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Lease Valuation Assistance
#8995105
01/27/24 04:08 AM
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Joined: Apr 2005
Posts: 562
TXMikeMcC
OP
Tracker
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OP
Tracker
Joined: Apr 2005
Posts: 562 |
Hey Folks,
Due to the age of our parents, a cousin and I will be taking over financial "management" of a family ranch, and this happens to coincide with scheduled lease re-negotiation with an existing long-term hunting group. In my youth I hunted a bit, but haven't shot anything other than targets or hogs in the past 30 years, so I wanted to seek the forums guidance on a fair leasing rate.
The group that is currently leasing (~11 guns) are seemingly the ideal group of folks; I ask this not because we're trying to "squeeze them for cash", or anything of the sort. I just want to make sure we're at least relatively in-line with comparable properties as we go to renegotiate. I think the family would strongly prefer to stay with the existing group.
Pertinent details below: ~2,350 Acres Low Fence Antler Restriction county Rough ranch land with extensive cover (not covered up in cedar) ~300 field acres of winter grain grazing ~150 acres of creek bottoms with pecan trees ~multiple water tanks that hold water year round Lease is year round for all game animals legal in the state Property is a working ranch, with limited cattle grazing and agg activity at various points of the year (not a feed lot or anything like that) Multiple points of highway access, and caliche roads throughout.
Electricity, well water, and septic on-site. Hunters bring/build their own shelter.
~110 miles from Austin ~150 miles from DFW ~90 miles from Waco ~120 miles from San Angelo
What do you figure something like that is worth charging per year?
F-T/R Shooter
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8995116
01/27/24 07:32 AM
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Joined: Mar 2010
Posts: 2,062
BLUERIBBONS
Veteran Tracker
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Veteran Tracker
Joined: Mar 2010
Posts: 2,062 |
Going to guess Brown county? What is the current group paying per acre?
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8995138
01/27/24 11:17 AM
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Joined: Jul 2014
Posts: 7,384
onlysmith&wesson
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jul 2014
Posts: 7,384 |
Do you know the # of deer they took off of it the last 2-3 years and the quality of bucks?
An unethical shot is one you take, that you know you shouldn't.
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8995140
01/27/24 11:26 AM
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Joined: Feb 2012
Posts: 11,446
DQ Kid
THF Celebrity
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Posts: 11,446 |
Not knowing particulars regarding animal quality and potential, it could range anywhere from $8-20 an acre, even a little more at today's prevailing rates. 11 hunters is pushing the top end of what I'd put on 2350 acres too.
Last edited by DQ Kid; 01/27/24 11:26 AM.
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Re: Lease Valuation Assistance
[Re: onlysmith&wesson]
#8995147
01/27/24 12:05 PM
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Joined: Apr 2005
Posts: 562
TXMikeMcC
OP
Tracker
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OP
Tracker
Joined: Apr 2005
Posts: 562 |
Do you know the # of deer they took off of it the last 2-3 years and the quality of bucks? I do not know the quantity. The ranch is in an active WMA, and not bordered by over-pressured properties. I forgot to mention, I know the ranch qualifies for MLD tags; I'm unsure of how that's handled, but I believe there have been several does taken in addition to the standard yearly limits. Nobody in the family is taking the does, so I assume the hunters are the ones doing it. Apologies for being light on details here guys, but I appreciate the assistance.
Last edited by TXMikeMcC; 01/27/24 12:06 PM.
F-T/R Shooter
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8995161
01/27/24 01:03 PM
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Joined: Jul 2013
Posts: 6,460
tlk
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jul 2013
Posts: 6,460 |
First off if you have a quality group of hunters already in place that is huge. I agree that 11 on that size property is pushing it. Knowing what they are currently paying would help along with quality of the deer in the past. Without that info I agree with DQ Kid - $8 to $12 an acre would be my guess. IMO I would discount a little off the going rate to have a proven group using my ranch. Good luck!
You can't fix stupid
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Re: Lease Valuation Assistance
[Re: Pitchfork Predator]
#8995455
01/27/24 10:30 PM
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Joined: Apr 2007
Posts: 296
dr_pepp
Bird Dog
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Bird Dog
Joined: Apr 2007
Posts: 296 |
I don't have anything to add regarding value. You have received some numbers that should help you develop a "market range" but once you decide on the current market value of this lease and assuming the current group is below that number, you might inform them and set the new market number as a target but give them a 3 to 5 year set of increases rather than one big jump. If they have been on the lease for a long time, giving them a multi-year agreement (hard to come by in my experience) with annual increases might be a way to find a workable solution.
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8995566
01/28/24 02:01 AM
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Joined: Jun 2006
Posts: 9,140
Dave Davidson
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jun 2006
Posts: 9,140 |
Multi year agreement would be hard to enforce by the LO.
Without a sense of urgency, nothing ever happens.
Boy, if I say "sic em", you'd better look for something to bite. Sam Shelley, Rancher Muleshoe Texas 1892-1985 RIP
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Re: Lease Valuation Assistance
[Re: Pitchfork Predator]
#8995574
01/28/24 02:24 AM
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Joined: Mar 2007
Posts: 5,235
Rustler
THF Trophy Hunter
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THF Trophy Hunter
Joined: Mar 2007
Posts: 5,235 |
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Re: Lease Valuation Assistance
[Re: Dave Davidson]
#8995586
01/28/24 02:40 AM
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Joined: Apr 2007
Posts: 296
dr_pepp
Bird Dog
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Bird Dog
Joined: Apr 2007
Posts: 296 |
Multi year agreement would be hard to enforce by the LO. I'm not an attorney, but I'm of the understanding that two parties can contract for anything not prohibited by law. Not sure why a multi year agreement would be a problem for either party. If I missed your point, please educate me.
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8995597
01/28/24 02:54 AM
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Joined: Jul 2013
Posts: 6,324
Wilhunt
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jul 2013
Posts: 6,324 |
Be careful you don't lose good people. The family strongly likes the group you have.
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Re: Lease Valuation Assistance
[Re: dr_pepp]
#8995724
01/28/24 01:48 PM
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Joined: Jun 2006
Posts: 9,140
Dave Davidson
THF Trophy Hunter
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THF Trophy Hunter
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Multi year contract means, to me, that it would always continue at that rate. That’s forecasting a lot of supply/demand and economic issues.
Without a sense of urgency, nothing ever happens.
Boy, if I say "sic em", you'd better look for something to bite. Sam Shelley, Rancher Muleshoe Texas 1892-1985 RIP
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Re: Lease Valuation Assistance
[Re: Dave Davidson]
#8995736
01/28/24 02:21 PM
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Joined: Apr 2007
Posts: 296
dr_pepp
Bird Dog
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Bird Dog
Joined: Apr 2007
Posts: 296 |
Multi year contract means, to me, that it would always continue at that rate. That’s forecasting a lot of supply/demand and economic issues. My suggestion was to have a multi year agreement with annual increases built in. For example, after this research, if the landowners determine that the current rate is 25% below the market, they could enter into a 3 year agreement with a 10% increase in years 1 and 2; followed by a 5% increase in year 3. If they increase the rate by 25% next year, that is a pretty big shock to the system and might cause at least some of the long-term hunters to go elsewhere. But phasing in the increase gives the hunters time to adjust to the increase but also benefit by knowing they have the lease for more than just one year at a time. Sure, by the time they get to the third year, the market rates for leases might have gone up or down, but in my experience, even in tough economic times, lease prices don't go down. While lease prices always appear to be increasing, they seem to be much more stable that other real estate prices, whether it is leasing or buying. I can't imagine that lease prices are going to increase or decrease significantly over a 3 year period. The longer the term, the more uncertainty, but 3 to 5 years isn't really what I'd consider long term.
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Re: Lease Valuation Assistance
[Re: dr_pepp]
#8995806
01/28/24 03:52 PM
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Joined: Jul 2014
Posts: 7,384
onlysmith&wesson
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jul 2014
Posts: 7,384 |
Multi year contract means, to me, that it would always continue at that rate. That’s forecasting a lot of supply/demand and economic issues. My suggestion was to have a multi year agreement with annual increases built in. For example, after this research, if the landowners determine that the current rate is 25% below the market, they could enter into a 3 year agreement with a 10% increase in years 1 and 2; followed by a 5% increase in year 3. If they increase the rate by 25% next year, that is a pretty big shock to the system and might cause at least some of the long-term hunters to go elsewhere. But phasing in the increase gives the hunters time to adjust to the increase but also benefit by knowing they have the lease for more than just one year at a time. Sure, by the time they get to the third year, the market rates for leases might have gone up or down, but in my experience, even in tough economic times, lease prices don't go down. While lease prices always appear to be increasing, they seem to be much more stable that other real estate prices, whether it is leasing or buying. I can't imagine that lease prices are going to increase or decrease significantly over a 3 year period. The longer the term, the more uncertainty, but 3 to 5 years isn't really what I'd consider long term. I know you don't want to loose the current group. That said, as long as the core members and majority stayed you'd be fine. A good core group will make sure they stick to their rules and way of doing things if they have some turn over. If you feel an increase is warranted, I'd have the conversation from the leader and get a feel for it.
An unethical shot is one you take, that you know you shouldn't.
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8995996
01/28/24 08:32 PM
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Joined: Jun 2010
Posts: 8,642
Stompy
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jun 2010
Posts: 8,642 |
For a ranch you're describing, should be about $15 an acre. For 11 hunters that would be about $3200 per hunter, which is a very fair market price for both.
Last edited by Stompy; 01/28/24 08:36 PM.
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8996060
01/28/24 10:32 PM
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Joined: Nov 2011
Posts: 11,505
Texas buckeye
THF Celebrity
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THF Celebrity
Joined: Nov 2011
Posts: 11,505 |
I am a firm believer in a bird in the hand is worth two in the bush….you have a group you (family) are happy with…talk to them and keep everyone happy.
A few extra thousand dollars for a far worse group is NOT worth the added dollars.
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8996097
01/28/24 11:49 PM
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Joined: Feb 2012
Posts: 11,446
DQ Kid
THF Celebrity
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THF Celebrity
Joined: Feb 2012
Posts: 11,446 |
If I understand op's post, he is simply trying to understand the current leasing market rates vs what the current group is paying. If group is paying way below prevailing rate nothing sinister in bumping them up some in order to reap "fair" ROI. Even if he is even considering such.
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Re: Lease Valuation Assistance
[Re: DQ Kid]
#8996130
01/29/24 12:32 AM
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Joined: Jul 2013
Posts: 6,460
tlk
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jul 2013
Posts: 6,460 |
If I understand op's post, he is simply trying to understand the current leasing market rates vs what the current group is paying. If group is paying way below prevailing rate nothing sinister in bumping them up some in order to reap "fair" ROI. Even if he is even considering such. He has been provided many experienced suggestions here - so now it is time for him to decide for himself IMO
You can't fix stupid
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8996286
01/29/24 04:09 AM
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Joined: Dec 2020
Posts: 1,510
Sewer rat
Pro Tracker
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Pro Tracker
Joined: Dec 2020
Posts: 1,510 |
As hunters no one here probably wants to hear this but lease rates should be increased every year. Not a lot, but small amounts. For example I saw the number $3,200/yr per gun thrown out. If that is what it is it should be $3,300 next year, $3,400 the next, $3,500, the next and so on. People who manage rental properties always raise the rent because they have to in order to keep up with inflation. Very few people will complain about small increases like that. I mean if you had a lease and paid $3,200 and you had a great time, shot the deer you wanted, and were excited to come back next year would $100 change your mind?
The problem comes when you don’t raise the rates and keep them the same for years and years and then one day realize you are way under market and tell your $3,200 hunter that the going rate for properties like this is now $6,000 and they get sticker shock and think you are trying to screw them because they have become accustomed to paying so little.
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Re: Lease Valuation Assistance
[Re: tlk]
#8996315
01/29/24 11:12 AM
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Joined: Jul 2013
Posts: 6,460
tlk
THF Trophy Hunter
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THF Trophy Hunter
Joined: Jul 2013
Posts: 6,460 |
If I understand op's post, he is simply trying to understand the current leasing market rates vs what the current group is paying. If group is paying way below prevailing rate nothing sinister in bumping them up some in order to reap "fair" ROI. Even if he is even considering such. He has been provided many experienced suggestions here - so now it is time for him to decide for himself IMO DQ - I did not mean for my post to come through reflecting on your post - sorry if it did - TLK
You can't fix stupid
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Re: Lease Valuation Assistance
[Re: tlk]
#8996347
01/29/24 01:17 PM
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Joined: Feb 2012
Posts: 11,446
DQ Kid
THF Celebrity
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THF Celebrity
Joined: Feb 2012
Posts: 11,446 |
If I understand op's post, he is simply trying to understand the current leasing market rates vs what the current group is paying. If group is paying way below prevailing rate nothing sinister in bumping them up some in order to reap "fair" ROI. Even if he is even considering such. He has been provided many experienced suggestions here - so now it is time for him to decide for himself IMO DQ - I did not mean for my post to come through reflecting on your post - sorry if it did - TLK I figured as much, as it struck me as strange coming from you. I know you are pretty objective about leasing and prevailing market leasing rates...
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8996425
01/29/24 03:28 PM
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Joined: Nov 2014
Posts: 7,938
Mr. T.
THF Trophy Hunter
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THF Trophy Hunter
Joined: Nov 2014
Posts: 7,938 |
My 2 cents worth. Having it leased to people that have been there long term and that have demonstrated over time of taking care of your property may be worth leasing it for 25% under market. Without knowing anything, if I just had to raise the price, I would raise it $250 per gun and give them a 5 year lease.
Cabin rental in Pagosa Springs, Co. Sleeps 10, If interested please PM me.
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Re: Lease Valuation Assistance
[Re: TXMikeMcC]
#8996501
01/29/24 05:36 PM
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Joined: Sep 2012
Posts: 13,320
PMK
THF Celebrity
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THF Celebrity
Joined: Sep 2012
Posts: 13,320 |
agree with most of the comments above. And if there is a good group currently on your property, that is worth something in itself!!! Have to be careful not to price a "good" group out just for more money and likely more headaches.
One of my current leases has more than doubled in price over the last 8+ years but I still find it to be a fair price for what is available. There has been a pretty big turnover during that time mostly around updated rules and cost rising so quickly and so high. It wasn't for everyone and they chose to leave. So far their replacements have fit in pretty good but those have been somewhat hand selected by remaining hunters or the LO based on previous experiences with them.
"everyone that lives dies but not everyone who dies lived..."
~PMK~
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