The New Reality of Rural Real Estate: “Washing its own Face”
Some years ago a client who prefers to go unnamed said to me, “I really would love to buy a beautiful ranch in the American West, but you know, Jim, it really must wash its own face.” At that time he and his wife represented a relatively rare breed in the marketplace for Rocky Mountain ranches. The average ranch buyer in those days was typified by people like Ted Turner who was tearing out interior fences and restoring the landscape for use by indigenous species such as elk and bison. Others were focused on improving trout streams as private fisheries for themselves and their guests and for that reason preferred to limit cow numbers - and thereby income - to protect riparian habitat.
For those unfamiliar with the term, “washing its own face” refers to the ability of a particular holding to produce enough cash flow to cover its own expenses. In practice, many owners, who use their ranches extensively for their own personal pleasure, do tend to segregate those personal expenses and do not require the ranch operation to cover them.
We believe that the recession we have just come through has not only created a “new reality” in terms of land prices but it has also created a new reality in terms of buyer motivation. Much of our sales volume in the last couple of years has been comprised of operating ranches and farms that in many cases will do more than just wash their own face. Increasingly, this has become an expressed requirement – particularly as investment-quality rural real estate has become a legitimate investment class.
This change in orientation is most obvious with Ted Turner’s ranch operations where both elk and bison, once considered a vital part of the scenery, have been converted to major cash generating crops. While Turner’s operating numbers are not public, it would seem he is now running a very successful business. Other examples of people who bought beautiful ranches and insisted that they wash their own face are individuals like Craig Barrett, former CEO of Intel, who has turned Triple Creek Ranch into what is perennially ranked as one of the most popular resorts in the world. Jim Manley, founder of Atlantic-Pacific Capital, has made his Ranch at Rock Creek into a wildly popular ranch resort operation in an amazingly short time frame.
Whether it’s cows, bison or human guests, we feel that “washing its own face” is a trend that is here to stay. It goes without saying however, that there will continue to be an active “private retreat” market where the cows and bison are few, the scenery and wildlife are sensational, and the “two-legged” guests are by invitation only.
James H. Taylor, Director
Real Estate Partner
Raised on a remote cattle ranch on the Crow Indian Reservation in south central Montana, Jim began his education in a one-room schoolhouse. He later went east to boarding school at St. Paul’s School and then graduated from Yale University in 1967 with a B.A. in Latin American History. After a brief stint on Wall Street and an exploratory year in South America, Jim came to Hall and Hall in 1972 as one of only two ranch partners.