’s probably a better question. That is a really great question, one that we hadn’t talked about before, but I’m talking about those exact same things with the partners that we have of what is that number? Is it two hours? There’s some demographics out there and some data that says that that two hour mark is probably about right. Once you get outside of that three mark, it’s going to be a little bit tougher. And also, montana people are like three hours there’s no big deal.

Colter DeVries: 57:21
It’s right over there for lunch. I knew kids who used to drive three hours for a prom.

Drew Hendrick: 57:25
Yeah right, Because those girls were way better looking.

Colter DeVries: 57:31
So they were on the prom circuit. They would go to Seiko, Whitewater, Scoby, Dotson, Nashua, You’re just on the prom circuit.

Drew Hendrick: 57:39
You got to drive two or three hours yeah obviously you’re not talking about guys, because I was never on any circuit. I was lucky to get, if I got a date to my own prom that was pretty good there was no circuit, right, but I don’t know what that number is. And I agree, and there’s going to be, and it’s not just us in the game, there’s people all over right, and it’s amazing how fast this state is changing. And we think we’re discovered, right. You talk to people around Montana and, like man, we think we’re so discovered and this state is blown up and you can’t get away from people. And then you get somebody here and you drive them around in Eastern Montana or even Central Montana, which isn’t terribly remote, and maybe it’s Lewistown or whatever, and the only thing they can think about is this place is absolutely undiscovered. Like you mentioned, this is the frontier. And we think of those of you who’ve been to Alaska. It’s like, okay, no, this is the frontier. And then the people from Alaska are like, no, have you ever been to Siberia? Have you ever been to Kamchatka? Go to Kamchatka, you want to see the final frontier. It’s a matter of perspective, right?

Colter DeVries: 58:54
That’s all it is. Well, everyone you can tell Drew is a big-time fly fisherman. He’s going to go to Kamchatka.

Drew Hendrick: 59:01
Russia after the war yes, I don’t want to ride in one of those giant Soviet helicopters and I want to see him sling vodka bottles out the front. I want to see the pilot throw vodka bottles out the front At Grizzly Bears. At Grizzly Bears. Yes, now that’s living to me. That’s living taking your life in your hands.

Colter DeVries: 59:21
Well, thanks for coming on. I am not at the $3 million mark, though. I see your thesis and I encourage anyone to reach out to Drew’s thesis because it’s there, that transitional real estate, the areas he’s looking for, checking all the boxes. I’m just going to wrap it up with a couple more points. You talked about this $3 million mark pre-2020. $2 million was our bread and butter. It was easy to sell these properties at $2 million. Easy, that is, at $3 million. Now. I think that the buyer pool is just going to keep growing and growing for that, which makes those properties more demanded, more the market is larger in the future and with technology they’re going to be less remote and that comes with its. You know that’s sad, it’s kind of like the dying of an age, but with Starlink they are less remote. But I like my Wi-Fi too.

Drew Hendrick: 1:00:19
Yeah, and that’s why we just have to do a great. We got to do a great job as a country too in public lands. Right, we got to keep our public lands good. We have to keep incentivizing, in my opinion, incentivizing stuff like the Block Management Program and to keep the traditions and, you know, the old West ways that we have here of the hunting and the fly fishing, and we need to keep those things alive. And I think, at least Montana, we’re doing a pretty darn good job not to always beg on the FWP. I’ll throw them one bone there. I feel like it’s opened up a lot of ground for us as public land hunters. I may be a broker, but for the most part the stuff that we’re selling, they’re not offering access.

Colter DeVries: 1:01:04

Drew Hendrick: 1:01:05
I’m a public land hunter man and I enjoy that.

Colter DeVries: 1:01:08
Yeah, I mean you bring up culture, legacy and community and we can’t put a value on that, but it does have a value and it’s hard to put a price on that.

Drew Hendrick: 1:01:17
Yep, absolutely. I appreciate you having me man. It’s been awesome.

Colter DeVries: 1:01:20
Thanks for coming on, Drew.

Drew Hendrick: 1:01:21
Yeah, good to see you.

Colter DeVries: 1:01:24
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General: 1:02:20
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Maximizing Land Value and Production
Private Ranch Fractionalization’s Impact on Sustainability
Investing in Montana