Buying rural land offers the rural land owner the opportunity to be a stewart of the land, water, fish and wildlife to preserve it for generations to come.

Wildlife Management  TPWD offers tax incentives to minimize the holding cost of rural land.

The wildlife management Tax Code is to encourage the preservation of open space for wildlife management and conservation of the state’s natural heritage in all areas of the state.

When you sign up for a Wildlife Management application you create definitive standards for tax appraisers to follow in determining the qualification of property for appraisal on the basis of wildlife management use.

Depending on the size of your property you can designate a partial part of the property to Wildlife Management.

There is also a Land Owner Incentive Program LIP where the land owner contributes to the enhancement of at least one rare or at risk species or its habitat as identified The Texas State wildlife Action Plan or the LIP Priority Plant species list.

The number of acres under TRWD Wildlife Management Plans will increase from 23.5million to 26million acres by December 2011.

Texas offers several other agriculture exemptions as tax incentives for rural land owners.

Some people choose to have cattle but you can also have a hay crop as an acceptable AG exemption. Every county have very experienced Ag Extension representative, Texas A&M; who welcome and encourage residents to utilize their services. These AgriLife Services offer educational programs, publications and assistance related to agricultural and natural resources such as rangelands and wildlife management.

Nov 03, 2009 3 Comments

The consensus opinion of those attending the 6th Timberland Investment World Summit in New York last week was that consensus about the future of timberland returns was not something on which we could all easily agree. The days of straight-line extrapolations assuming fixed rates of growth and everything else may have passed.

LANDFLIP.com and LandThink.com were media partners with the conference sponsor, International Quality & Productivity Center.

Timberland returns for the two decades beginning in 1987 exceeded stocks and were negative in only one of those years, 2001. (See http://www.ncreif.com/, Click on timberland returns.) Timberland returns during these years were strong despite variability in timber demand and log prices. Price appreciation in the land offset variability and uncertainty on the timber side. Timberland values were driven beyond the intrinsic value of the timber resource and the bare land by the Higher and Better Use (HBU) premium that resulted from “rebranding” and then reselling timberland as second homes and recreation properties.

In the first three quarters of 2009, timberland returns are very slightly negative. So what might the future hold?

Chip Dillon, the widely respected managing director at Credit Suisse, suggests that timberland prices may resemble a bell curve of sorts over the next 15 years or so. He believes log prices have bottomed in 2009 and they should improve in 2010-2011. The “bright future” he predicts will emerge in 2013 to 2018.

He bases his projection in an emerging market for wood-based biofuels, improvement in the pine-beetle situation in Canada and the demographic push of Baby Boomers buying second homes and retirement places. He believes that the overall U.S. and global economic situation will improve over the next five to eight years, which would be consistent with recent historical cycles.

Dillon, however, warns that the positive Boomer demographics will change in the 2020s when they are in their 70s and not buying houses. He characterizes the years after 2020 for timberland returns as “more challenging” than the next decade.

Others were more pessimistic about the next two or three years, though not about a five-year horizon.

The pessimists were of the opinion that the current financial crisis has brought us into new territory. No one has been through a time like this when the government has printed so much money and taken on so much debt to save the largest financial players –and the economy itself — from failure. The “recovery” of 2009 may not stimulate sustainable growth and in hindsight may be nothing more than a temporary patch that peters out. Continuing job loss and the structural shifts away from manufacturing and middle-class stability question the assumption that consumer spending will take over as a recovery driver. And no one knows how health-care-reform legislation will affect public and private spending. If taxes and health-care costs continue to rise, less money will be available for new house construction, second homes and remodels—all of which will impact timber and timberland prices.

Several money managers I spoke with were concerned over the absence of change in the financial sector that would prevent the type of crisis that befell us a year ago. They pointed in particular to the lack of a line between commercial banks and investment banks, which promotes risk; lack of use of the Prompt Corrective Action law that can be used to deal with undercapitalized banks; Bush-era laws that immunized securitizers from lawsuits and allowed a type of derivative — “naked credit default swaps” — that was risky and speculative beyond reason; lack of federal prosecution of those in the biggest banks who behaved negligently and fraudulently; and lack of new regulations to address the mess. The same thing could happen again, they said. (http://www.villagevoice.com/, “No Justice,” by James Lieber, 10/18-11/03, 2009.)

My sense of things is that timberland investments for individual investors need to be looked at in a three-to-five year horizon.

For large institutional investors — endowments and pension funds — timberland returns are likely to be less volatile than stocks over the long term. Even though some traditional markets may decline, or appear to decline, new markets for wood products and new types of trees may more than make up for the slack. Trees with very short rotation cycles are plantation-grown in the tropics today, and bio-engineers are working on cold-hardy cousins. A eucalyptus that could be grown in the American South on a seven or eight-year rotation would change a lot of forecasts about energy prices and the future of timberland values in that region.

For individual investors and smaller players, I think timberland has to be pegged at current timber values, with value in the dirt varying by location and real HBU potential in a constrained market. I advise looking for timberland now, because prices are being corrected down in light of lower stumpage and log prices. I’d screen out parcels that didn’t have at least 50 percent of the purchase price in merchantable timber unless the objective is setting up a Roth real-estate IRA with a 20-to-40-year horizon. I would be patient in timing the sale of the merchantable timber and make sure that the next harvest improves the stand for the future by taking culls.

Of course, you can say, “What does Seltzer know?” And you’d be dead right.

Fingers of possible blame pointed in many directions—Greeks bearing debt, Jihadist glitches, automatic computer-trading programs, a trader’s “fat-finger” mistake, jitters about financial-reform legislation, too much sugar in Wall Street’s afternoon power drinks, a Madoff mole wreaking revenge.

A thousand point drop got me to thinking.

I’d been talking to my daughter, Molly, a few minutes before the DJIA’s dipsy-doodle. She works on the speed desk at Bloomberg News in Manhattan, feeding headlines and financial news into the company’s terminals. She’s up to the minute on this stuff; I’m a lagging indicator, often intentionally so. We were talking about the future and how to prepare for it.

I said I thought people in their 20s and 30s were going to have a much tougher time earning livings and preparing for retirement than Baby Boomers, because the global financial system — and the American end of it, in particular — seemed increasingly volatile, increasingly fragile and increasingly vulnerable to system-breakups, from both internal and external sources. System risks, in short.

This got me thinking about hedges.

Gold is often touted as a hedge against inflation. But when I looked at gold price and the Consumer Price Index, I saw that inflation had risen with reasonable consistency year to year while gold was volatile—spiking in 1980 and during the last several years, but lagging the CPI for most of the years in between. One study I reviewed showed the average annual rate of return on gold between 1979 through 2008 was 5.37 percent, most of the gain coming during the last decade, compared with stocks at 11.9 percent, 3-month T-bills at 5.9 percent and rare coins above 10 percent.

Gold is a fear purchase, not an inflation hedge. If you think it’s likely that the world will fall apart, you put gold in your bedroom safe so you can buy guns and toilet paper. If that time comes, inflation will have solved itself through collapse.

Gold doesn’t behave like a commodity, because people buy it for reasons other than consumption and utility. It’s a non-renewable resource like oil, but it doesn’t get used up like oil, coal and natural gas. It seems to me that people use it as a financial worry bead, fingering it more in times of high stress.

When Molly set up her retirement account last year, I gave her the conventional advice about index funds and broad baskets of stocks and bonds. But what I wanted her to do was to set up a real-estate IRA to buy land, which she couldn’t do.

An inflation hedge should track inflation…and do a little better.

Between 1999 and 2009, the average annual inflation rate has been 2.6 percent. For the 10 years preceding, it was 3 percent.

It’s difficult to measure national returns on timberland investments, because tracts vary so much in size, management, types, length of ownership and other factors. The database at the National Council of Real Estate Investment Fiduciaries is widely used for comparing investments, but it’s skewed toward large tracts and tax-exempt investors, primarily pension funds. The same bias is found in NCREIF’s farmland index, all of whom are tax-exempt investors.

Nonetheless, the NCREIF average annual timberland return in the 20 years between 1990 and 2009 was 2.76 percent. The average annual return for farmland between 1992 and 2009 was 2.74 percent.

Using the NCREIF indexes, farmland and timberland returns did a bit better than inflation during the last two decades. These types of land investments as measured by NCREIF are reasonably good inflation hedges.

A 2009 study from Jeff Mortimer at J.P. Morgan Investment Analytics & Consulting found that timberland “…has provided an annualized return of 14.60%…” over the past 22 years while correlating “highly with inflation….”

Looking ahead, I see nothing that would suggest that stocks and gold are getting less volatile, and the financial system in which they function seems to be looking more vulnerable, more risky. Whether systemic risk is reduced in the future is anybody’s guess; mine is that it will not.

Gold may be the coin of last resort, but short of total collapse, farmland and timberland appear to be better hedges against both less-than-catastrophic events and inflation. If nothing else, land prices will appreciate due to population growth over the long term. And if the toilet-paper choice is between gold bars and leaves, well….

LandThink is a knowledge base for land investors and sellers to learn about and discuss the various aspects of land investing, selling, ownership, and trends in land real estate. Get Land Smart!

Article by: LandThink.com Sent: Monday, May 10, 2010 9:07 AM

And buying land is easier than you think—with the help of an Accredited Land Consultant of the REALTORS Land Institute.

The wide range of options under the “land” umbrella makes land an accessible purchase for almost every potential investor. Recreational timberland offers a good choice for long-hold investors since it combines periodic income from timber cutting with appreciation and the opportunity for personal enjoyment, says Benton Gibson, ALC, president of United Country Gibson Realty, McComb, Miss. Recent yearly returns on recreational timberland have averaged 8 percent in Gibson’s market, which are in line with national returns calculated by the USDA National Agricultural Statistics Service.

If one of your land-buying goals is purchasing a site for your future retirement home, now is a perfect time to take advantage of the market pressures on home builders to find a well-located lot at a great price. Rural land prices are also likely to accelerate as Boomers retire, notes Gibson. He cites a 2006 study by the National Association of REALTORS that found half of Boomers who live in an urban area would like to retire to a small town or rural area. Buying the land separately and not building until you’re ready to retire also helps keep costs down.

Developers’ financial distress may also produce some significant price reductions on land near the edge of current urban development, says Ray L. Brownfield, AFM, ARA, ALC, an associate broker with john greene Land Company in Oswego, Ill. But these investments—although they have strong upside potential—are only for those with deep pockets and patience, since “there is little viable income compared to the total cost of the land,” he says.

Speculative development land also carries higher risk than many land investments since it’s difficult to predict when and where new home construction will occur, he adds. But if you buy right and have patience, this type of land investment can have a tremendous amount of upside, he says.

For investors seeking low volatility and reliable cash flows, Brownfield and many other land experts suggest concentrating on farm land.

“Good agricultural land in our market can yield a consistent 4 to 5 percent annual return. And since prices have stabilized this year after several years of appreciation, it’s a good time to invest,” he says.

Despite the ongoing financial crisis, funds are available for qualified farm land buyers. Interest rates remain near historic lows, and lending sources such as local community banks in rural areas and the Farm Credit System (www.farmcredit.com), a federally chartered network of borrower-owed lending institutions, are still offering loans for as much as 85 percent of purchase price with a 20-year amortization in early 2009.

If you already own other real estate investments, you can use a 1031 exchange to acquire land, says Brownfield. These exchanges permit real estate investors to trade one real estate holding for another but deter any capital gain taxes until the second asset is sold. (Note that 1031 exchanges have stringent rules, so consult an expert when considering an exchange.)

Another ready source of funds for land purchases is a ROTH or SEP IRA. IRS regulations permit individuals to use retirement funds to purchase real estate, including land, through an IRA custodian that offers real estate investments along with stocks and bonds.

“Several of my investors have contacted me recently to thank me for suggesting they diversify their retirement accounts into land holdings,” says Lou Jewell, ALC of Dan River Real Estate Inc., in Pilot Mountain, N.C. “Others have told me that they wish they’d diversified before they lost their money in the stock market. I tell those people that it’s not too late to invest in land. There are still great opportunities today.”

But while there is almost certainly a land investment to fit any investor, finding the property that fits each individual’s goals requires expert knowledge and experience. That’s why the smart first step in making any land purchase should be consulting with a professional land broker, preferably one that holds the Accredited Land Consultant (ALC) designation from the REALTORS Land Institute (RLI).

The ALC designation is conferred only on those land specialists who complete a rigorous education program and achieve a volume of successful land transactions, says Dan Hatfield, ALC, 2009 RLI president-elect and owner of Hatfield Realty in Medina, Texas.

As a professional membership organization, the REALTORS Land Institute serves the unique constituency of real estate professionals who broker, lease, sell, develop, and manage land assets. RLI offers superior education through its RLI Land University and professional development programs, an array of services that encourage networking and referral opportunities, and legislative advocacy on land-related issues through the National Association of REALTORS.

“One of the real benefits of the REALTORS Land Institute is that whatever type of land you’re seeking, there are RLI members who are expert in that area,” says Gibson. “Whether your interest is shale oil leases, timber, or ranches, RLI members have the knowledge and resources to find the answers.”

For more information on locating an Accredited Land Consultant in your area, contact RLI at 800.441.5263 or go to www.rliland.com.

Fingers of possible blame pointed in many directions—Greeks bearing debt, Jihadist glitches, automatic computer-trading programs, a trader’s “fat-finger” mistake, jitters about financial-reform legislation, too much sugar in Wall Street’s afternoon power drinks, a Madoff mole wreaking revenge.

A thousand point drop got me to thinking.

I’d been talking to my daughter, Molly, a few minutes before the DJIA’s dipsy-doodle. She works on the speed desk at Bloomberg News in Manhattan, feeding headlines and financial news into the company’s terminals. She’s up to the minute on this stuff; I’m a lagging indicator, often intentionally so. We were talking about the future and how to prepare for it.

I said I thought people in their 20s and 30s were going to have a much tougher time earning livings and preparing for retirement than Baby Boomers, because the global financial system — and the American end of it, in particular — seemed increasingly volatile, increasingly fragile and increasingly vulnerable to system-breakups, from both internal and external sources. System risks, in short.

This got me thinking about hedges.

Gold is often touted as a hedge against inflation. But when I looked at gold price and the Consumer Price Index, I saw that inflation had risen with reasonable consistency year to year while gold was volatile—spiking in 1980 and during the last several years, but lagging the CPI for most of the years in between. One study I reviewed showed the average annual rate of return on gold between 1979 through 2008 was 5.37 percent, most of the gain coming during the last decade, compared with stocks at 11.9 percent, 3-month T-bills at 5.9 percent and rare coins above 10 percent.

Gold is a fear purchase, not an inflation hedge. If you think it’s likely that the world will fall apart, you put gold in your bedroom safe so you can buy guns and toilet paper. If that time comes, inflation will have solved itself through collapse.

Gold doesn’t behave like a commodity, because people buy it for reasons other than consumption and utility. It’s a non-renewable resource like oil, but it doesn’t get used up like oil, coal and natural gas. It seems to me that people use it as a financial worry bead, fingering it more in times of high stress.

When Molly set up her retirement account last year, I gave her the conventional advice about index funds and broad baskets of stocks and bonds. But what I wanted her to do was to set up a real-estate IRA to buy land, which she couldn’t do.

An inflation hedge should track inflation…and do a little better.

Between 1999 and 2009, the average annual inflation rate has been 2.6 percent. For the 10 years preceding, it was 3 percent.

It’s difficult to measure national returns on timberland investments, because tracts vary so much in size, management, types, length of ownership and other factors. The database at the National Council of Real Estate Investment Fiduciaries is widely used for comparing investments, but it’s skewed toward large tracts and tax-exempt investors, primarily pension funds. The same bias is found in NCREIF’s farmland index, all of whom are tax-exempt investors.

Nonetheless, the NCREIF average annual timberland return in the 20 years between 1990 and 2009 was 2.76 percent. The average annual return for farmland between 1992 and 2009 was 2.74 percent.

Using the NCREIF indexes, farmland and timberland returns did a bit better than inflation during the last two decades. These types of land investments as measured by NCREIF are reasonably good inflation hedges.

A 2009 study from Jeff Mortimer at J.P. Morgan Investment Analytics & Consulting found that timberland “…has provided an annualized return of 14.60%…” over the past 22 years while correlating “highly with inflation….”

Looking ahead, I see nothing that would suggest that stocks and gold are getting less volatile, and the financial system in which they function seems to be looking more vulnerable, more risky. Whether systemic risk is reduced in the future is anybody’s guess; mine is that it will not.

Gold may be the coin of last resort, but short of total collapse, farmland and timberland appear to be better hedges against both less-than-catastrophic events and inflation. If nothing else, land prices will appreciate due to population growth over the long term. And if the toilet-paper choice is between gold bars and leaves, well….

LandThink is a knowledge base for land investors and sellers to learn about and discuss the various aspects of land investing, selling, ownership, and trends in land real estate. Get Land Smart!

Article from From: LandThink.com Sent: Monday, May 10, 2010 9:07 AM

Sassy Stanton

Welcome to my blog please visit here for ideas and real estate opportunities if you are buying or selling Texas Farms or Texas Land.

The future growth of the Greater West Houston trade area validates “Why rural land is a good investment”.  The predictions from the West Houston Association of over 2,000,000 people in the 100 square miles outlined on the chart below in 2050 support the wisdom of investing in land in the west, south and north west. A&M’s Texas Real Estate Center reinforce this prediction that over 90% of the population in Texas will live in a triangle between Houston, Dallas, San Antonio and Austin by 2040.  The I-10 corridors are the backbone for this predicted growth, with both residential and commercial development.

 As an investor, the simplicity of buying land in rural counties offers lower taxes through an AG exemption and future lower development cost.  The historical appreciation of this type of desirable land  (rural, farm/ranch) can be measured in the major growth shown on the diagram west of HWY 6 which in the 1970s was rural farm and ranch land.

The cost of developing and owning land inside the West Houston Association diagram will be more complicated and expensive than it has been in the past with the future governmental controls from state and federal agencies.

REDNews advisory board member Sassy Stanton’s highlights from the National Land Conference, and what it all can mean for your business

The 2010 National Land Conference, held in Fort Worth, featured keynote speakers from a variety of fields and backgrounds, including those specializing in economics, politics, environmental affairs and investment. The annual conference is put on by Realtors Land Institute and is attended by land specialists who hold the organization’s esteemed Accredited Land Consultant (ALC) designation.

Here, Sassy Stanton gives us a few highlights from the conference.

Farm land as an investment

During difficult economic times, farm and ranch land are solid investments. Income-producing farm land has cash flow, appreciation, is a tax shelter, and offers the investor diversification without personally participating in farming. The percentage of farm land rented in Texas ranges from 40 to 50 percent, and in some states, the numbers reach between 50 and 60 percent. Farm and ranch land can produce income, appreciate in value, and offer the investor diverse options, even without personally farming.

Farm land has viable and competitive buyers; the Corn Belt (comprised of the upper-Midwest) has had positive annual returns in their land investments almost every year for half a century. In addition, economic forecasts show the number of farmable lands will decrease worldwide while the US exports remain stable.

“It is the end of cheap food,” according to the U.N. food price index, brought on by growing populations, both domestic and international. As one example, China has 20 percent of the world’s population and only 7 percent of its land is farmable. If this trend continues to realize, the US can look forward to a continued dominant position in global supply of agriculture products.

Entrepreneurial mitigation banking as an investment

As America’s focus turns to the environment, it seems that commercial land developments are moving to include wetlands, buffers, streams, sensitive species, and carbon. According to the EPA, a mitigation bank is one of these endangered areas or species that have been restored or preserved. These banks can be created when a government agency, corporation, nonprofit organization, or other entity undertakes these activities under a formal agreement with a regulatory agency.

Mitigation agreements can prove a sound (and green) investment for corporations. Acre-to-credit calculations and no-net-loss rules apply for these special types of investment. To qualify, there must be land banked that can provide the credits for developing land for commercial and residential uses. For the investor, there are financial benefits with positive rates of return.

Other government programs, including “in lieu of fee” programs, highway projects and private projects, share these requirements and benefits. These are properties that the investor buys with an understanding that the credits created can be sold. Once the land has undergone the proper mitigation process, these credits have value to developers, the highway department and other governmental and private entities.

Many investors specialize in mitigation banking for large development companies that are doing master-planned sites. Contacting one could mean doing your environmental part today and turning a profit in the future.

Real estate can be part of your retirement plan

If you would like to increase your investment in real estate as you approach retirement, you need to have a self-directed plan. These types of plans can be self-directed:

•   Traditional IRAs (including rollovers)

•   Roth IRAs

•   Employer plans

•   SEP IRA

•   Simple IRA

•   Coverdell Education Savings (ESA)

•   Health savings accounts (HSH).

In order to invest in real estate, you must have one of these plans. These investments are generally used after a change in employment. The investment can be land or investment property, but cannot be used for personal use. Solid and protected banking entities can do non-recourse loans on land purchased through your IRA.

The owner of the property is your IRA. All earnest money and installment dollars also come from your IRA.

Rural land is an excellent choice for IRA investments because it is a ‘low maintenance entity’ and has stable qualities with historically good appreciation value. For more information, contact a licensed security company; they specialize in taking the investor through this process.

As big as Texas is, it’s no wonder that investors are chomping at the bit for land investments. The National Land Conference series offers the chance to meet with these investors, as well as political, academic, environmental and commercial entities. The 2011 conference will be held in Nashville.

For more information contact Sassy Stanton at 713-861-4097