Hall and Hall Defines Investment Quality Rural Real Estate

Normal 0 MicrosoftInternetExplorer4 st1\:*{behavior:url(#ieooui) } By: Sylvia IsabellThe United States is home to some of the best fishingand hunting properties in the world. Des

By: Sylvia Isabell

The United States is home to some of the best fishing and hunting properties in the world. Despite the turbulent financial markets and the sub-prime mortgage mess, these properties remain as valuable, interest accruing assets. Wealthy cash buyers are always in the hunt for the best properties and probably always will be, since as Will Rogers famously stated, “They ain’t making any more of it.”

It should come as no surprise that those seeking to purchase prime sporting properties consider privacy, exclusivity, proximity to public lands, and availability of good water to be the top factors in their search. However, Hall and Hall, one of the largest and most successful ranch brokerage companies in America, has added a twist to qualifying the best sporting properties on the market with a newly drafted definition of “Investment Quality Rural Real Estate" (IQRRE)--- property that possesses intrinsic qualities that ensures it has the highest potential for appreciation and liquidity.

There is no question that many top-tier hunting and fishing properties fit the definition of IQRRE. The best sporting properties are unique, desirable, and in very short supply. In fact, fishing has consistently come second only to privacy in a buyer’s list of criteria when deciding to purchase a sporting property, according to Hall and Hall’s President, Jim Taylor.

Two key ingredients that make a fishing property “investment quality” are water and privacy. Accessibility is another important factor. If one has to charter a helicopter or a float plane to access a property, then one has to discount the value that relates to the quality of the water or exclusivity of the property. If it is difficult to get into a piece of property, buyers will typically insist on a substantial discount or select a more accessible property.

Fresh water fisheries generally come in the form of lakes, small streams, rivers, and spring creeks. As a general rule, lakes are not considered as desirable as moving water for fisherman. They often require more maintenance as they are often man-made. That is not to say that there are not some very wonderful and beautiful natural lakes that support significant wild fish populations. However, because of their general lack of desirability to the buyer, it would take a very special lake to rise to the highest level of IQRRE. Stream and river fisheries are definitely desirable based on a number of factors. The stream or river must have the nutrient base and water temperature to support game fish. Upstream dams and/or irrigation water users above the property also deeply impact a property’s value.  Clearly control of a significant stretch of land on both sides of the water source is important. It is also important that the stream is managed for wild fish so that you do not get people introducing potential sources of disease from hatchery fish into the stream. The variety of fish available, their size, and the diversity of habitat in the stream is another factor to consider. Variety is a good thing.

 Every state has different regulations regarding public access to its waters. In the U.S., individual states claim ownership of the water and fish, but each state has different regulations regarding public access to its water. One needs to determine whether there is any form of public access to the stream that passes through the property in question. In Montana, for example, many of the most famous trout rivers such as the Madison, the Big Hole, the Yellowstone, etc. can be floated by the public, and the public may get out of their boat and fish up to the high water mark. In Colorado on the other hand, floaters are not allowed to get out of their boats where the rivers pass through private land. There are other ways that the public could possibly access one’s land so it is important to determine what the situation is on each property because privacy is the most important creator of value on a fishing property.

Spring creeks represent the ultimate in privacy and generally offer year-round fishing with very little impact from spring run off or upstream users. Spring creeks by their very nature rise out of the ground at a constant temperature and flow for a relatively short distance before disappearing into a river or stream. In concept, this allows one or two owners to control the use of the stream. Fish tend to do well in this environment. It goes without saying that a well located spring creek with complete control by one owner represents the very highest level of IQRRE.

Hunting properties tend to be a bit more complex. In the U.S. the two main types of hunting properties are big game or upland bird/waterfowl properties. The main species of interest for big game in the U.S. are deer and elk. The primary consideration in finding a big game hunting property is to control enough prime habitats so that the property can be hunted without driving the animals off the ranch. A good hunting ranch can be enhanced considerably if it lies adjacent to large blocks of public land. This allows the owner to expand a hunting area, and frequently public pressure drives wildlife onto private or controlled lands. Since the state claims ownership of the wildlife, it is important to review the local regulations. In some states, non-resident land owners have to enter a lottery to receive big game tags for the season. States with the most elk hunter friendly regulations are Oregon, New Mexico and Colorado. Both Oregon and New Mexico issue landowner tags that attach to the ranch.  Bow hunters currently have less stringent restrictions than rifle hunters. Truly great elk hunting ranches are few and far between and tend to be large in acreage. These properties register at the high end of the investment-quality scale.

Upland bird and waterfowl properties tend to lie in less scenic areas and are somewhat less interesting in terms of their aesthetic qualities. Pheasants and water fowl in particular are subject to man made habitat enhancements such as introduced crops and ponds. Waterfowl are migratory so this introduces a variable that is difficult to control. Generally a great property will be one on a dependable flyway that has been developed to attract and hold birds and waterfowl. In many cases, tame birds are introduced to increase the numbers. The best of these are the ones that have a high percentage of natural habitats that would cause them to be great hunting properties even without the manmade enhancements.

Perhaps the best examples of bird/waterfowl properties are the famous quail plantations of the Southeastern United States. While there is a significant level of input from man and introduced birds, the best of these properties are the ones that produce significant numbers of wild birds in a natural setting. The great and sought after properties are the ones that offer a variety of hunting options from deer to waterfowl to doves.

As hunting and fishing properties have gone into tighter hands and achieved investment-quality status, an entire industry has evolved around the theme of enhancing - or even creating from scratch - wildlife habitat and private fisheries. In fact, many land owners are investing hundreds of thousands of dollars into properties for habitat management and enhancement. A good trout stream or bountiful riparian areas can double or even triple per acre value. Recognizing this situation and acting on it has turned average ranches used for cows and crops into investment-quality property with top-notch fly fishing and elk hunting. 

It is fair to say that man’s hunter gatherer instinct runs deep and properties that allow him to go back to his roots will always be in short supply and in high demand. This certainly applies to the top hunting and fishing properties on the market today.

“Put very simply such property must be relatively unique (i.e. in short supply) and the qualities that make it unique must be broadly desirable,” said Taylor. “The classic concept of limited supply and broad demand driving price appreciation is the underlying theme that causes certain pieces of land to be investment quality.”

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