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Lease Valuation Assistance #8995105 01/27/24 04:08 AM
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TXMikeMcC Offline OP
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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?


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Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995116 01/27/24 07:32 AM
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Going to guess Brown county? What is the current group paying per acre?

Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995138 01/27/24 11:17 AM
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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.
Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995140 01/27/24 11:26 AM
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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.
Re: Lease Valuation Assistance [Re: onlysmith&wesson] #8995147 01/27/24 12:05 PM
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Originally Posted by onlysmith&wesson
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.

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Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995161 01/27/24 01:03 PM
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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!


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Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995165 01/27/24 01:11 PM
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30-35k


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Re: Lease Valuation Assistance [Re: Pitchfork Predator] #8995455 01/27/24 10:30 PM
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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.

Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995566 01/28/24 02:01 AM
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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
Re: Lease Valuation Assistance [Re: Pitchfork Predator] #8995574 01/28/24 02:24 AM
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Originally Posted by Pitchfork Predator
30-35k


This.

Re: Lease Valuation Assistance [Re: Dave Davidson] #8995586 01/28/24 02:40 AM
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Originally Posted by Dave Davidson
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.

Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995597 01/28/24 02:54 AM
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Be careful you don't lose good people. The family strongly likes the group you have.

Re: Lease Valuation Assistance [Re: dr_pepp] #8995724 01/28/24 01:48 PM
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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
Re: Lease Valuation Assistance [Re: Dave Davidson] #8995736 01/28/24 02:21 PM
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Originally Posted by Dave Davidson
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.

Re: Lease Valuation Assistance [Re: dr_pepp] #8995806 01/28/24 03:52 PM
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Originally Posted by dr_pepp
Originally Posted by Dave Davidson
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.
Re: Lease Valuation Assistance [Re: TXMikeMcC] #8995996 01/28/24 08:32 PM
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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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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.

Re: Lease Valuation Assistance [Re: TXMikeMcC] #8996097 01/28/24 11:49 PM
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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.

Re: Lease Valuation Assistance [Re: DQ Kid] #8996130 01/29/24 12:32 AM
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Originally Posted by DQ Kid
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


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Re: Lease Valuation Assistance [Re: TXMikeMcC] #8996286 01/29/24 04:09 AM
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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.

Re: Lease Valuation Assistance [Re: tlk] #8996315 01/29/24 11:12 AM
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Originally Posted by tlk
Originally Posted by DQ Kid
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


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Re: Lease Valuation Assistance [Re: tlk] #8996347 01/29/24 01:17 PM
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Originally Posted by tlk
Originally Posted by tlk
Originally Posted by DQ Kid
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...

Re: Lease Valuation Assistance [Re: TXMikeMcC] #8996425 01/29/24 03:28 PM
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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.


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Re: Lease Valuation Assistance [Re: TXMikeMcC] #8996501 01/29/24 05:36 PM
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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.


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