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Investment Options - Is Buying A Ranch Worth The Money?

Ranching is part of the American dream. The image of the ranch and the homestead conjures up the idea of the steely eyed cattleman fighting for his own independence against hostile nature and often black hatted villain who wanted nothing more than to rustle his cattle and make off into the dusty sunset with their ill gotten gains.

At least those were the story lines of the heyday of the West on American television and in cinema during the 1950's and 1960's.

Today there has been a resurgence in interest by many investors around ranching - but this interest has been tempered by a more pragmatic approach. The truth is that before donning a stetson and warming up the branding iron a careful examination of just how sound an investment a ranch is might be a prudent approach.

The first consideration when contemplating buying a ranch is to take into account that any investment of this type requires extremely deep pockets and a very long term mindset. This is not an investment that will provide an exceptional ROI in the short term. Often the land that is purchased is barren and needs stocking and other infrastructure investment.

Secondly there is widespread agreement among financial advisers who specialize in this sort of investment that in order to realize a profit the owner of the ranch must actually be present. These are not operations that can be managed remotely.

There is also the danger of confusing the returns that can flow from agricultural land with those that a working cattle ranch for instance can provide. The returns from a ranch are substantially lower than those for farmland. And it applies to most of the Equestrian property .

There is also a saying among those who have made ranching a way of life and this is 'cattle are a business; a ranch is an investment.'

The fact of the matter is that it is true. The land that is purchased as the base for cattle ranching is undoubtedly beautiful, but it can prove difficult to sell - or in some cases even value.

However, selling a ranch can lead to substantial profits. There are cases where people have purchased a ranch for $70,000 in the mid 60's and seen it sell in the second decade of the noughties for well over $4,5 million. However, there are rules set in place to ensure that profiteering does not take place. In order to make that sort of profit the ranch owner must show the IRS that they have at least tried to make a profit from the operation.

However, cattle ranching is not the only game in town, as the saying goes there are ranches that are turning a tidy profit from other activities. Dude ranches and hunting lodges / tourism are only two of the other alternatives that are available to those who want to enjoy the wide open spaces.

In the end it should come down to a lifestyle choice and a commitment to that lifestyle. If your dreams are to become a rancher then the investment will be a sound one - but don't expect to become rich without a lot of blood, sweat and tears - at least in the short to medium term.

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