Ranches for Sale in Colorado: Determining Your Land’s Profit Margin
Many people buy ranches for the purpose of getting into the cattle raising business. The good news is that there isn’t a shortage of ranches for sale in Colorado or any profitable piece of rural land anywhere if you know exactly what to look for. You might easily fall in love with the first ranch that offers a great view but you need to consider more than just aesthetic appeal if you really want to get a considerable return on your investment. Here are a few things every smart buyer should do before they put down money for any land.
Profit vs. Price
Any suitable Colorado ranch for sale isn’t going to come cheap especially if you are after land area. You need a proper estimate of the land’s net income before you sign the contract. It’s worth having a long chat with your land broker. You can also have someone who knows his way around economics to give you an analysis. The rule of thumb, however, is to find a balance between how much you will invest up front and what you will stand to gain. If your estimates show that you will be losing more than what you will earn, perhaps it’s time to move on to greener pastures.
Ultimately, your land’s potential revenues will depend on the cattle you will bring in. According to The Samuel Roberts Foundation, the annual costs per cow are $300 to $400 while the typical annual gross income per cow is $190 to $340. With these figures in mind, you need to determine the carrying capacity of the land. This may already be provided by your land broker or indicated in the listing you are browsing, nevertheless, you still have to make doubly sure. Carrying capacity is actually dependent on a multitude of factors including forage condition, vegetation, soil type, and more.
The livestock you buy should also be suited to the kind of climate you expect to experience in the ranch. For instance, Colorado often has dry, warm weather with the occasional rains and snow. Make sure that you are buying cattle bred to handle this environment.
Though they are the most important, land and livestock aren’t the only things you need to concern yourself with. Your ranch needs more than just cattle to be profitable. Equipment like trailers, tractors or trucks also has to be included as you plan your budget.
Things to Know Before Buying a Ranch, Samuel Roberts Noble Foundation
Owning a Ranch Offers Returns Beyond the Financial, The New York Times