After retiring from my printing and marketing business in Dallas, Tx, friends asked me, first of all, why I wanted to retire and secondly, how long before I got into another business. I was originally in Printing and Marketing because those businesses had historically always grown GDP +1-2%. Once that declined to where that was no longer true and we were all just stealing business from each other, it was time to get out. I started teaching at Montana State University but wanted to get back in the chase. I started looking at businesses and found the trends that led me to Montana Ranch Real Estate. Now, I am a partner at Venture West Ranches where I get to make genuine connections with Montana farmers and ranchers and the properties that they own.
The statistics are overwhelming that the vast majority of farms and ranches in the US will have to change ownership in the next 10 years in some way. Hopefully, that means passing on to prepared future generations in a tax-wise, friendly transaction. Our government knows those statistics all too well and in our tax hungry world, they plan on getting their share of some of those large capital gains. The capital gains from numerous decades of appreciation, blood, sweat, tears and countless 12 hour days. Can you tell which side of the table I’m on?
The average age of farmers and ranchers in the United States is 58 years old. Even more importantly, it has risen from 50 to 58 in the last 30 years according to the USDA Census of Agriculture. From my statistics days, that tells me that there are more farmers and ranchers older than the median age and that trend will only accelerate. In my talks on Montana ranch real estate this seems to hold true. There are many options to help avoid this crisis. Some of these options can be found in our article about the crisis of aging Montana farmers and ranchers.
I don’t run across very many young Montana farmers and ranchers. The challenge is they have to be willing to work long hours and they have to have capital and credit to have purchased a Montana ranch. It is a job that requires many hours and you can see your sale price per animal fluctuate 40-50% in a year. It is not for the faint of heart. That said, it can be very rewarding both financially and emotionally being a Montana rancher and farmer.
While the published official inflation rate has been below 2% for the last five years, (Source:http://www.usinflationcalculator.com/inflation/current-inflation-rates/) the government has changed the way inflation has been measured. Of course, the change helps their storyline. I like to look at the inflation number stripped back to how it was measured in 1980.
Chart by Shadow Stats
I would call this stealth inflation. The Fed ‘s money printing and our government’s deficits have impacted everything including Montana ranches and farms values and Montana ranch real estate. When you flood the economy with funny money, it eventually inflates asset values. If you couple that with the Fed’s artificially low-interest rates, it affects land values. This has been tempered recently in the last year by commodity prices dropping substantially. However, the long-term trend of government deficits and Fed’s continued money printing bodes well for values in Montana ranch real estate.
Over the next 20 years, water will be a very important asset. Water rights have always had significant value in Montana ranch real estate. The ability to guarantee moisture for livestock, forage and crops holds great monetary value for Montana farms and ranches. Couple that with the demand from ever increasing populations and you’ll see the need for more and more water increasing. As the nation’s water supply is called upon, the value of water rights in Montana ranch real estate has a good chance of holding value or increasing in value. Consequently, the value of a property that is accompanied by water rights may also increase. Montana ranch or farm real estate water rights can come from a number of sources. Whether it comes from a river, creek, reservoir or underground sources, water is the guarantee of life and the time of overlooking water as the most important asset may be coming to a close. I have written extensively about water rights in the following articles:
Population of Montana
Our state of Montana has a population of just over a million people. Montana ranks as the 4th largest state but the 44th in population.(https://en.wikipedia.org/wiki/Montana) So, we have plenty of land per person. If you’re in Montana ranch real estate that means you have a lot of opportunities. It is also very appealing to buyers who are coming from densely populated cities. They have the opportunity to escape 5 million of their closest friends. Buyers love the downtime, family time, scenery and wildlife. The population also offers a small city environment that many are craving coming from more densely populated areas.
Montana is known as the last best place. It has two famous National Parks; Yellowstone National Park and Glacier National Park. An abundance of other National Forests, Preserves, State Parks and Refuges, gives everyone an opportunity to experience the beauty of Montana. Working in Montana ranch real estate, I get to see some beautiful places. Montana has the most beautiful rivers, different number of species of wildlife, and beautiful mountain views. Clients that are able to consummate a deal in Montana ranch real estate make an investment with great memories.
Recent urban trends of violence and unrest have sent people looking for areas out of densely populated areas. Couple that with technology that has allowed people to live in rural areas and telecommute and Montana ranches and farms have become a viable residence for some people. We are seeing more and more unrest in bigger cities. With budget cuts in police forces, some are viewing moving out into more rural areas as good moves for safety and family. As a result, this is the reason my family moved from Dallas, TX six years ago. We had lived in an area that was consumed with people and concrete and while Dallas was where we grew up, we were desiring more room for our family and a safer place to raise our kids. I think that trend is just starting and will gain a great deal of traction if we continue to see urban areas struggle.
Final Thoughts on Montana Ranch Real Estate
So, I have named several factors in my choosing of Montana ranch real estate for a living. I still own a ranch in Texas called the 5T. I own half and my parents own half. My parents are both in their 80’s and although we have done estate planning, we are still faced with difficulties in keeping it in the family. There are so many memories and a great deal of appreciation in the 20 years we have owned the 5T. There has been a tremendous amount of blood, sweat, tears, and capital put in the place.
We have fought oil companies, built multiple lakes, seen the improvement in wildlife and lived through a poisonous snake bite for my son. It is a part of us and has been a big part of my children’s lives. We are fighting to keep it in the family. Maybe we will or maybe we won’t. I have seen first hand the impact it has on families and gained the knowledge to help. I don’t like that government can force a multi-generational family Montana ranch or farm to sell or to have to pay so much in capital gains taxes. I’m totally fine with being a part of helping keep a Montana ranch or farm in a family and not going to public sale. I do that because it will be time for some to monetize their asset for whatever reason. It may not be someone I help but it might be their neighbor or friend.
If it is time to sell, I have the knowledge and contacts to help make a plan to minimize taxes. If you are starting your journey in purchasing your dream Montana ranch, the structure and tax setup is important to get started right. Montana ranch real estate has allowed me to meet some great people and has reinforced my long learned lesson of not judging a book by its cover. I have made some great friendships and look forward to more great friendships.
If it is time to discuss your situation or look for your Montana ranch or farm please give me a holler. I help people buy and sell Montana ranch real estate and would love to help you do it in the smartest way possible. Contact me here.
About the Author
Partner at Venture West Ranches
Buzz Tatom, a partner at Venture West Ranches, 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 a ranch on to the next generation or planning for eventual sale, his talents and contacts help save clients money and navigate complicated transactions.