An expert shares his 6-step plan for turning a 20-acre land investment into the 200-acre farm of your dreams
Neighbor Billy Bob added another 200 acres to his ranch. Some chump half your age just bought the best tract of hunting land you’ve ever seen. You sit there, sulk a bit, then wonder how they were able to do it.
“The timeline on which it takes to turn an investment on a 20-acre property into a 200-acre farm depends on how well you find, buy and resell properties,” Priest said. “I’ve flipped land in as few as six days.”
Here’s Priest’s method for success:
Step 1: Smell Money
“Anytime you’re buying property with the goal of making money, it’s important to remember that you make your money on the buy,” Priest said. “When you buy a property, the price you buy it at will determine how much you make after you sell it. If you don’t buy correctly, you’re starting out backward. It’s like cars. If you buy a Z71 for $100,000, you’re buying into the negative right from the start. It’s the same with land.
“You must educate yourself on the buying process,” Priest continued. “Study land values near you. The Realtree land pro in your area will know this off the top of their head. RealtreeUC.com is another great resource because you can see what properties are going for and how long they’re staying on the market.”
There are ways to make money off a property after you buy it, but before you sell it. For larger properties, lease part of it out to other hunters. Lease agricultural rights. Check out government conservation programs, timber harvest, mineral rights and other options. Maximize income wherever possible.
Step 2: Find Problems
Looking for property issues is a good way to find hidden value. Turnkey properties are much likelier to sell at or above market value. But properties with problems — like access issues, easement questions, encumbered titles or even just poor aesthetics — can scare buyers away. “Sometimes properties just need a cleanup,” Priest said. “I look for problem properties when I buy. As a problem fixer, you can get great deals. ”
Step 3: Strike Fast
Once you understand the buying process, learn to recognize a good deal when you see it.
“If a property is a good deal, it won’t be there at the end of the week,” Priest said. “You have to drop what you’re doing and go. Have your financials in order. Talk to the wife. Talk to the family. Have your ducks in a row. Then, when a good deal is available, you’re ready to make an offer. There are a lot of sharks out there looking for land.”
You have to swim the fastest.
Step 4: Be a Tough Negotiator
You’re here to make money, so stay level-headed. Negotiate that price down as low as possible.
“People are too worried about hurting the seller’s feelings with lower offers,” Priest said. “And people will get offended. But all you’re doing with an offer is telling them what the property is worth to you today. No one can fault you for trying to get a good deal. Don’t be afraid to make an offer. You never know what might get accepted.”
When negotiating, use every tool in the shed. Do your homework before the process begins. Know the landowner and property situations. Explaining where your head is at should decrease the chance that your offer offends them.
“Time on market is important,” Priest said. “If something has been listed for a while, tell them it isn’t worth what they’re asking. If it’s a problem property, tell the seller what it’s going to cost you to fix it after making the buy. Justify why you’re offering less.”
Be tactful during the discussion, not insulting or pushy. Consider it a reverse sales job. You’re trying to sell them on a lower price.
Another surefire way to strike a lower price is to show them the dollars. Money talks.
“Bring the money with you,” Priest said. “If you’re already pre-approved to make the purchase, that means something to the seller. Putting a contract and money in their hands makes it harder to turn down your offer.”
Don’t forget to be human. Do not take advantage of people. While a good deal is great, ripping someone off isn’t worth a guilty conscience.
Step 5: Improve Wisely
Improve the land where you can. Milk all the value from it while you have it.
“Maybe it’s a nasty, 40-acre thicket that no one but a deer hunter would want. If you invest some sweat equity and improve it for hunting purposes, the value immediately increases. Know your market.
Increase the general value of properties by adding utilities, creating camp or build sites and solving any problems the property might have. Building roadbeds, improving bedding areas, planting food plots and establishing stand or blind locations can greatly improve the value of a property if you’re in an area where hunting drives land values. You just need to conduct improvements wisely. They can’t cost more than the profits you plan to make from selling the property.
“Sometimes, you’ll see things other people don’t,” Priest said. “On the surface, a property might not seem like a great buy. But an educated eye might know how to market it in the future when you’re ready to resell. For example, we just bought 45 acres here around the house. It connects to a national forest, has a good bit of road frontage, and electricity. We put in a campsite, roadbeds and a food plot. Now, whoever buys it can come right in and start hunting that property; all while having access to thousands of acres of public ground behind it. It started as a rough piece of ground and became a premiere spot.”
Step 6: Reap the Rewards
The first steps are all for naught if you don’t bring it full circle. You have to resell at the right time, for the right price, to take the next step in land growing.
“Say your goal is to resell in five years,” Priest said. “If it’s in CRP for three more, you might get a better deal for it while it’s still rolled up into that government contract.
“Also, consider timber harvests,” Priest continued. “Maybe the property is ready to cut. Then, after holding the property for five to 10 years, you might get another cutting and make even more money than if you purchase land that doesn’t have timber value.”
Another way to increase value is to dice it up into smaller tracts.
“When buying, always remember an easy way to make money is to cut down the size,” Priest said. “The smaller the tract, the more it generally goes for per acre. It’s all about ratios and price brackets. For example, if you buy a 40-acre piece, and it has great road frontage, you could split it up into multiple tracts and resell it for much more.”
It’s important to remember you won’t hit a homerun every time. Don’t get discouraged if things get a little off course. This is recreational business, and business is tough sometimes.
“Some properties will be great investments,” Priest said. “Others will look like great investments but turn out not to be. But no matter what happens, if the land or stock markets go down, you still have the land. If you get stuck with one for a while, at least you can still have fun on it. I’ve never heard of anyone killing a deer or catching a fish on their stock market portfolio.”
The timeline to hit that 200-acre mark will be different for everyone. It might take 10 properties and 50 years to get there for one person. It might only mean five tracts and 15 years for another. It all goes back to how well you complete the five steps for each land transaction. Hopefully, you’re making money off each property and rolling the profits into bigger and bigger acreages with each buy.
Remain focused. Stay poised. Keep your eye on the goal.