How Much Do Ranches Cost & How Do I Get Started?
Steps to bring your Montana ranch dream to fruition:
- Know roughly what you want based on hobbies and aspirations
- Create a list of questions for a broker
- Call a broker who knows the state well
- Visit properties and be educated on water rights, easements, privacy, property background, nearby amenities, etc. (a competent broker will make your life much easier on the journey to fulfilling your dream)
- Purchase a property
What Types of Properties are in Montana?
Operational farms and ranches, homes, investment properties, and recreational properties are what the state is mostly comprised of. With the demand for Montana growing, one could argue that all these are investments, but it depends on what it is that drives you to buy in Montana. The secret is out, and Montana is the “last best place!” People seeking a Montana getaway property is an upward trending ask, varying from ranchettes to $200M ranches.
Price of Land in Montana – How Much Ranches Cost
The price of ground is variable just as it is anywhere. Raw ground (land without dwellings) can range from $300 – $50,000+ an acre. A broker who knows what you want can help give you an idea of what price range your vision is in. Not all 100-acre or 100,000-acre properties are made equal. As the saying goes, “location, location, location”, but there’s much more to it than that. “How much do ranches cost?” is a loaded question. Below are a couple of the most common things that dictate pricing on farms/ranches.
Size
Typically, the smaller the tract the more per acre. This isn’t always the case but it’s a common rule of thumb.
Proximity to Amenities
This certainly affects the price in western Montana but not nearly as much in central and eastern Montana. You tend to see inflated prices closer to larger metro areas due to the convenience value, but not as much in close proximity to small or medium sized towns.
Beauty
A pretty subjective way of adjusting a ranch’s price. Is that view worth x to you?
Water Rights
A fantastic seeming property isn’t worth much without water. This becomes more important the bigger a place is or the more livestock you are needing to water. Irrigating can help to increase production, sometimes by as much as 3x compared to dryland (non irrigated), but that’s not possible if you don’t hold the proper water rights.
Production
There are a couple common categories of production – livestock and farming. The value of how many cows, sheep, or other livestock a property can sustainably feed or raise. A value put on how many tons of hay or bushels of grain a property raises annually.
AUM Capacity
This is the amount of air-dry forage a 1,000-pound cow and her unweaned calf will consume (the ‘Animal Unit’) in one month. Essentially, it is the carrying capacity of a property based on grasses (feed).
Mineral Rights
These vary from having a lot of value in places like NE Montana where the Bakken oil field lies to very little value. Landowners value these rights even if they don’t have much in terms of dollars under the surface of their property. This is because a mineral right holder does not need permission to access your property in search of gold, mining gravel, or drilling for oil. This could result in a loss in privacy, habitat, and production amongst other things. This is one of those things that is likely worth paying extra for the peace of mind. Most properties are sold with conveying mineral rights but not all.
Recreational Value
Again, it’s subjective but it’s not uncommon for this to more than double the price of the property based on agriculture value. 5,000 acres of scattered timber with prairie grasses and 400 inch bull elk may only be worth $1,000 an acre for a working cattle operation, but the recreational value could easily be $2,500 an acre due to the quality of elk.
Improvements
These vary from updated fencing, nice homes and barns, wildlife habitat work, stream restoration, water development, etc. To some buyers, a $1M home has almost no value where to others it is the deciding factor. Wildlife improvements will likely have more value to a hunter than it will an operator (farmer or rancher).
Demand
Montana is a large state so there are many different markets throughout the state. We commonly refer to these larger markets as – Western, North Central, and Eastern Montana. Within each of these markets there are hotter areas than others. These “hot” areas are driven by demand just as they are anywhere else. As of this writing, we are seeing an increase in demand for what has historically been a quieter market, Eastern Montana. Having met with countless appraisers and brokers over the last week, most feel this demand will continue to ramp up.
Inventory
There is no doubt that there are more buyers than sellers in much of Montana. It can take some patience to find everything you want in one property. Others want a piece of Montana so bad that they are willing to go through their checklist and make adjustments to find an active property on the market that meets most of their wishes.
Privacy
Again, quite subjective. In Montana, most people cherish having breathing room. Some things that may increase privacy on a ranch: being in the mountains, in a low spot surrounded by rolling hills, bordering National Forest Service, the last property on the road, having no neighbors within miles, and not building on the property boundary. Typically, the larger the property, the more private it is.
Hyatt Voy – Bill Bahny & Associates
If you have more in-depth questions about how much ranches cost, we at Bill Bahny & Associates would be happy to help. Let us help you find the property that best aligns with what you want and your budget. Reach out to us today.
Learn more about Montana ranching in the next part of the series, and if you missed it here’s part 1!