PAUL BIERSCHWALE, Bierscwhale Appraisal Company, Junction, TX.
Abstract: Land management strategies have a major impact on land value, as reflected by market demands. Proper land management that incorporates what the market is seeking can preserve or increase the net worth of one’s property. Managers must take stock of the physical characteristics of each property and decide when and where to clear or thin woody plants. With careful planning and a knowledge of the demand in the market for recreation and aesthetics and if an owner wants to manage for people as well as livestock, a property can be developed to its maximum potential from both a current returns standpoint and a long term investment standpoint.
Texas landowners are faced with a dilemma on management of their rural investment concerning brush and other woody species control. Should they clear these plants and increase livestock production, or should they let their ranch grow up to provide a maximum amount of wildlife cover, given the demand for wildlife recreation in the State? As with most issues, the answer lies somewhere in the middle of the two extremes and depends heavily on the physical characteristics and the location of each individual property.
Even with the transition to more absentee landowners with other sources of income, land still makes up the major part of most owners net worth. Thus, it serves two functions in the investment portfolio. It needs to generate income to cover costs of operation, or, at the very least, holding costs, and it needs to be managed properly in order to provide the maximum value for the net worth of its owner. Proper management can maximize both aspects of investment considerations.
Some of the least valuable properties on the market today are those that had the best management known at the time carried out in the 1940’s, 1950’s and 1960’s. Many acres of Texas were cleared by chaining or dozing during these times, as landowners tried to maximize agricultural production. Some of these lands have come back with woody species, but many are still relatively clear of all woody vegetation. Given agricultural prices and the sparse demand for rural recreation at the time, this probably wasn’t a bad management decision. But from a long term investment standpoint, those properties without woody vegetation are in the least demand and therefore command the lowest prices. The demand for rural recreational properties increased drastically in relation to per capita income.
On the other hand, heavily wooded lands which provide worlds of cover for wildlife do not provide forage vegetation to support the numbers of animals and other wildlife which increases the desirability of a property from a recreational standpoint. While these properties will command a higher price than a cleared ranch, the market knows that there is a cost associated with bringing them to their maximum desirability and income producing capabilities. Thus the dilemma of to clear or not to clear is not too clear..
At least two principles of real estate value are at play — the principle of change and the principle of the unique aspects of each piece of real estate. A changing demand made the best management decisions look bad based on the current market and the unique aspects of real estate make brush control a challenge for current owners. How can a landowner take advantage of the current demand for rural recreation, maintain and possibly increase returns to agriculture and maximize property value?
Managers must take stock of the physical characteristics of each property and decide when and where to clear or thin woody plants. Maximum productivity gains can be accomplished by working areas with deeper soils and little to no gains may be realized when hillsides or clay banks are cleared. Also, soil erosion should be a consideration and woody plants in correct balance help hold topsoil when moisture conditions encourage erosion. Most areas of shallower soil contain terrain and cover suitable to enhance local wildlife populations, so these areas should be considered for leaving most brush in its natural state.
Opening up low lying areas while leaving adequate cover in surrounding areas enhances wildlife habitat and increases forage production capabilities. At the same time, aesthetics and eye appeal can be increased with selective clearing or thinning. Cedar or mesquite as far as the eye can see is no more attractive than white walls of a house with no pictures or wallpaper to break the view. Each property has its own unique aspects and even a level tract can be developed into an eye appealing property with proper planning.
The market for tracts with live water continues to be strong in Texas. The nature of our climate (especially in West Texas where it is said the next drought begins the day following a rain) will continue to place a high demand on those properties with water resources. Where live water is available on a property, this asset should be a factor in management decisions. Where there is no water naturally occurring, consideration should be given to development of tanks and ponds, even if it means pumping well overflow into surface tanks. Water development is a major consideration in brush control as many times decreasing the amount of woody vegetation on a watershed will cause springs which have dried up to return to a natural flow.
Cost considerations are a major factor for most landowners, as few want to spend money on a property without an anticipated return. Land management requires careful thought and sometimes current costs which may not be realized immediately in increased returns. Current cash flow and net worth must both be considered when making land development decisions. If a cost incurred today will not increase current returns, will it increase the value of the property and therefore net worth enough to justify expending the funds?
Land in Texas has historically been a long term investment and has taken good care of its owners over the long haul. Many current owners want immediate returns and are not patient enough to hold land as an investment. Landowners must determine what type investor they are as they make management decisions which affect the value of their investment. If they are short term investors or landholders, the best strategy may be to do nothing to a property. However if they are in for the long term and want to maximize current and long term returns, consideration of all aspects of property value and returns must enter into management decisions. With careful planning and a knowledge of the demand in the market for recreation and aesthetics and if an owner wants to manage for people as well as livestock, a property can be developed to its maximum potential from both a current returns standpoint and a long term investment standpoint.
All it takes is perfect knowledge!
Comments: Dale Rollins, Professor and Extension Wildlife SpecialistUpdated: Mar. 18, 1997