Development Not Only Way To Make Money Off The Land

Landowner John Baen is ahead of the market when it comes to understanding the earning value of recreational land leases. The professor of real estate at the University of North Texas, who privately owns 11,000 acres, reports that approximately 60 percent of the income from his land comes from recreational leases � from deer hunters to those hunting for arrowheads � and only 40 percent comes from cattle operations.

Baen earns more in eight weeks from recreational leases than he does all year in his job as a full-time professor.

"It's absolutely essential that today's landowners talk to their real estate agents about the added value they can get from leasing land for recreational purposes," said Baen, himself a licensed real estate agent and appraiser.

Landowners like Baen are also increasing the value of their land while producing extra income for themselves, according to Lee Vermeer, AFM1, vice president of real estate operations for Farmers National Company, the largest farm management company in the United States. "People who lease often enhance the property with modifications such as cabins, deer stands, and wildlife habitat and road improvements that up the value of the property even further, at no expense to the landowner," said Vermeer. "And because of their investment, lessees tend to care for the property as if it was their own and keep trespassers away." According to the Realtor's Land Institute, an affiliate of the National Association of Realtors, the value of recreational land has increased 32 percent over the past two years, while the value of agricultural land increased only 24 percent during that same time.

Vermeer confirms that over the past 10-15 years, he has seen a tremendous increase in interest from people looking to lease property for recreation.

"What this increased interest means for landowners," said Vermeer, "is that the same sections of non-productive property that 20 years ago would have been worthless can now bring in additional revenue if it's leased for hunting or other recreation." Baen said that recreational leasing should be a part of every landowner's business plan, but leasing requires a type of marketing that many landowners aren't familiar with. That's when leasing agents and savvy land real estate agents step in to help.

"The recreational lease market is getting stronger nationwide, in part because real estate agents by and large are beginning to understand the value of recreational leases to buyers and sellers," said Richard Kelsey, with the Tennessee chapter of the Realtors Land Institute.

Vermeer said that real estate agents who are knowledgeable about this trend could help landowners in a number of ways. They can market the recreational potential to help landowners sell their property for top dollar, they can help a landowner set up a lease on their property for additional income, or they can help prospective land buyers maximize their investment by pointing them toward land with the potential for recreational leases.

Some real estate agents actually establish the recreational leases themselves, while others refer clients to recreational leasing companies for which they often receive a commission.

One such recreational leasing company is the Hunting Lease Network (HLN), which is the first franchise company of its kind and a subsidiary company of Farmers National Company. HLN frequently works with outside real estate agents to help landowners establish recreational leases on their property. Troy Langan, HLN manager, said income from their hunting leases varies greatly depending on the property and its location.

To use the HLN service, landowners pay a one-time $100 enrollment fee, which covers the time and effort for the company to build a Web page for each landowner's property and to coordinate lease bids from sportsmen registered on the Web site. The landowner's Web page is located on HLN's Web site, generating nationwide exposure for the landowner's posting.

Once a landowner accepts a bid for a lease, HLN franchise owners serve as the liaison between the landowner and the hunter for the life of the lease. The franchise owner also provides complete services such as lease writing, accounting, wildlife harvest reports and arrangement of the hunting liability insurance sportsmen are required to carry under HLN leases.

In the past few years, Scott Saults, a real estate agent for Farmers National Company in western Nebraska, became so convinced that land real estate agents need to be tied in to the recreational leasing industry that he purchased the HLN franchise in his territory last summer.

"My role as a real estate agent goes hand-in-hand with coordinating hunting leases," said Saults. "Real estate work is really all about building relationships with clients, and now as a leasing agent I can be the direct contact to help my clients get the most value out of their land at any stage of ownership." Langan points out that using a leasing agent rather than establishing independent leases is especially important for the growing number of absentee landowners who hold onto the family farm or buy property as an investment, but live elsewhere.

He cited one example of an absentee landowner who was using Farmers National Company to manage her mother's farm in Oklahoma, and had leased ground to hunters on her own without liability insurance protection.

"When she followed her farm manager's advice to consult the HLN for a better deal, she was able to lease her ground for five times the previous lease amount and the hunters now pay for a liability insurance policy," said Langan, who added that the client used the increased income to pay property taxes and her elderly mother's home healthcare bill.

But landowners who live in areas that aren't lucrative for hunting need not despair. Langan said that the HLN, in response to increased inquiries, plans to expand into eco-tourism leases as well. "For example, there are limited hunting opportunities in Hawaii, but we're getting more calls from individuals and groups who want to lease land in unique locations like that for fishing, boating, bird-watching and other outdoor activities," said Langan.

Vermeer, with Farmers National Company, said that each property is unique, and the bottom line is for landowners � or prospective landowners � to educate themselves about their property's potential and to find a real estate agent who is knowledgeable about recreational leases.

1AFM designation: The American Society of Farm Managers and Rural Appraisers awards the title of Accredited Farm Manager to members who have had years of experience, are technically trained, have passed rigid examinations and subscribe to a high code of ethics.

Internet Resources Farmers National Company: www.farmersnational.com Hunting Lease Network: www.nationalhuntingleases.com National Association of Realtors: www.realtor.org Realtors Land Institute: www.rliland.net

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