Summer 2016

ADDING VALUE TO LAND
As an added bonus, though, the intangible benefits of
stewardship can also enhance the market value.
“While our primary reason for wanting the ranch wasn’t financial,
a good quail ranch in the Texas Rolling Plains has to increase in
value because there just aren’t that many places to hunt wild
quail,” Campbell said.
Mark Matthews, a partner in Republic Ranches who is also a
wildlife biologist based in Hondo, agreed that focusing on the
‘ecological bones’ of a property can add value, especially if
aesthetics are taken into consideration.
“Good stewardship that improves the quality of the habitat and
the availability of water generally is time and money well spent,”
he said. “Although people may not be able to express why
they are attracted to a piece of property, they respond to the
aesthetics of productivity and of nature.”
In his experience seemingly little things can make a big
difference in the way potential buyers perceive a recreational
property. For instance, potential buyers respond more positively
to a road that winds its way through a stand of bull mesquite
instead of a straight road that is cut through a stand of switch
mesquite. Brush sculpting that leaves a lot of edge trumps more
“artificial” patterns such as checkerboard or strips.
Potential buyers respond more positively to stock ponds that
are built in an irregular shape with the creek drainage curving
around behind as opposed to perfectly symmetrical stock tanks
plopped in the middle of pastures. If the surface water can be
enhanced with a “park-like” setting that includes large trees, it’s
even more appealing. In drought years, he noticed that people
respond to right of ways and riparian areas that is re-seeded
with native plants so there was cover alongside the ranch roads
and creeks hinting at productivity when the rains returned.
“A majority of today’s buyers are looking for recreational
property,” Matthews, who is a Texas Wildlife Association
member, said. “Recreational buyers want the land to offer a
promise of discovery. There are people who want to make the
improvements themselves and then there are those who prefer
to purchase a ‘turnkey’ property to maintain and manage.”
Before joining Republic Ranches, Matthews was involved in a
partnership that sought out ranch properties with the intent of
improving them and reselling them. Their target market was the
people who were searching for a ‘turnkey’ property.
Generally, the partners looked for ranches that had been grazed
continuously and hard with minimal water and infrastructure
development. They considered the soil profile to determine if it
would support diverse vegetation that in turn would support a
species of interest such as white-tailed deer or quail.
“By improving the overall quality of the habitat and the
availability of water, we knew we could enhance the value of the
property most directly,” Matthews said. Location and ease of
access were secondary considerations, he said.
While the partners got satisfaction from improving the land,
it was a business so they began by determining the bottom
line. Before purchasing a property, the partners would define
the top of the local market, estimate the cost of the planned
improvements and see if the difference between the two would
allow them to turn a profit.
“The laws of conformity affect ranch properties just like they do
residential properties,” Matthews said. “You wouldn’t build a
million dollar home in a $250,000 neighborhood. The same holds
true for ranches. When looking at land as an investment, it’s
important to know what the market will bear in a specific region.”
As the partners began to plan their improvements, they would
identify the property’s “sweet spot” whether it was a scenic
water hole, a sandstone cliff, or a stand of ancient live oaks and
make that the focal point. It would be the property’s epicenter
with the improvements radiating from that location.
While the improvements would vary from property to property,
they would be practical applications that enhanced the land’s
productivity such as brush management, range reseeding,
prescribed burning, water development, or the property’s
usefulness such as road and fence construction. Whatever
management practices the partners implemented, they ensured
the property to remain would remain under agriculture or wildlife
tax valuation.
“The wildlife valuation gives more management flexibility, but
you have to have one or the other,” Matthews said. “In my
experience, recreational buyers like knowing they hold a wildlife
valuation because it speaks to their conservation ethic.”
If applicable, the partners would also try to acquire high volume
water rights.
“Water is the driver of everything in Texas,” Matthews said.
“Generally water rights are a good investment.”
While the partners would invest in the land, they avoided investing
in homes or other facilities that are subject to personal taste.
“You can get into tricky waters quickly if you overbuild or
overdevelop,” Matthews said. “To recover the cost of an
extravagant home, you may have to price the land above the
regional average. Then, you also have to find a buyer who
is attracted to the style home you’ve chosen to build. In my
experience, many recreational buyers want to spend their money
on land not a big house.”
To that end, Matthews suggested identifying potential building
sites on the ranch and improving their aesthetics, but not
actually constructing anything. He also cautioned against
inadvertently using prime home building locations for ranch
infrastructure such as barns.
“People, even those who aren’t comfortable doing the initial
restoration work, want to leave their imprint on the land,”
Matthews said. “They, too, want to leave the land better than
they found it, so it’s important to create opportunities where they
can do that by building on the foundation you’ve laid.”