How to Start a Ranch

Spending your days riding, herding and exploring the great outdoors is one of the many appeals of starting a ranch. If you are thinking of starting a ranch for lifestyle or business reasons, you should carefully consider the size, type and location of the ranch you hope to start. Given the low profit margins in ranching, you should budget carefully and consider hiring a ranch manager or management firm.

[Edit]Steps

[Edit]Buying a Ranch

1. Shop for a ranch online. You can begin searching for a ranch online, where you will find a variety of ranching real estate sites. Real estate sites specializing in ranches usually focus on a particular region, such as California or Texas ranches. Some of the sites allow you to sort listings by location, price range and acreage.^[1]
   
2. Work with a real estate agent. Though you’ll be able to find many enticing properties online, it’s a good idea to work with an agent to find a ranch in your price range. They’ll have more access and a better idea of what’s on the market, and be able to caution and encourage you appropriately about setting up a ranch.
   
3. Determine whether you want to invest your money in a ranch. Ranches are a significant investment. If you want to keep your money in a safe investment that is a little more fun than a government bond or savings account, a ranch could be a decent investment.^[2]
   
   • In California, you may pay between $5,000,000 and $21,000,000 for a ranch.
   • In Texas, you might be able to get a ranch for as little as $400,000. You can also easily spend upwards of $5,000,000.
   • You should only invest in a ranch if you want to spend significant time at the ranch, since ranches can be difficult to value and to sell.
4. Talk to your local bank about financing options. Some local banks work with agencies such as the USDA to help finance beginner farmers and ranchers. Ask your local bank about the local beginning farmer financing initiative, which is a special lending pool designed for young farmers.
   
   • You could also look into the “Young & Beginning” program offered by Farm Credit Services. This program helps young farmers get on their feet with real estate loans, insurance, education reimbursements, youth in agriculture loans, as well as college scholarships.
5. Work your private contacts. If you know any property owners, you should contact them directly to work out an arrangement to ranch on their land. Depending on your financial situation and ranching goals, you could work out a cash deal or a work-in arrangement. In other words, you could work to pay for some or all of the land or get a good deal by paying with cash.
   
6. Start a large, profitable ranch. If you want to make money with a traditional working ranch, try to determine your possible sources of income from ranching, hunting rights, tourism and other sources. ^[3]
   
   • If you want to make money, you should look at emerging markets such as sheep farming and carbon offsetting.^[4]
   • Another way to make money is to lease your farmable land out to other farmers to grow hay, corn, or other crops.
7. Get a small, personal ranch. A small ranch can be a great way of living an active and outdoor lifestyle, as long as you have other sources of income. If you are starting a ranch for personal and lifestyle reasons, you might want to purchase a ranch that is conveniently located and hire a ranch manager to keep the cost of the ranch relatively low. ^[5]
   
   • If you start a small ranch, remember that it is a significant investment of time. You will be spending at least twenty hours a week working on your small ranch, in addition to whatever you do for a living.^[6]
   • Small ranchers do not typically realize a profit, although there are exceptions.^[7]
   • If you are mostly interested in ranching for recreational or lifestyle purposes, you may want to start with a small ranch and 5-10 cattle and/or 2-4 horses.
8. Look into the carrying capacity of the land. Go to the local conservation office and ask about the production potential of the land you are looking to purchase. You want to consult with professionals about the soil type, vegetation, annual precipitation and other local ecological conditions that will determine the number of livestock your land can support.
   
   • Sellers may tell you the land can support more cattle than is realistic. ^[8]
   • If you live in the USA, the local Natural Resource Conservation Office will have helpful data to help you determine the potential productivity of the land you hope to purchase.
9. Take location into account. Ranches in relatively close proximity to urban centers retain their value and cost a great deal, as well as ranches in high demand regions like Montana or Texas. Although you may want to get away from the city to a remote ranch, you should also consider the time it will take you to get to the ranch for a vacation.^[9]
   
   • If it is a working ranch and you will also have a day job, you should consider the travel time to and from the ranch.
   • Other considerations for location include distance to gas stations, feed stores, and grocery stores.

[Edit]Getting Your Ranch Off the Ground

1. Make sure you have everything to set up your ranch. In addition to the land and the cattle, you will need a lot of physical equipment to start up your ranch. For instance, you will need the following equipment:^[10]
   
   • Tractor
   • Truck
   • Stock trailer
   • Corrals
   • Fencing
   • Fuel
   • ATV
   • Feed for all of your animals
2. Build facilities if necessary. You may need to add fencing or build corrals, barns, sheds, arenas, or feed storage buildings on the property. You’ll likely need to hire an architect or engineer to help you plan the site and design the buildings and a contractor and construction team to complete the work. Plan for the expense of paying for the design, construction, and maintenance (including utilities) of any necessary facilities.^[11]
   
3. Hire a ranch manager. Ranching requires significant technical expertise, including not only business management but also cattle and grazing management.^[12] As such, you may want to a hire a ranch manager with technical expertise in these areas, as well as irrigation, rangeland, cattle and ranching equipment.^[13]
   
   • Hiring a ranch manager or a management firm will allow you to focus on the more pleasurable aspects of ranching, such as horseback riding, hunting or fishing.
4. Buy affordable, quality livestock. Cattle and horses are the biggest expenses in ranching. Develop a network of friends and professionals to give you advice on which livestock to purchase, since it is easy to overpay for livestock. You also want to make sure you are paying for good quality, genetically superior livestock, since you will be investing a lot in them every year.^[14]
   

[Edit]Keeping Your Ranch Profitable

1. Do an inventory of financial resources. If you have recently inherited a ranch or purchased a ranch with existing resources, you should do a thorough financial inventory. Take an in depth inventory of existing financial resources, such as ranch bank accounts, debts that the ranch owes to banks, as well as lease agreements and other financial arrangements. Knowing the current financial state of the ranch will help you figure out what to do with it.^[15]
   
2. Review human, natural, and physical resources. Resources include the people who work at your ranch, as well as equipment like tractors, trailers, fences and barns. You want to look at human resources, such as current family and paid employees who put time into the ranch. Then, list all of the natural and physical resources of the ranch, such as existing equipment, buildings and the livestock. Take this inventory into account in planning your ranch operations.^[16]
   
3. Figure out whether you could make money. The profit margin in ranching is typically very thin, with only the most frugal and efficient ranchers able to make a living in this business. Smaller ranchers will usually lose money ranching.^[17] However, if you have inherited a ranch, the value of your land may be significant and could possibly allow you to keep your ranch financially feasible.
   
   • For instance, gross annual income for each cow is typically $190 to $340.^[18]
   • Each year, every cow you own will cost you between $300 and $400.^[19]
4. Aim for a large volume of cattle. If you start a ranch with a large number of cows for the operation, you will be able to spread the high costs of equipment, fuel and labor over a greater volume of animals. If you can lower the cost spent on each cow, you are more likely to make money in the competitive business of ranching.^[20]
   
   • Of course, you should also make sure your land has the carrying capacity to handle the number of cows you desire.
5. Budget for livestock, equipment, labor and other production costs. Since the most profitable ranches are also the most efficient in their production costs, you should aim to keep your equipment and labor costs down. So, make a realistic and efficient budget for your new ranch, which should include items like livestock, feed, a tractor, ATVs, stock trailers, corrals, and waged labor.^[21]
   
   • If you can use an old truck instead of a buying a new one, you are more likely to make a profit.

[Edit]References

[Edit]Quick Summary

1. ↑ http://www.nytimes.com/2011/07/30/your-money/owning-a-ranch-offers-returns-beyond-the-financial.html
2. ↑ http://www.nytimes.com/2011/07/30/your-money/owning-a-ranch-offers-returns-beyond-the-financial.html
3. ↑ http://www.worth.com/how-to-buy-a-ranch/
4. ↑ http://www.nytimes.com/2011/07/30/your-money/owning-a-ranch-offers-returns-beyond-the-financial.html
5. ↑ http://www.worth.com/how-to-buy-a-ranch/
6. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
7. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
8. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
9. ↑ http://www.worth.com/how-to-buy-a-ranch/
10. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
11. ↑ http://www.thehorse.com/articles/36072/building-a-horse-property-from-the-ground-up
12. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
13. ↑ http://www.worth.com/how-to-buy-a-ranch/
14. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
15. ↑ http://www.cattlenetwork.com/strategic-scenario-planning-ranching-conducting-ranch-inventory-part-2
16. ↑ http://www.cattlenetwork.com/strategic-scenario-planning-ranching-conducting-ranch-inventory-part-2
17. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
18. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
19. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/
20. ↑ http://www.beefmagazine.com/blog/what-s-more-important-economy-scale-or-low-cost-production
21. ↑ https://www.noble.org/news/things-to-know-before-buying-a-ranch/

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