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Important things to consider before buying a ranch

Texas farm and barn

Owning a ranch in Texas is a dream come true for those who enjoy the backbreaking but rewarding work of tending to livestock and managing the land.

But before you sign on the dotted line, here are some important things to consider before buying a ranch.

  1. Where will you buy cattle?

    You’ll find several reputable livestock auction markets and sale barns in and around Weatherford, TX. You can read reviews here and here.

    Aside from finding livestock dealers and breeders, you should also have an accurate idea of how much you should pay. Too many ranchers pay too much for livestock, buy inferior quality livestock, or both. Poor quality livestock often results in shabby products and in some cases, financial losses.

    So before you make a purchase, do your research. Build a support network in the community. This way, other ranchers can point you towards the best dealers and breeders who can give you an estimate of how much you should pay. You can also talk to professionals who are trained and experienced when it comes to buying quality livestock in Texas.

    Read about Weatherford’s policies on livestock within city limits here.

  2. How many animals can the ranch support?

    Now that you know where to find quality livestock and how much to pay for them, you must find out how many animals the ranch can adequately support.

    Too often, ranchers overestimate the carrying capacity of their property. This results in overcrowding. There also are sellers who exaggerate the number of livestock that the property has supported throughout its history.

    The good news is that you can find information about the production potential of land in most Texas counties at the local Natural Resources Conservation Service office. A professional can give you an accurate assessment of the land’s production potential if you provide information on precipitation, soil type, and forage and vegetation conditions.

  3. What else do you need to buy?

    Aside from land and livestock, ranchers must also buy equipment. But don’t make the mistake of buying too much or the wrong kind of equipment. This blows up production costs and diminishes your profit margins.

    You don’t necessarily need to buy a new tractor, trailer, pickup, or ATV. Consider buying used equipment in good condition from other ranchers. Renting and borrowing equipment is also a great alternative to making brand-new purchases.

    Buyers also underestimate the cost of hired labor. Before buying a ranch, make sure you have an accurate idea of how much hired farm hands are paid in the area.

  4. How much time are you willing to invest on the ranch?

    Some buyers may think that the land will take care of itself. This is not always the case. Livestock alone will require a significant amount of care. They need to be taken out to pasture, treated for illness, and kept secure with proper fencing.

    People often purchase “hobby” ranches without realizing that managing one will take up nearly all of their free time. They also fail to consider the amount of time it takes to travel to and from the property, or the time it takes to commute to their jobs in the city center.

    Be prepared to put in more than 20 hours of labor each week on a small ranch. If you don’t have the time and energy to do this, hire someone who does. But this will add to the cost of managing the ranch and decrease the potential for profit.

    So before buying a ranch, think of the amount of time and energy it will take to maintain it. Think of how this will affect your leisure time.

  5. How much are you willing to pay each year?

    Don’t underestimate costs of managing a ranch. Always plan for the worst case scenario. Sales typically take place only once or twice a year, whereas bills must be paid on a regular basis.

    Some of these expenses include livestock feed, hay, pasture, medicine, veterinary care, transportation, and maintenance of vehicles and machinery.

  6. How much income can you expect to generate from the ranch?

    Buyers usually overestimate the land’s expected gross income. Take a conservative approach when projecting the land’s gross income potential and don’t hesitate to talk to professionals.

    For example, the price of cattle as an agricultural commodity may fluctuate based on supply and demand on the national or international level. Because of this, the ranch’s gross income may vary.

  7. Will you get tax savings from agricultural production?

    Buyers often assume that they can make significant tax savings due to agricultural production. However, they run the risk of making poor decisions in order to save on taxes.

    To avoid this, go over your plans with a knowledgeable agricultural tax practitioner prior to buying a ranch.

Are you ready to buy land for sale in Weatherford, TX? Call HBS Real Estate at (817) 550-6666 for professional assistance.