Ranch Leasing
Ranch Leasing
Within the last two years, we have launched a new entity of our business, which consists of offering ranchers and landowners leasing and management services. These services reach the owner's goals and objectives expediently, while providing us with forage resources to profitably run a livestock operation.
The business entity of leasing and managing ranches was initiated through the growth of the other enterprises of Teague Diversified, Inc. Our main mission is to build a legacy for our children, which will include the production of beef, from the cow-calf production to the marketing of the beef to consumers. Our business has provided the capital necessary to buy and develop a sizable cowherd, yet not enough to purchase land. Leasing was the obvious answer. As we began to research opportunities for leasing forage, it became apparent that opportunities were abundant, and they often had a similar situation; the landowner held the land for various objectives (recreation, investment potential, or something else), but lacked the abilities, resources, or time to manage the natural resources of the land and allow it to appreciate. We have obtained properties at cost-effective rates, managing the natural resources for the benefit of profitable livestock operations, while striving to meet the owner's objectives for the properties.
Holistic Resource Management
The natural resources of the ranches we lease are managed under a holistic resource management based system. We have hired as part of our management team a very bright, enthusiastic group of ranch managers who understand the need to be stewards of the land to maintain the most profitable ranching operations. In addition, we work with several of the best natural resource managers of the country, well known for their abilities to manage profitable livestock operations while taking care of the land. Our ranching operations coexist with wetlands, wildlife, and undisturbed habitat, and maintenance of biodiversity is of utmost importance. It also makes long-term leasing arrangements attractive, as improvement and restoration of the natural resources can be seen almost immediately under a holistic-based system. To reach maximum potential of natural resources, years are necessary for progress and growth. Although short-term leases are considered, long-term leases fit more closely to our long-term mission.
Farming
Ranches with farm ground are attractive, as they offer increased flexibility. Farming and irrigation can be utilized to enhance forage availability for livestock production and can be particularly useful for drought and season management.
Goals of the Owner
Our ranches are managed with the goals of the owner in mind as well. Because wildlife and fishing resources are managed and improved in a holistic-based system, recreational opportunities can improve and develop. Some owners simply want a well-maintained environment to visit and relax in. Some don't want any participation at all, other than a sound return on their financial investment. We attempt to accommodate all, no matter what the goal.
Lease/Purchase Agreements
We also have an interest in developing lease/purchase agreements on large ranches, as they allow us to utilize our assets, which would otherwise be used on a large down payment, on immediate improvement of the ranch and its natural resources.
For the seller/landlord, lease/purchase agreements can offer numerous advantages. In a lease/purchase agreement, we are able to pay a larger lease rate, as expense can be allocated to something other than our cowherd. It also can offer a viable source of income to the owner, where there might not otherwise be one, while waiting for the ranch property to sell. In addition, it also can save on high fees and commissions, which can significantly reduce the final sales price. Finally, the owner retains ownership of the property until the purchase option is exercised, providing safety in the agreement and allowing the owner to retain the tax shelter.
Another important advantage of a lease/purchase agreement is the reduction of capital gains and reduction in total tax liability. This can particularly be helpful in estate planning, and the sale of a property in a situation where total dollars received for the real estate is of utmost importance. In the sale of a multimillion dollar property, the capital gains income can easily be taxable at a level of 50% or higher!! If the income is spread over a time period of several years, the income would be taxable at a much lower rate.
Estate Planning
Lease/Purchase agreements can work very nicely in the transfer of property in an estate where money is more desirable to the family than the ranch. Income from the sale of a property in a lease/purchase agreement is spread over time, and is taxable at a lower level. When a multimillion dollar ranch is sold in a single transaction, 50% or more may be used for the payment of estate taxes!!
Our estate planner can work with you and your estate planner, in order to reach the best agreement for both parties. We invite you to investigate this very viable alternative!!
