Montana Ranch Real Estate-Revenue Opportunities

Ranch Real Estate

Updated 1/2/18

While being in the Montana ranch real estate business, I notice that ranch owners are always looking to find new ways to increase profits. They do this by discovery and utilizing alternative revenue streams. Sometimes these alternatives are very abstract but other times they only require a small change to current operations. Prospective clients are consistently asking me questions about how they can create additional forms of business on prospective ranches. It is critical to highlight the main features of a ranch, but what clients really want to know is how they can protect themselves from future unforeseen hardships.

Ranch Real EstateOne unforeseen hardship that Montana ranchers are currently experiencing is the volatile cattle market. Cattle prices have not just dipped, but have experienced a massive plummet. Over the past two years, cattle prices have continued to fall. Prices hit an all-time high in 2014, but that was short lived. Ranchers were getting between $2.50 and $2.75 per pound but now are only getting $1.10 to $1.30 per pound. These cattle prices are further discussed in our Montana Cattle Report and three featured articles on Small Business Trends: 5 Challenges Facing Cattle Ranchers Right NowUS Beef Exports to China: What Cattle Ranchers Need to Know10 Things to Know Before Investing in a Cattle Ranch.

When prices were booming, ranchers spent extra revenue on additional land and more cattle to increase their herd sizes. Now, those same farmers are struggling to pay off their debts, placing them in danger of losing their ranches. If ranchers can find alternative sources of revenue they can better protect themselves from future hard times.

One individual who has done an exceptional job at protecting himself from unforeseen difficulties is Ted Turner. Ted Turner is the second-largest landowner in the United States and has roughly 2 million acres of land and a net worth of $2.3 billion. He also owns the largest private bison herd in the world, at approximately 51,000 head. The bison herd is spread across 15 ranches and is a viable meat business because of the health benefits from bison meat.

Ted Turner is famous for creating wealth from the ranches he acquires through ranch real estate. The ranches he owns and operates serve at least one of three purposes: bison ranching, sustainable timber harvesting, and commercial hunting or fishing. Through these functions, Ted Turner can create insurmountable amounts of wealth. Any ranch owner can observe what Ted Turner has done with his properties and apply it to their ranch to increase their wealth.

 

Vermejo Park Ranch

Ranch Real EstateOne famous ranch of Ted Turner’s is the Vermejo Park Ranch. The ranch is a luxury guest ranch that provides world-class trophy hunting and fishing. Ted Turner has found several ways to develop alternative revenue streams for the Vermejo Park Ranch that can be implemented on Montana ranches. The ranch is 590,823-acres in size, contains 16 trout-rich lakes, 30 miles of fishable streams, and occupies parts of northern New Mexico and southern Colorado. The ranch is also the largest contiguous piece of land in the United States. Vermejo is home to large herds of Elk, Deer, Antelope, and Bison as well as Black Bear, Mountain Lions, and Bighorn Sheep. 180 different species of birds also reside on the ranch. The streams and lakes of Vermejo are stocked with Brown, Rainbow, and Rio Grande Cutthroat Trout. Vermejo Park provides hunting and fishing experiences that attract the attention of many outdoorsmen.

Vermejo Park Ranch creates a steady revenue stream from outdoorsmen through its extensive outfitting opportunities. An early rifle season trophy elk hunt can be yours with a price tag of $16,000. Spring Merriam’s Turkey hunts cost between $3,250 and $3,750. A Trophy Mule Deer hunt will cost between $6,000 and $7,000. Booking rates include lodging, meals, license and trespass fees, guide service, sales tax, and on-site transportation. Any other expenses such as meat processing and gratuities are not part of the rate.

Possible Revenue

If a single hunter wanted to hunt one of every animal and stay at the Costilla Lodge, the mid-priced lodge, they could expect to spend a total of $38,050. The prices for each animal are $3,750 Turkey, $3,300 Black Bear, $4,250 Pronghorn, $7,000 Trophy Mule Deer, $16,000 Trophy Elk, and $3,750 Premium Cow Elk. The ranch can accommodate up to 76 people at a time and provides hunting experiences in multiple sessions, year-round. In only one session, if all 76 hunters harvested every animal, Vermejo Park could see a revenue stream of $2,891,800.

This same format can be applied to any Montana ranch with high wildlife density. It may not be to the same degree as Vermejo Park Ranch, but by providing an outfitting operation, any Montana ranch could earn substantial alternative revenues from commercial hunting and fishing.

 

DePuy Spring Creek

One example of how a Montana ranch creates additional value for itself is the DePuy Spring Creek. The DePuy Spring Creek is a family run operation that was initially started by Warren DePuy in the 1950’s when he decided to build a fish hatchery. Then, when a new highway was surveyed and built, through the grounds of the hatchery, the DePuy family dredged and created additional channels to the Spring Creek. This created additional habitat for future trout and waterfowl. Today, the DePuy Spring Creek provides 3 miles of world-class fly fishing to anglers.

Rates: 

Spring (4/15 – 6/14)$80
Summer(6/15 – 7/31)$120
Late Summer (8/1 – 9/14)  $100
Fall(9/15 – 10/14)$80
Winter(10/15 – 4/14)$40
Winter Pass(10/15 – 4/14)$400

 

 

 

 

 

 

Possible Revenue 

Ranch Real Estate

The ranch has a maximum capacity of 16 anglers per day. At summer rates and with 16 anglers per day, DePuy Spring Creek can make $1,920 per day and $13,440 per week. Their strategy of creating an easily accessible creek that is home to world-class trout is a brilliant strategy of creating alternative revenue streams. It may take a little bit of initial investment, but if a potential investor in ranch real estate can make a successful fishing stream, they are looking at a profitable business. Additional information about Montana fly fishing and improving fisheries can be found at Fall Flyfishing in Montana and Stream Restoration and Fishery Improvements.

Not all ranches are created equal. What a ranch lacks in world class big game hunting or pristine fisheries and tributaries, it can make up for by providing other services that people are willing to pay for. There are always ways to develop new avenues for additional revenue. These additional revenue streams can consist of anything including corn mazes, guest rentals, and waterfowl or upland bird outfitting.

 

Corn Mazes

Ranch Real EstateCorn mazes are great sources of adding additional revenue to almost any farm or ranch. They allow landowners to create a public attraction where people can come for a couple of hours and have a good time. The Montana Corn Maze in Manhattan, Montana, uses a 2.5-acre plot of corn where a themed designed is cut into a maze pattern. People can come to the maze and pay a $5 to $7 fee to use the maze. The Bozeman Maze charges $8 to $9 per person to use a maze that is constructed out of hay bales. These mazes are fun for all ages and attract families, birthdays, parties, and large groups of people.  

If a rancher or farmer decides to create their own corn maze, they could create a sufficiently large revenue stream to help cover expenses. A nice part about corn mazes is that customers don’t expect the maze to be open every day of the week. Most mazes are usually open from Thursday to Saturday night. This allows for a limited commitment of time for the maze but focuses on peak days for participation. We discuss other corn mazes and their benefits in the Montana Corn Mazes article. 

Possible Revenue

Halloween and the fall season are the focus times of the year for corn mazes. If your corn maze attracts on average 150 people per night and charges $7 per person, you could be looking at a potential revenue stream of $1,050 per night. If you are open Thursday through Saturday for September and October you could see a revenue stream of $28,350. 

 

Guest Ranches

Guest ranches are another avenue to pursue additional revenue. By creating a livable space on your farm or ranch, you can rent that space out to people who are looking for a weekend getaway or want to experience what life on a farm or ranch is like. The hard part is creating this livable space that is appealing to potential renters. After that, it becomes quite easy to find people who are looking to spend a weekend at your property. Sites like Airbnb allow you to place your property on the site where potential renters can view the property and decide if they would like to stay there for a weekend. By adding this space to your property you will also see an increase in the value of your property in the ranch real estate market. In fact, Venture West Ranches currently has a guest ranch for sale. The 7R Guest Ranch is located in Wolf Creek, Montana, and has a track record of success. it offers many amenities which can be expanded to create an amazing experience for guests. 

Possible Revenue

If you are successful in creating an appealing living area that people want to rent, you can charge a premium price. For an average property, you could charge about $100 per night. Renting out the room for 3 nights at a time and having 15 rentals per year, provides a revenue stream of $4,500 per year for space not being used. This strategy can be another way of increasing revenue and add additional value to your piece of Montana ranch real estate.

 

Waterfowl & Upland Bird Outfitting

Ranch Real EstateMontana is a thriving location for all kinds of waterfowl and upland game birds. The two predominant species of waterfowl in Montana include Mallards and Canada Geese, with Teal, Pintails, Widgeon, Gadwall and others mixed in. Seasons for these species can be different and often depends on location. I recommend checking the Montana regulations for exact dates. The season generally stretches from September to January which allows outfitters a large time frame to conduct business. The predominant species of Upland Game Birds are Grouse, Partridge, Pheasant, and Turkey. These seasons start on September 1st, except Pheasants, which start in October and end on January 1st. Turkey also has a spring season between April 8th and May 21st. These large time frames allow outfitters to conduct business for a quarter of the year and is a viable area to increase revenues.

Possible Revenue

Ranch Real EstateThese species provide for an exciting shooting experience for all waterfowl and upland game bird hunters. The waterfowl and upland bird outfitting industry is a growing area in Montana. Entering the industry is a great way to increase revenues and ranch real estate value. Blast & Cast Outfitters charge $300 per person for a day of guided waterfowl hunts and $325 per person for a day of upland bird hunts. With a season of 4 months, you could create a sizable revenue stream. At $300 per person, 5 hunters per week, and 16 weeks per season, revenue could be in the neighborhood of $24,000.

The potential revenue from creating an outfitter can be very beneficial to a ranch and can grow exponentially. One way to create more value and increase customers is to create additional habitat to boost population numbers. Another way to increase population is by raising Pheasants, Grouse, or Turkeys and releasing them onto your property. The better the hunting, the more people are willing to spend and the more customers you will attract.

Difficulties will always present themselves at the worst times. This is evident in the recent plummet of the cattle prices. It threatens the livelihood and future success of hundreds of farms and ranches. My role in Montana ranch real estate is to educate current and future owners of additional revenue streams as well as highlight key features of properties. They can pursue these financial avenues to make sure that times of hardship do not threaten their livelihood. These opportunities could be as extensive as Ted Turner’s bison or hunting and fishing ranches. Or they can consist of the addition of a corn maze or establish a waterfowl and upland bird hunting outfitter. The opportunities are endless and can make any ranch more financially stable.

You might also want to check out our 2017 Montana Ranches for Sale Real Estate Report or how a company has turned aerial maps into a successful business.

Follow us on Facebook and LinkedIn for updated on new properties and blog posts as well as industry news.

 

References

https://www.forbes.com/sites/stevebanker/2016/01/29/the-grass-fed-beef-supply-chain/#5cb23c2d48e5

http://missoulian.com/news/local/devastating-historic-drop-in-cattle-prices-leaves-ranchers-desperate-for/article_9ee3b225-9e8d-576c-8502-c8a3c03b170e.html

http://1d9mqt19v9zm1jzgf82ljsev.wpengine.netdna-cdn.com/wp-content/uploads/2016/03/Hunting-Rates_Policies_Procedures.pdf

http://www.depuyspringcreek.com/rates.php

http://www.bozemanmaze.com/event.html#Dates

http://www.blastandcastoutfitters.com/montanawaterfowlhunting.html

http://www.montanacornmaze.com

https://www.forbes.com/profile/ted-turner/

http://www.airbnb.com

http://central.flyways.us

http://fwp.mt.gov/hunting/seasons/

http://www.tedturner.com/turner-ranches/turner-ranch-map/vermejo-park-ranch-new-mexico/

http://www.tedturner.com/turner-ranches/turner-ranches-faq

http://vermejoparkranch.com/fishing-shooting/

 
 
 

About Buzz Tatom

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 Sales/Partner

Buzz Tatom is a ranch owner and has built, run and sold numerous businesses in his career. This gives him a unique background in helping Montana farmers and ranchers navigate the life decisions that we all have to face. Whether it is passing the ranch on to the next generation or planning for eventual sale, his talents and contacts help save clients money and navigate complicated transactions.

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Buzz Tatom Cellphone
406-580-4774

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VWR Bozeman Office
406-522-9378

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He still owns the 5T Ranch in Texas but now calls Big Sky, MT home. His background in Texas included finding run down ranches and rehabilitating them into show place properties. From building lakes, stocking fish, to managing for wildlife he has a proven record of increasing values of properties that have given families great memories and returns.

His successful business background allows him to have good knowledge in contracts, dealing with people and has a wide variance of knowledge from his experience in dealing with oil and gas companies on his properties to manufacturing background to knowing who to call to get answers.

He has a BBA from Texas Tech University and got his MBA from Southern Methodist University. While at Texas Tech, he played football and was a 3 year starter as a Tight End. He bought into a Printing company at the age of 24 and grew it ten fold by the time it was sold in 2011.

Buzz teaches part time at Montana State University and loves mentoring students. He has been married to the love of his life, Kathy Tatom, for 25 years and has one son(Tate) and 2 daughters(Sayler and Emmy).

His hobbies include hunting, fly fishing, improving the 5T and following his son Tate in his golf career at the Air Force Academy. His life is divided between family, volunteering, teaching part time at MSU and Church.

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