Among the fantasies that keep many of us going on dreary days, owning a vast ranch out West would surely rank up there.
Ranch life taps into the American desire for space, freedom and a connection with the land. Lately, owning a ranch, and selling the products raised on it, has emerged as an alternative investment class for those with deep pockets and a time horizon that stretches as far as the eye can see.
Ranches have always had a spot in a wealthy investor’s portfolio. Ted Turner may be known for founding CNN, but he also began buying ranches in 1987 and is now the second-largest individual landowner in North America, with two million acres spread across seven states, trailing only John Malone of Liberty Media. He sells the bison he raises, some to Ted’s Montana Grill restaurant chain.
As a pure investment, agricultural land has long offered steady returns, particularly as food prices have risen. According to the Farmland Index produced by the National Council of Real Estate Investment Fiduciaries, prices rose 8.6 percent last year and 6.19 percent in 2009.
Depending on how someone buys and sells a ranch, there are special tax treatments for what the Internal Revenue Service calls like-kind exchanges, which can defer capital gains taxes, according to Brian R. Gallagher, a tax partner at the law firm Davis & Gilbert. (The same rule, known as 1031, can apply to other real estate transactions where the properties are owned as investments.)
Travis Driscoll, Broker Associate for Galles Properties, works with buyers looking for the prefect ranch and sellers who are ready to capitalize on their investment, often times helping them move onto the ranch for the next phase of their live.