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Running on all leased land

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MillIron

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Hello to everyone, it's been awhile since I've posted.

I came into this forum here:

http://ranchers.net/forum/viewtopic.php?t=8963&postdays=0&postorder=asc&start=12

This was the thread on land values. At that time, as I noted, I was beginning to suffer from dispair that I'd never be able to afford a place. I'm no closer now than I was then, and this past years drought conditions didn't help my cattle raising efforts anyway.

Anyhow, here's my question. Sorry if its irritating to folks, I hope it won't be.

When I posted on the land prices I was 42, now I'm 43. I'm not getting any younger, and at the pace I'm going, if I keep my present course, I'll never be doing this full time. What I'm inclined to try to do is to simply give up on purchasing anything, and lease as much ground as I can. I'd probably have to get a monster loan to buy enough cattle to stock it, but that'd be jump start in. It might be a jump start right to failure. But, after repeatedly harassing my wife about it, she says she'll resign herself to it if I can show how this will work out in black and white.

Otherwise, I fear, I'm going to be stuck in my "good" town job forever, which is so helpfully taking my out of town for the next two weeks, meaning I have to lean on everyone on the cow end of this. Everyone cheerfully does that, given my good "town" job, but I feel like I'm getting walled up in town and I'll never get back out.

Anyhow, is this idea insane or can it work?
 
There a lot of "ifs" to the equation, but "if" everything comes together, I see no reason why it couldn't work. The first and hardest obstacle to overcome is that of finding the right kind of ranch to lease. They are hard to come by, and if you find one, try to get it for at least a three-year contract. One year at a time is just not enough to put up with the hassle. Then about the time you are stocked up, the lease gets pulled out from under you.

One thing about it, even though in a way you have already "lost one year" you are way ahead of the deal already. Had you bought a lot of high dollar cows last year, you could already be in financial peril. You could buy the same type of cows this year for considerably less money. You are already the winner in this regard.

Instead of spending gobs of borrowed money to buy cows, you could "take in" someone else's cows, either on a share deal or on a monthly cash deal, with the cow owner paying you so much per cow per month to run his cattle. Points to consider on a share deal, or cow lease program, are how to handle any open cows and the simple fact that cows get older and less valuable faster than a person would think.

Another way of experiencing the life-style without the hassle or stressful financial risk, would be just to get a job on a well-run cow outfit. Sometimes the owner will stay out of your hair enough that you have some say in the management part of the deal.

These are just suggestions. Anything is possible, especially if your wife is agreeable to striking out in a new direction. It sounds like she is adventuresome, so one of your main obstacles has already been overcome.

Good luck on any future endeavors.
 
Yep- Long term leases are getting hard to find around here..What used to be 7 year leases are now only 3- and most are only going 1 year so they can rebid them every year to keep up with the inflating land prices...

Then some of the ones around here are tribal/BIA/Reservation leases that are tied up right now in tribal politics and a scandal and investigation involving illegal subleasing-- right now they are kind of too hot to really want to touch, until they get things straightened out.....I know of one fella that had one year left on a 3 year lease that moved 700 cows onto one of the leases in April and was ordered to and had to move off in May...
 
Wow, I see myself here. After working on ranches for several years, I finally quit and got "a good town job". I got 5 heifers, leased a quarter section, and borrowed a bull. I borrowed money, leased ground bought more cows, and kept my town job. My job was a Teamster job. After 30 years on a truck, I took an early retirement at 58 and began ranching. Today, I am still moonlighting and owe a substancial loan payment. For years, my cattle would not have payed my bank note, but thanks to the recent high prices, I could at least sell out and pay out. This is not a fun position, and I reccomend that you avoid it. If I were going to do it over, I would, but I would do this different. DO NOT borrow money on cows. Buy what you can pay for, even if its only one or two. Sell steers to pay for feed, keep heifers. If steers won't cover costs, sell a heifer. If you have all steers, sell all, buy what you can afford to in in good heifers. BE PATIENT. It is amazing at how soon you can increase your herd, and they will be yours not Mr. Banker's. I would have loved to have sold 75% of my cows and owned 25% at one time, but couldn'; I couldn't have unloaded the whole schmear and been out of debt, or I would have. Keep your town job for living expenses. Quality in cattle is very important, I think. When cattle prices are good, any one can sell any old calf and make out. When numbers of cattle are up, prices down, a good calf will still draw a couple of bidders and keep you in the busness. Good feed and good bulls are worth what they cost. Learn to recognize each and pay what you have to for either, but not more. I am 60 years old, and still in debt. I could have owned this many cattle free of debt, had I been patient enough to build a few good heifers at a time. It is hard when you want something so bad, But when you borrow the money everything is costing 7 or 8% more, and often that is the entire profit margin on a cow brute. I really recommend patience, and when you are 60, you can have a small herd that is all yours. But for the grace of God, I would have lost all. When I did some deal I was proud of, it would lose me money I could ill afford. I did one or two things, that cost me many a nites sleep that ended up being what pulled me through. Work for yourself, son, not the banker. Own a few cattle, don't let cattle own you. But then what do I know? If I knew very much I probably wouldn't even like a bovine! The hardest part is relying on a good wife and good neighbors to be doing something you would love to be doing while you are off doing what you don't want to be doing. It is also hard to understock rented grass, but it is cheaper than interest, or else run lease cows like soapweed said.
 
With the cattle market the way it is now, unless I got a good long term lease with a relible land owner, I would hold back.
If not start with 20-25 head and a small grass lease and try to add small leases at every opportunity. I would rather have more landlords than one big one unless the big one was really exceptional.
I would rather have 50 head bought and paid for rather than 100's and couldn't sleep at night because of a scary debt.

Remember............buy low........sell high
 
I've posted much the same question as MillIron here before. Not quite the exact details but the basis is the same. I really appreciate the sage advice that I've read from you seasoned ranchers. I imagine that there are countless folks out there that came from a ranching family that don't have the option to go back home but can't get rid of the sick idea of trying to make a go of it. I wrestle with it every day.

I've considered a few different ranch jobs that would at least cure the desire to be doing what I love. There are many good ranch people in the country that would be great to work for or with. However, the element that's still difficult to overcome is that of equity. I might work for a ranch for ten years and things could be very rosy. Might even build up a herd of 20 or more cows while drawing a wage. But, we all know that most ranchers can't afford to pay themselves a big wage, let alone the hired help. So, the employee has a great job in a great environment, but never builds up any savings due to the typically lower wages of the job. Might have those 20 cows, but that's it, no house, no land, no equipment, etc. The day the employment comes to a close a fella is all of a sudden homeless with no place to run those cows or lay his head at night. Real estate prices continued the climb over those ten years and now he really can't afford a place of his own. That's really the only thing that has kept me in my town job this long. Perhaps I'm narrow minded or not thinking about it in the right way. Just throwing some more thoughts out there from a different angle. I'm not complaining, I'm happy for all of the ranchers that do have what they have and I wouldn't try to take away from that in the least. Surely many folks on this board have had to work and suffer to get to where they are today. Would be happy to see some more discussion on this and maybe somebody can straighten me out or spark some ideas.

Sorry, MillIron, I didn't intend to trump you on this discussion. Just got myself all fired-up again and I'm always looking for answers, just like you.

HP
 
HP. Actually, it's a releaf to know that somebody else is thinking along the same lines, although I don't know that that makes things any easier for either of us.

It is a frustrating deal. I do have cattle now, which I run on ground leased from my in laws, but in order to make a real go of it I'd need a lot more cattle (I have 50 now) and a lot more leased ground. Otherwise, I feel a bit stuck.
 
When I started my first farm, I owned the stock, and bought the land while working for the veterinary department, sold all my school raised cattle and bought my fullblood herd which was my key to going fulltime ranching 6 years later.
I own a small property and have the use of 10 adjoining acres, with land available at under $3000.00 per acre I am keen to buy, but at present I am on a work permit and do not want to invest too much in fixed property untill I have residence, but may have to take the chanceso as not to have land prices overtake my finances. My herd are all top imported cows, the 3 foundation cows being embryo donors, and I am inseminating to the best bulls available in the country. I expect to continue managing for the company for 10-15 years and diversifying before being able to be full time farming again.
 
Don't give up. There are lots of us that must have the "town job". I am one of those too. I purchased 160 acres right out of college by selling my pickup for a downpayment and putting all of my town job money into the land and cattle. It has led me to be able to leverage that land and keep building. I've been out of college 13 years and still have the town job. It has allowed me some flexibility during the bad years. Instead of being in big trouble with the drought, I've been able to make it because of the town job. If not for the drought, I would have not needed it by now, but it sure helps. Just hang in there and avoid a lot of fancy things, and you'll make it. It's not the quickest thing, but you can build slowly over the years. The only must I've found is if you want to do it full time at some point, avoid new paint, whether it's tractors, pickups or anything. Be conservative and you'll make it. Good luck.
 
:lol: :lol: :lol: Had lots a town jobs. Retired now. My place will be paid for when I'm 107. Being a positive thinker I,m gonna pay it off and get a new 30 year mortgage......... :lol:
 
MillIron, I can sure appreciate your situation. I spent 30 years in ag banking and always wanted to be a full time rancher. It didn't happen and won't happen now but it is working out ok. Pay close attention to shortgrass and soapweed as well as the others. There is some excellent advice on this thread. Unless you inherit it or marry it becoming a full time rancher and making a living as well is very difficult. Patience is one of the key elements. Don't borrow a lot of money on cows. I started a small cow herd 15 years ago by buying 10 heifers from my dad. No, I didn't get a "deal" either, paid full price plus interest. Without my town job I could never have paid the feed and pasture bills plus the cow note. I saved back several heifer calves each year to increase my herd. Rented a bull the first couple of years and finally bought a good bull which was money very well spent. It was a night and weekend job and I didn't borrow any money. I bought all my feed. Hay was much cheaper to buy than to bale and I didn't have any hay equipment anyway. Two years ago retired at age 60 and have about twice as many cows as you have, some equipment to take care of them and still run well over half rented pasture. I have little debt so don't have to have a big number of cows. It's really rather fun as I'm working for myself and not some damn banker ! A herd of cows will probably never make you rich but you do grow some equity over the years....it just takes time and patience. That's as close to a full time rancher as I'll ever get but I'm ok with it even though it isn't how I had hoped it would turn out. Good feed, good cattle and watch that debt, it can wipe you out in a hurry. I didn't post this to discourage you at all, just to relate my experience and how it didn't turn out as I'd hoped but still allowed me to be a small part of the cattle industry and I have truly enjoyed the challenges of beginning with very little and building a decent little business. I wish you the best of luck whichever way you chose to proceed.
 
This is an interesting thread.

I would never try to start an operation on leased land unless it was Forest Service or BLM with assurance that you had a chance to continue. There are a lot of operations that do that.

A couple of instances where folks are trying to do what you plan.

Around here, a lot of land is being bought up for development. As long as it is used for agriculture, the taxes are minimal. Once the agricultural exemption is lost, the taxes go up by a factor of 20 or 30. A few guys here run cows almost completely on leased land - in fact one of them leases our old ranch. He pays a fair rent and actually has 100 or 150 cows. But every time one of those places is sold, he has to reorganize and sell or buy cows. I don't think he makes very much, but he is 74 years old and retired. Better than sitting around, but he is sickly and it looks like he will never see green grass again.

The other instance is a fairly large ranch near our operation. It is about 40,000 acres and the tenant has to pay $4.50 per acre. He can run 1000 cows on it. This can be a profitable venture. The man has another operation some 20 or 30 miles away. When this property came available, it was split off of a larger ranch due to family agruements. All appeared well until it came to water. The larger operation had a well near the creek and pumped water all over the place. When it was split, the 40,000 acres was cut off and they resorted to wells. At least some of these wells had extremely poor water and they have about 30 or 40 percent open cows each fall. They are now working on a new water system and getting water from another creek. If this man didn't have other assets, he would have done down the tube.

The primary way of accumulating a retirement from cattle is the appreciation of the land. If you rent, you miss out on this.

We bought our ranch about 13 years ago and we are selling due getting too darn old. It looks like it has appreciated by about 160% in those 13 years - although we have spent a bundle on fences and pipelines. We financed about 60% of the purchase price so we really did quite well on our investment. And it has been very rewarding. Got to find something else to do that is closer to home,
 
After the crash of 72-73 I was forced to find a job. I started contracting and found it to be much more compatible with the ranch than just getting a town job( although more stressful).
I say I'll consider myself retired when I can spend full time on the ranch agian. When I'm meeting myself comeing and going in the summertime, my wife sometimes asks how many cows we'd have to run to be able to maintain our lifestyle with out the contracting and I have to admit that right now we might be alright but some years they dont make enough cows to make a living.
As far as the lease ground goes, here its a lot cheaper to lease than to own, but you need to own enough to give some stability to the operation when you lose a lease or get droughted out.
 
I will join in here,

My family lost everything in the farm crisis of the 80's we most likely could have hung on but at the same time my Dad came down with MS so his working days were done he has been in a wheelchair for the last 20 years.
I worked on a ranch in highschool caught the ranching bug then.
I went to school for Auto Body of all things during summer someone stoled all of my tools. I did'nt have any money to replace them so I got a job as a painter at a Trailer Mfg.Co worked there 2 years got smart and quit started building trailers on my own that was 17 years ago.Since that time I have built about 800 trailers in my shop at home.

My dad gave me 16 acres of land when I first got married no building water or electric.We have since built a Shop,Log House,barn,corrals etc.

About 16 years ago I got divorced then remarried 14 years ago so about 13 years ago I bought a few bottle calve's.

In the fall of 1996 the rancher I worked for in highschool made me a deal on 11 old granny cows I ran those cows for 1 year calved them out and he got all the calves and the cows were mine great deal for me.I managed to buy 3 Reg Angus heifers traded a used stock trailer for 3 Reg Bred cows and bought 4 shorthorn bred heifers.That was the end of my buying cows for awhile we rented all our pasture bought hay.We kept every heifer calve big or small.In the spring of 2002 we had a chance to rent a big pasture but needed more cows to fill it so I bought 24 Reg. bred heifers on borrowed money plus 5 more yearling Reg. heifers for cash.Our steer to heifer ratio has always been 2 steers to 1 heifer so that has kept us in check seamed like getting to a 100 cows was a chore last spring we calved out 40 heifers this spring will be 40 more and next year we will add 60 we dont have 20 cows older than 7 during this time we bought 80 acres of land now we are buying 50 more right now.

I know that dream of wanting to walk out my backdoor and have it all right there not gonna happen we rent anything. I sometimes pay more just to get it you have to compete with established rancher's.Right now we lease about 2200 acres from 10 different landlords .I have a full line of hay and forage equipment 5 tractors in 30,70 82 160 and 180 horse power, balers,rakes,disc rock picker corn choppers forage boxes all of which I don't have $60,000 invested total. Dont invest $50 a bale into haying equipment when you can buy it for$20 as we can here.

Taxes on land here are around $3 per acre I can rent it for $10 an acre in any bussiness you have expenses when I build a livestock trailer I buy all the steel and components sell a trailer for $6800 of that $4800 was for parts I don't think I need to own an axel company or a steel mill not feaseable same as owning all the land not feaseable if you have 10 landlords vs. one if you loose a lease with the 10 you can put a few cows in with each bunch and keep going with one large lease if you loose it then what????

Keep your debt low we owe on our house but the cows have to pay their own way we dont get any extra money after they pay the rents and the daily expenses whats left we keep in heifers.

I still build a dozen or so trailers a year but the big thing is my wife has a very good job.

I may never own alot of land but its a start for my kids if they want in years to come buy more land and add to it I will add a piece here and there but my true love is the cows the land is a pipe dream.

We never really own the land anyhow we just get to use it while we are here I would rather ride on leased land than to not ride at all.

My main goal is to have a house a small acreage paid for when I retire what more do you really need.

I am 38 years old now and basically ranching for a liveing I do build a few trailers more because I like to spend money on stuff I don't need like vacations to LasVegas etc etc etc and I really like the Rancher's that buy the trailers it's a fun life.Plus I need the money to spoil my Daughters :wink:
 
There are many great success stories on this thread. Hard work and perserverence pays off. If you get bucked off, get up, dust yourself off, and get back on. Try to remember what got you bucked off the last time, and ride a bit more cautiously the next time. Bring the horse in sweaty and rode down, and hang up the saddle blanket so it dries off good for the next morning.

One thing that helps on several different counts is that of keeping over quite a few good replacement quality heifer calves each year. Keep more than you think you need. Some of the advantages of doing this are: less taxable income, acquiring more equity, your herd quality improves as you are keeping your best instead of buying someone else's culls, and any expenses associated with keeping these heifers are deductible. It is always fun to show the banker that you are making money, while you show the IRS inspectors that you are losing money. This happens when you keep over way too many heifer calves each year, and it is all perfectly legal and on the up-and-up. With the heifers held over, you breed them the next summer. Then you have two options, either keep them and calve them out, making your herd bigger and better, or you can sell the bred heifers.
 
Milliron--Just to let you know what the BLM leases are going for around here-- I talked with a fellow yesterday that is looking at selling out- He is asking $3500 per cow unit for his grazing rights-- then you still have the monthly fees which on this place is $14 an AUM....

And its getting tougher and tougher to find lending institutions that want to put up large amounts of money for government leased grazing rights - since they only exist at the whim of Congress and are becoming more and more politically unpopular- especially since the trend of the day with many of the Corporate bought Politicians is to import everything we need...
 
My two cents worth is: Anything wether it is land or cattle, it has to pay for it's self.... If you buy $600.00 an acre land you darn sure better be able to pay for it with the land... Can you at ranching? Indian land eight miles north of us rented for 40 bucks and acre.... They have to put in two miles of fence and the water is iffy... Cattle market is in a downward trend. Do we know where it will end? I guess I would save untill I had enough equity to make a downpayment on a place large enough to support your dreams.. And if it never happens... You have a very nice nest egg......
But what the hell do I know!!! :roll: :roll: :roll: :roll:
 
Rent here runs from $6 an Animal Unit and up. The land is from $1500 to $5000 per acre. I don't see why anyone would want to rent $600 an acre land for $40. Am I missing something? Katrina would it take 5acres to run a cow on that $40 an acre rent?
 
Red Robin,
We have quarters that can run 25- 36 head a quarter....... Depends on the rain too.... Land around here is a crazy price... The place next to us sold for 600 dollars an acre and had been grazed to the nubbins and full of cheat grass... The people who bought it have yet to show up to live on the place.. They leased it out for two years. I can't figure it out... Section of grass sold for over 500 dollars a couple of months ago.... The people who bought it take in cattle over the summer and she has a nursing job in town...
Rented pasture is (last I knew) was 38 bucks cow calf pair.. :roll:
 

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