What's appealing about Texas ranch life? It might be the sense of freedom and independence that comes with owning your own sprawling piece of land. It could be the appeal of a simpler way of life, unplugged from the hustle and bustle of city living. Or, it might just be that you've always dreamed of driving cattle and the cowboy lifestyle.

Whatever your reasons for wanting to purchase a ranch in Texas, owning land has some unique factors that make it different from a residential sale or commercial sale. Here's a quick rundown of what you need to consider when buying a ranch in Texas:

The purpose of the purchase

First and foremost, have a clearly defined reason for why you want to purchase the land. Are you looking for a working ranch to raise cattle or grow crops? Or are you hoping for more of a hobby farm where you can keep a few horses and chickens? Perhaps you're looking for a hunting ranch as a base camp for your hunting trips. Maybe the idea of retiring to the country and living a quiet life sounds appealing.

Whatever the purpose, having clarity and vision from the start will help determine what type of ranch you should be looking for. Knowing your intent informs everything from the purchase timeline to budgeting to financing.

Budgeting for your ranch purchase

Once you know what you intend to use the ranch for, start to put together a budget.

It's worth noting that ranch property values vary considerably depending on the property's characteristics, such as its location, accessibility, specific amenities, and natural land features. One tool you can use to start forming a budget is from the Real Estate Center of Texas A&M University. The center's website has a section dedicated to data on purchasing rural land in Texas. You can find average pricing information and price trends from previous years in the area you're looking for land.

In Q4 2021, Northeast Texas's median price per acre was $6,742.

Financing a ranch land purchase is different from a residential home purchase. Because it is not their specialty, most conventional banks will refuse to offer land loans. Instead, farm credit companies provide land loans - and they are more familiar with the subject. They can walk you through the loan application process, suggest what insurance to get, explain property tax discounts you may be entitled to, and more.

In exchange for the land loan, you may need to pay more upfront. Expect to contribute 20% or more of the overall cost as a downpayment. Additionally, interest rates are likely higher than a conventional home loan.

Don't just budget for the purchase. A ranch is a long-term financial investment. Suppose you're planning on using the ranch for commercial purposes, like running a farm. In that case, you'll need to factor in the cost of any necessary equipment and buildings, the potential income from selling your products or services, and maintenance.

If your future ranch life is more of a hobby or lifestyle change rather than a commercial venture, you still need a ranch budget. Consider the cost of any animals you might want to raise, along with the cost of any necessary outbuildings. Factor in the costs of maintaining the property, such as paying for grazing rights, hay, and other supplies.

Understand ranch property taxation

Another critical factor in the budget is taxation. The Agricultural Tax Appraisal (ATA) is available for qualified properties used for agriculture or timber production in Texas. This can result in a significantly lower appraised value for tax purposes, which can lead to significant savings on property taxes.

Exemptions and provisions that aid farmers and ranchers are crucial, but they account for a small percentage of the overall exemptions and exclusions that state and local governments provide.

Your taxation benefits for agricultural land could include:

  • A lower appraised rate for open land compared to other zoned properties
  • Exemptions on sales and use taxes for specific farm-related purchases such as feed or equipment
  • Exemptions on motor vehicles sales and use taxes for farm-specific production vehicles
  • Exemption on sales and use taxes for fuel used on ranches
  • Some franchise state taxes exemptions

Adjusted property tax is probably the most significant benefit for ranch owners. In Texas, the value of ranch properties is determined based on their agricultural or timber production value rather than market value. To qualify for this special valuation, the land must be used for conservation or wildlife management, or for producing crops, livestock, exotic animals, timber, nursery crops, and related goods.

The land must have been in agricultural production, including land for timber, conservation, and wildlife management, for 5 of the previous 7 years to qualify for the open-space designation and ATA. The property must be devoted primarily to agricultural use during the current year at a level typical for its region.

Note that the productivity-based valuation applies only to ranch property like the land, fences, stock watering tanks, and irrigation wells. Other real property on the ranch, like the houses, barns, or other commercial improvements, are assessed at the prevailing market value.

The application process for ATA can be found on the Texas Comptroller's website.

Note that if you're purchasing a ranch that already receives open-space designation and qualifies for the ATA, you need to reapply in your name for the exemption once the sale is complete and by April 30 of a given year.

Learn more about the ATA and open-space designation from the Texas A&M AgriLife Extension, including rollback taxes, sales tax exemptions, and qualifications. For wildlife exemption information, see the FAQ from the Texas Parks and Wildlife Department.

Ranch location

Choose a ranch where you want to own property, and that has the features you want. At the same time, consider the drive time to the essential amenities or your Fort Worth main residence. Many ranch owners prefer to be within two hours of their primary home, but properties farther out may have more favorable pricing or another tangible benefit, depending on ownership purpose.

Ranch land around Fort Worth keeps you close to the metro's cultural and lifestyle amenities while providing you with an opportunity to own your own land. The ranches are close to close-knit small communities, lakes, and creeks.

Utilities and outfitting

Knowing what utilities are available in your area can help you narrow down land possibilities that match your requirements. You don't want to be caught off guard after purchasing, especially if you want to build a ranch home with all the modern comforts you desire.

Look into whether utilities and essential infrastructure are already in place. This can include water, electricity, fencing, and other outbuildings. Setting up your ranch will be much easier and less expensive if these things are already in place.

However, if the property lacks these utilizes and you want them, you will need to factor the cost of installing them into your ranch budget.

Keep in mind that even if utilities are available in the area, running them out to your ranch may not be feasible or economical. Electrical providers charge per foot to bring power from the nearest source to your property. If the price is not within your budget, you can explore some alternative options, such as solar power or generators.

If there is not an existing dependable water supply, you may need to drill a well. Learn if there are wells in the area, their depth, and the number of gallons per minute (GPM) they can generally be expected to produce. It's critical to inquire about how dependable the water sources are in all situations and times of the year. Not only should you assess the flow, but you make sure the water source is potable and safe for drinking or agricultural purposes, especially if there is or has been mining on the land.

You may also need to inspect or install septic tanks and systems. Get estimates from local contractors about the typical systems necessary for your specific soil and climate conditions.

In short, be aware of all infrastructure build-out costs by speaking with reputable vendors in that area.

Plan for maintenance and security

Once you've purchased your ranch, there are several things you need to do to keep it running smoothly. This includes regular maintenance tasks such as mowing, weed control, and trash removal. Any structures, from barns to camp structures to fences, must be maintained to maximize their life and use. If you choose to sell down the road, these structures add value to your property, so it's wise to not let them fall into disrepair.

While crime isn't as prevalent in rural areas, it does happen. If nothing else, poachers are liable to use or cross your land. This is the last thing you want if you're running game land or a wildlife conservation ranch.

Take steps to secure your property from trespassers and vandalism. One way to do this is to post signs around the perimeter of your property warning people that the land is private property and that they are not welcome. You can also install gates or fences to deter people from entering your property. Keep the fences and gates in good repair to prevent rural crime.

Make the time to stroll around your property and conduct a thorough perimeter security inspection. Walk or drive slowly along the boundary, looking for possible entry points where unprincipled individuals may gain access to your land. Routinely drive-through to check for changes or note areas that need repairs.

Another way to secure your ranch is to have a security system installed. This can include surveillance cameras, motion-activated lights, and alarms. Tag your essential assets, such as engraving, metal ID plates, or etching. Inventory what you own on the ranch in case something goes missing. Most importantly, never leave the keys inside your ranch equipment. Don't make it easy for thieves to drive off with your tractor or work truck.

Suppose you will be away from your ranch for an extended period. In that case, you may consider hiring a caretaker to oversee the property in your absence. The individual should regularly check on your land and its assets to ensure everything remains in order.

Hiring a ranch-experienced real estate agent

When you're ready to purchase a ranch, working with a real estate agent with experience with these properties will benefit your sale or purchase. Experienced land and ranch agents will be familiar with the unique considerations that come with buying a ranch and can help you find the perfect property for your needs.

Ranch properties can have particular issues that complicate a transaction. Buyers must be aware of oil & gas leases, mineral rights, surface rights, or conservation easements. If you're not properly informed about these or other complicated issues, it may cost you time, money, and the full enjoyment of your ranch property.

Real estate agents specializing in land and ranch know agricultural zoning regulations. Other regulations, such as the construction density, subdivision restrictions, and the floodplain, can impact property usage and future permit approvals.

A land agent must understand all aspects of a property, whether selling or showing to a buyer. They know how to problem-solve mineral rights issues, limited access, or survey encroachment. The best agents get out on the property and piece together what's available from aerial maps and surveys.

If you're looking for a timber exemption, the land agent will work with forresters to estimate the value for the transaction and future planning.

Make sure to talk with your chosen real estate agent and broker about whether they have someone on their staff that specializes in land-oriented work: surveyors, attorneys who are knowledgeable with affairs involving ranch property, lenders who provide financing on land purchases, land-clearing firms, environmental experts, and so on.

Buying Texas ranch land

Ranching is a unique and rewarding experience, but it's essential to do your homework before you purchase a ranch. If this is your first purchase, take the time to learn about property valuation, plus the build-out costs, maintenance, and security measures you'll need to take.

With a little planning, you can enjoy a Texas ranch life for years to come. Work with a real estate agent who has experience with Texas land and ranch properties. Chicotsky Real Estate Group has helped Texas owners find land and ranch properties around Fort Worth that fit their intended needs.