Passive Income From Your Ranch

[Lisagrantb]

It's like a rice field. I control the water to it. In early spring I drain it and either let the Bermuda grass grow or plant it with grazing sorghum.

 

[Caustic Burno]

I've been pondering ways to maximize the potential of our properties. I'm curious - how do you all generate passive income from your land?

From short-term rentals, hunting leases, leasing grazing rights to wind turbines, or maybe something I haven't even thought of - I'm all ears!

General vicinity would help .
West Texas? Oklahoma?

 

[Doc Hitchcock]

I've been pondering ways to maximize the potential of our properties. I'm curious - how do you all generate passive income from your land?

From short-term rentals, hunting leases, leasing grazing rights to wind turbines, or maybe something I haven't even thought of - I'm all ears!

Passive income requires context applied to hobby farms as well as vast working spreads. Any earned income is the yield of some planning, time, labor, and resources. And an element of luck at times. There are some possible ventures that can supplement income with minimal outputs though.

Have an woodlot that needs proper intervention/management? Due diligence and consultation with a County Ag. Extension Agent, may produce ethical sources to improve the health of the woodlot and provide a little cash. Very possible to clean up enough firewood afterwards for home or modest resale venture.

Pollinators need all the help they can get in creation/restoration and preservation of sustainable habitat. Partnership with beekeepers may be a source of modest 'passive' income. Provide/improve the appropriate habitat and rent space for beehives or an apiary. Some 'free' honey may be part of the bargain too.

Talk with local 4H and high school agricultural representatives. Could be, there is a young person that has the motivation and work ethic to explore animal husbandry, and/or sustainable agriculture/gardening. Maybe they just need a proper "place" to start their journey under club or class supervision. If, in the process of learning and caring for their project(s), you can gain just a little help in caring for your own. Not all returns on investment are paid in cash and coin.

 

[Named'em Tamed'em]

I have a short term rental that isn't on the farm but close by on the beach. It is far from passive income. Seems there is always work to be done at that place. Lol

I just replaced the water line at a rental house today, couldn't get one of my machines in. I hate digging, thankfully 24 inches deep is good for frost around here!!

 

[CowboyRam]

Several years ago we converted one of the old chicken barns into self storage.

 

[Old Hermit]

Passive is an interesting concept... Not one we've explored :/ .
Without knowing where you are, what you have, or what you're already doing, all I can chime in with is what we're doing.
We raise 100% grass fed beef. We've spent 20 years developing our brood stock to produce well on grass - they're short, fat and awesome, but it was/is definitely not passive. I suppose selling brood stock is relatively passive now.
We can't sell hay, because we only have 80 acres of dedicated hay meadow and we need it all - and they can't/won't eat anyone else's hay, so I can't risk selling it.
We are a distributor for an organic feed company, which led into raising organic pastured broilers for several years. (yes, we're those organic people) Not passive, not fun, but quite profitable. I quit that two years ago.
We have an on-farm store - part 'groceries' from our farm and a few trusted others, part things the 'new homesteader' crowd wants (canning jars, shrink bags, clothes line & pins, etc) part farm-produced souvenir type stuff for the...
Farm tours. We have a little under 300ac, and because of our rotation system, it's relatively easy to walk most of it. For some reason, people want to (at least when it's warm). And my cattle are pretty and friendly. This is probably the least work.
We have a small orchard and vineyard, mostly done as 'U-pick' by appointment.
I do an assortment of workshops - poultry processing, canning, rendering, tanning, milking, grafting, soap making, spinning/weaving, etc. - on no particular schedule and only when enough people bug me about it.
We aren't getting rich - or trying to. As long as we can cover the taxes and insurance, we're good!

 

[Brute 23]

Over here people are having concerns about the costs of decommissioning solar farms and wind turbines after their lifespan. Apparently it is very expensive, similar cost to establishing them. There is no guarantee that the companies that put them in will remain solvent at the end and the cost could fall to the landowner so all of this has to be factored in when considering a project like this.

Ken

The solar companies will put money in escrow for decomision as part of the contract, if you ask.

 

[bird dog]

The solar companies will put money in escrow for decomision as part of the contract, if you ask.

I have read a few of these and most state they will do a surety bond but they have 15 years to do it even though the state law says 10 years. Even 10 years is way longer than I would want. I have some battery storage folks sniffing around now and their contract reads the same 15 years plus theirs does have a end date.

The power line they are wanting it next to is 300 miles long. I am not sure why they picked my place from all that land.

 

[WFfarm]

Rent your cows out for Cow Cuddling.

 

[Brute 23]

I have read a few of these and most state they will do a surety bond but they have 15 years to do it even though the state law says 10 years. Even 10 years is way longer than I would want. I have some battery storage folks sniffing around now and their contract reads the same 15 years plus theirs does have a end date.

The power line they are wanting it next to is 300 miles long. I am not sure why they picked my place from all that land.

Remember they are going to bring you what benefits them. Never go with the first piece of paper any one brings you. Stipulations like that will separate the end user companies ready to build now now vs people trying to secure leases for resale. Obviously for resale they want the broadest terms possible.

My brother manages a portfolio of "renewables" and holds a lot of contracts on all sorts of wind, solar, etc contracts. We have also had people try to lease for solar. They will do it if they are serious.

 

[Dave]

When I bought this place I leased the hay and pasture to B. In working out the dollar amount I told him I could help with some things, irrigation etc. It worked into more. I am B's unhired hired man. It also worked into some partner deals on cattle and some of my own. Now Idaho Power is wanting to put a 500K Mega watt power line across my property. My lawyer is still working on that. The offers started at an insult level but is now getting to be some real money. If they build that line 200 feet further west it would be off my property but on BLM land. They think it is easier to deal with individual land owners than the federal government. I also signed up the majority of the ranch in Grassland Reserve from FSA. The requirement is it must be left in grass. The part I put in the program a person couldn't possibly drive a tractor on let alone plow the grass down. I doesn't pay a lot per acre but there is a lot of acres.

 

[Brute 23]

I've been pondering ways to maximize the potential of our properties. I'm curious - how do you all generate passive income from your land?

From short-term rentals, hunting leases, leasing grazing rights to wind turbines, or maybe something I haven't even thought of - I'm all ears!

There are tons of ways to generate revenue but the down side is its kind of luck of the draw unless you hand picked the properties.

In some area the hunting revenue alone can be $20+ per acre alone, if you have the wildlife. If you don't, it worth very little and you will tend to get people who hang out more than hunt. And that cokes with its own issues.

It's hard to recruit o&g, wind, solar, etc. They generally come to you. It can be very much out of your hands.

Cattle is decent but does generate much cash flow. At best it maintains the land.

House rentals, rv parks, storage units, etc can have quite a bit of upside, especially in the right location, if you have the capital to develope them and the interest to run them.

 

[greybeard]

The big $$$$$ is in emu and chinchillas....

 

[yippee]

There is no passive income from a ranch. Ranches require work from you in one way or the other.

I've been pondering ways to maximize the potential of our properties. I'm curious - how do you all generate passive income from your land?

From short-term rentals, hunting leases, leasing grazing rights to wind turbines, or maybe something I haven't even thought of - I'm all ears!

Contact area photography or nature groups to allow them to take photos. Outside engagement pictures are a hit.
Contact local boys/girls clubs, youth groups, etc for camping experience or small campfires

Make sure your liability insurance is up to date.

 

[Lisagrantb]

When I bought this place I leased the hay and pasture to B. In working out the dollar amount I told him I could help with some things, irrigation etc. It worked into more. I am B's unhired hired man. It also worked into some partner deals on cattle and some of my own. Now Idaho Power is wanting to put a 500K Mega watt power line across my property. My lawyer is still working on that. The offers started at an insult level but is now getting to be some real money. If they build that line 200 feet further west it would be off my property but on BLM land. They think it is easier to deal with individual land owners than the federal government. I also signed up the majority of the ranch in Grassland Reserve from FSA. The requirement is it must be left in grass. The part I put in the program a person couldn't possibly drive a tractor on let alone plow the grass down. I doesn't pay a lot per acre but there is a lot of acres.

Couple things to consider about leasing ROW for power lines

1 use a lawyer that specializes in rights of ways
2 do they have the power to expropriate
3 if there buying ROW they have already performed the cost analysis and determined that this is the best location based on environmental, land topography and lots of other stuff that affects project cost.
4 they are on a project schedule and that can work in your favor
5 to move just the 200 feet you mentioned is not something they are wanting to do especially on a 500kv line. Remember project schedule (time is money) re engineering that section, modifying bid specifications or a change order and the list goes on. They DO NOT want to deviate from the plan.

The land acquisition guys know all the tricks and they already know what you are going to do if they've met with you a couple of times. I can't express this enough, get a lawyer that specializes in ROW not just a real-estate attorney

I know this because I have built 100's of miles of distribution/transmission lines and gas pipelines

Just an example of something you or your lawyer may not have even considered in the contact. What, where, how will they be granted access to the ROW for line maintenance. Are you limiting the ROW based on current design capacity and if not they can come in latter and build another line or increase the existing line capacity and they don't have to ask for another ROW

 

[farmerjan]

Passive is an interesting concept... Not one we've explored :/ .
Without knowing where you are, what you have, or what you're already doing, all I can chime in with is what we're doing.
We raise 100% grass fed beef. We've spent 20 years developing our brood stock to produce well on grass - they're short, fat and awesome, but it was/is definitely not passive. I suppose selling brood stock is relatively passive now.
We can't sell hay, because we only have 80 acres of dedicated hay meadow and we need it all - and they can't/won't eat anyone else's hay, so I can't risk selling it.
We are a distributor for an organic feed company, which led into raising organic pastured broilers for several years. (yes, we're those organic people) Not passive, not fun, but quite profitable. I quit that two years ago.
We have an on-farm store - part 'groceries' from our farm and a few trusted others, part things the 'new homesteader' crowd wants (canning jars, shrink bags, clothes line & pins, etc) part farm-produced souvenir type stuff for the...
Farm tours. We have a little under 300ac, and because of our rotation system, it's relatively easy to walk most of it. For some reason, people want to (at least when it's warm). And my cattle are pretty and friendly. This is probably the least work.
We have a small orchard and vineyard, mostly done as 'U-pick' by appointment.
I do an assortment of workshops - poultry processing, canning, rendering, tanning, milking, grafting, soap making, spinning/weaving, etc. - on no particular schedule and only when enough people bug me about it.
We aren't getting rich - or trying to. As long as we can cover the taxes and insurance, we're good!

You mentioned not knowing where the original poster was located... Where are you located?

 

[Brute 23]

Couple things to consider about leasing ROW for power lines

1 use a lawyer that specializes in rights of ways
2 do they have the power to expropriate
3 if there buying ROW they have already performed the cost analysis and determined that this is the best location based on environmental, land topography and lots of other stuff that affects project cost.
4 they are on a project schedule and that can work in your favor
5 to move just the 200 feet you mentioned is not something they are wanting to do especially on a 500kv line. Remember project schedule (time is money) re engineering that section, modifying bid specifications or a change order and the list goes on. They DO NOT want to deviate from the plan.

The land acquisition guys know all the tricks and they already know what you are going to do if they've met with you a couple of times. I can't express this enough, get a lawyer that specializes in ROW not just a real-estate attorney

I know this because I have built 100's of miles of distribution/transmission lines and gas pipelines

Just an example of something you or your lawyer may not have even considered in the contact. What, where, how will they be granted access to the ROW for line maintenance. Are you limiting the ROW based on current design capacity and if not they can come in latter and build another line or increase the existing line capacity and they don't have to ask for another ROW

Power line ROWs is probably the one group I will never lease to. They are arrogant and unregulated. A lot of the unwillingness to deviate comes from the fact that they will do eminent domain if it's a line of any size, another reason I dispise them.

You brought up good point about access. I recent locked a pipeline company out of access that they claim was given before my time and told them to stay on their ROW. They had no gates to access it other than ours. They tried to give me a sob story about their budgets not having room for the construction and I told them I didn't care if bankrupted their whole company. They leased a ROW and do not own the land... I do... and I will spend a fortune to make sure they understand it clearly.

With any ROW maintenance is a big issue. Get it in the contract up from they must contact you with a certain amount of time of notice, and damages while doing maintenance will be at their expense, write exceptions like they ROW must not interfere with your grass or grazing operation, they must use herbicides annually to controll brush/ weeds, no shedding. I had AEP run a hydroaxe (huge mulcher) down several miles of ROW through good grazing because their shredder broke done. We went to war and they had to reimburse damages. All that stuff needs to be thought about in advance.

Watch for statements that say they have the right to leave their ROW in emergency situations. They will play that card when ever needed. Be specific about what an energy situation is like, loss of life, not loss of revenue.

 

[Texas G@l]

Power line ROWs is probably the one group I will never lease to. They are arrogant and unregulated. A lot of the unwillingness to deviate comes from the fact that they will do eminent domain if it's a line of any size, another reason I dispise them.

You brought up good point about access. I recent locked a pipeline company out of access that they claim was given before my time and told them to stay on their ROW. They had no gates to access it other than ours. They tried to give me a sob story about their budgets not having room for the construction and I told them I didn't care if bankrupted their whole company. They leased a ROW and do not own the land... I do... and I will spend a fortune to make sure they understand it clearly.

With any ROW maintenance is a big issue. Get it in the contract up from they must contact you with a certain amount of time of notice, and damages while doing maintenance will be at their expense, write exceptions like they ROW must not interfere with your grass or grazing operation, they must use herbicides annually to controll brush/ weeds, no shedding. I had AEP run a hydroaxe (huge mulcher) down several miles of ROW through good grazing because their shredder broke done. We went to war and they had to reimburse damages. All that stuff needs to be thought about in advance.

Watch for statements that say they have the right to leave their ROW in emergency situations. They will play that card when ever needed. Be specific about what an energy situation is like, loss of life, not loss of revenue.

We had a gas company want to run a supply line down about a mile of our southern property line.
They chatted and left a1 1/2 page agreement for us to look at. Our attorney countered with 25 pages of details. We haven't heard back .....in over 10 years.

 

[Lisagrantb]

Kinda getting sideways on this thread but one other thought for you. You are not just giving them permission to use that ROW you or your heirs are giving up any future use of that land, no buildings no development of any kind. Just think what may happen or be available for you to do in the next 50 plus years if that line wasn't there.
It's not uncommon for someone to request a line follow something like a property boundary or fence line, the company will say no it will cost too much to do that (and it really does) then they will say we'll just take it and when the time comes they will either pay you a lot more or move the line. The reason that they will give in is because your attorney will say to the judge "my client is not restricting their access but merely request a slight change to make it more accommodating for land management and usage."

 

[Brute 23]

We had a gas company want to run a supply line down about a mile of our southern property line.
They chatted and left a1 1/2 page agreement for us to look at. Our attorney countered with 25 pages of details. We haven't heard back .....in over 10 years.

That's the way to do it. It's the same with us. You can drop a lease off but you will get our lease in return. Take it or leave it.