Buyers who are looking for ranches in the West sometimes run across ranches that have total acres and then deeded acres listed for sale. For example, 10,000 total acres and 5000 deeded acres for sale. This means that the rancher has a public lease from some government entity that he/she leases for grazing purposes. Very common in the West where there is lots of public land.
The most common entities are National Forest, Bureau of Land Management or State land. Each will have different requirements and you will deal with different bureaucracies. There are a few characteristics that 90% of the leases will contain. Not all leases will transfer although most will. New owners will need to get approval to continue the lease.
Uses of leases are overwhelmingly for grazing livestock. Just because you have a lease doesn’t mean you have it for multiple purposes like hunting. You will have to share it with the general public even during the lease period. So if you are going to hunt it you may have an advantage over others because you know the lay of the land and where game hangs out but the public has equal hunting rights. The exception to this is if the lease is landlocked with no public access but that is an idea for another article.
The government entity you are leasing it from will have a window of use time. This also determines the value of a lease. If you have a 30,000 acre lease of mountain pasture but your window of use is June 1-June 15 there is likely not much value. If you can imagine you have to transport the livestock onto property by expending their energy or by expending transport costs. On the flip side if you have a window of time from early May until the end of October and it is right next to your homestead there is potentially real value. Understand that window can change based upon range conditions. Always for the shorter of course.
Many times you will be required to do things to keep the lease such as maintain fences and if you are missing cattle you will need to make every effort to find the missing head. You will also be limited to a certain number of head. Improvements such as corrals will need to be written into the lease and sometimes taken off and on each year.
Sometimes you will be granted the right to put a stock tank for watering livestock on the lease. The government views that as a win win considering it will water wild game as well as the livestock. This is usually at the lessee’s cost and ownership, of course, stays with the government entity.
So you have heard a number of the warnings but there are good things. Most times leases can be sold and they enhance the value of a ranch. It allows more carrying capacity of animals to make the ranch more profitable. Leases are usually very inexpensive and can be sold at multiples of the cost when you consider what it can do for the profitability of a ranch.
Leases allow some ranches to rotate and produce hay to make operations year round ventures. If because you have a lease you can put up two cuttings of hay from irrigated ground instead of feeding off the land and that allows you to feed year round it can totally change an operation and gives you tremendous flexibility.
Public leases are good for the rancher and for the public land. Grazing can help manage a property to reduce noxious weeds, reduce fire fuel and other things that can be beneficial to the land. Dealing with government employees that have oversight over leases can go both ways. Like any entity you deal with sometimes you meet good people that want to work with you to enhance the property and other times you meet people that you don’t want to meet and make your job harder.
Like numerous things when you are looking at buying a ranch the buyer needs to do the due diligence on a lease and the people he will be working with because it is a partnership and it can affect the value of your property. If you are starting your journey in finding a ranch please let us know how we can help. Our advisors have combined hundreds of years experience and many are ranch owners themselves. We at E&V Ranchland would love to help you make what likely will be the most rewarding investment you make in your lifetime. The memories with family and friends are the best part.
Buzz Tatom is an Advisor/REALTOR® for Engel & Voelkers in Montana. He specializes in farms and ranches. A ranch owner himself he knows the complications that a buyer or seller will go through and is able to help navigate the complicated process. Give Buzz a call or fill out his contact form and put him to work finding you the right property so you can start building memories with friends and family!