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3 Important Things to Understand About Buying a Ranch

31 July 2020

Cody Day

When you are buying a ranch, you are doing more than buying property, you are buying a business that depends on living things. Consequently, you need to do a lot of research before going forward with the purchase of ranch properties. Here are three important factors to consider.

1. Number of Animals the Property Will Sustain

When purchasing a ranch, it is important to fully understand how many animals the property will support. Don't just take the seller's word for it. Instead, reach out to the Natural Resources Conversation Service (USDA) office in the area. The USDA office should have information about the ranch that goes into detail, including information about vegetation, soil type, precipitation, and forage conditions. This information can help the USDA estimate how many animals the property can fully support.

The number of animals that the land supports will help you determine what type of ranch you can run and what type of profits you can expect from the ranch.

2. The Tax Implications of Owning a Ranch

Don't assume that you are going to save on your taxes by owning a ranch. Before purchasing the ranch, ask for access to financial statements concerning the ranch's business over the last few years.

Then, have an agricultural tax practitioner review those financial statements, as well as your own financial information, so you have a better idea of what type of tax obligation or savings you will have if you purchase and run the ranch in a similar manner to the previous owner.

3. What Comes With the Land

When you are purchasing a ranch, you are often purchasing more than just the land. In many deals, you are also purchasing the business from the previous rancher as well. That is why it is important to make sure you fully understand what else is involved in the deal and what else you will need to still purchase.

Are you getting equipment to take care of the ranch? Are you getting any outbuildings? Are you getting business records and contacts?

Make sure you fully understand what is going to come with the purchase and what additional investments you will have to make in order to be able to take over the running of the ranch. You need to be fully aware of the business investment you are making.

When it comes to buying a ranch, you need to make sure that you know how many animals the property can support, you understand the tax application of owning a ranch, and you understand what else is coming with the land. Take your time and research the full deal before investing in a ranch.

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