The Outdoor Dream - Owning Your Own Land
For many of us hunting, fishing and outdoor enthusiasts we dream of owning our own land. Not a 5,000 sq ft. parcel but actual land! Acres at a time. And for many this is a noble and worthwhile pursuit, but it does require some pre-planning and some helpful financial guidance along the way as well. In today's world where "they aren't making any more of it" good quality land is getting harder and harder to find, as populations explode and development follows as well. So below are a few checkpoints to review.
What are your goals? What is the land for? Is it hunting, fishing, camping, riding ATVs, horses, income generation via agricultural leasing, timber? You can have multiple goals, but being very clear on what you want will help exclude many other parcels and find the ideal property. Also, would you want to build a residence here one day? That is a very important factor to consider as well. A great thing about land is you have a "Blank Slate" on which to build your dream habitat and environment, but that also blends into some other future considerations.
Location & Search: Another key component is how close this land will be to your residence; some folks have the ability to travel far (already retired or will soon be), or they can even fly out-of-state to other land. However, most of us like proximity for the ability and ease of enjoying the land. Another key factor is to enlist a qualified land broker, a licensed real estate agent who specializes in land. You can find a good local one who is an Accredited Land Consultant (ALC) through the Realtors Land Institute. Given your goals and their connections they can even often find off-market deals.
Financial Considerations: The big factor - how will you pay for this purchase? The following are some key considerations in thinking of financing your land:
- Will it be a cash deal? Do you have cash available for a purchase?
- Will you finance? Have you been preapproved and know the terms, interest rates, closing costs, associated?
- Title search and employing a licensed Real Estate Attorney is key to make sure the title is free and clear.
- Are you selling stocks, investments, or taking IRA or retirement account distributions? How will this affect your other goals and your taxable income for the year? Key things to review with an accountant or CPA.
- Are you selling another investment property and considering a 1031 exchange? Where you can buy a new (non-personal use) property and defer any capital gains tax.
- Ongoing expenses: Property tax, do research to find historical rates. In many areas you can qualify for deferred taxes or Present-Use Valuation (State and locality dependent, do your research), which may be a lot lower. Other costs are any improvements such as culverts, drainage, road ways, food plots, mowing & spraying, clearing, grading and even physical structures. Work to build a list of projects and costs. Another is liability insurance, or crop insurance, if you are leasing for hunting or using for your own agricultural income.
Regulations & Zoning: This is a very important early step in the buying and searching process. Identifying how the land is currently zoned (residential, ag, commercial) as well as any covenants.
- Mineral rights and timber - another factor if these items convey to the seller
- Utilities and land viability - do you have any local access points? Is it easy to obtain? Also septic testing for potential build sites may be done, or may need to be performed.
- Waterways and wetlands - an important consideration are flood zones, as well as existing wetlands and the limits and regulations around what you can and cannot do on property.
You Own an Asset, Now What: The beauty of owning land is it is an asset, one that can generate income through a myriad of ways, but also one included in your estate and that could be sold, transferred or left via Will or Trust to future generations. With that in mind, having smart goals on your land is prudent, thoughts and ideas such as:
- Hiring a Timber Consultant and Forester to develop a Timber Management Plan
- Possibly using Cost-Sharing Programs or CRP and tax-related benefits
- Leaving to a Conversation Easement or Land Trust to prevent future development, but still retain personal usage and income generation.
- Estate tax inclusion and gifting tax consideration, varying on the State you live in but also on a Federal level.
Owning land is a wonderful thing - it is fun! It is exciting, and it can bring decades of joy and pleasure. A few other tips and considerations.
- Don't just buy the cheapest land - you might get a deal, but not all land is equal. And always have "Can I sell this again?" in the back of your mind before you buy.
- Do common, necessary, and highly-sought-after improvements. Sure a 10 bedroom lodge with Italian marble is nice, but it costs a lot, and the ongoing running expenses are high, and like the point above, you limit a potential buying pool should you sell. Improvements like roadways, gates, access points, clearings, etc. are all high-value additions worth exploring.
- You don't need the biggest acreage. You can build a sweet property with 15 or 20 acres if it's the right spot, a great location, and set-up for your goals. Especially for hunting purposes, some of the smaller and forgotten tracts can be downright great investments.
- Go in with family or friends. If you want a larger property, or higher cost, consider going in with other investors. However, always have similar goals, plans, and a strong contingency plan - also work with an attorney on how to structure the ownership (tenants in common, survivorship, etc.). And determine the financing and payment, as well as ongoing costs. Spend a LOT of time in discussion before ever entering a shared ownership model.
- Don't be a liability. Consider even owning the land in an LLC, separate from other personal assets in the event of a lawsuit. This is a very important item to consider.
As an outdoorsman and lover of land, I am here to help with any questions you have, while sharing personal experience and working with dozens of clients who have pursued this opportunity. Life is too short to only rely on leased land, which could be sold or lost, or public gamelands which are crowded. However, there is a financial price to pay! Review all of your options and get a financial picture to see how you can make this dream a reality.