Rising production costs on farm and ranchland are motivating U.S. landowners to reduce expenses through recreational leasing of their properties. The American Society of Farm Managers and Rural Appraisers (ASFMRA) says leasing land for hunting, fishing and wildlife exploration is one of the fastest-growing supplemental income categories for agricultural landowners.
Denver, CO-based ASFMRA defines a recreational lease as an agreement between a person who owns or controls access to a property, and those who desire recreational use of the property. The lease grants the right to participate in a recreational activity on a specific tract or property for a defined time and fee.
Mike Ming, ASFMRA candidate member and real estate appraiser with Alliance Appraisal in Bakersfield, CA, says the amount of income potential from recreational leasing is based on many factors. These include the size of the acreage, type and population of wildlife species on the property, location and aesthetics, and the required management for providing such services.
“Rapid urbanization has eliminated much of the nation's wildlife habitats and rural areas surrounding cities,” he says. “With surging growth in outdoor recreational sports like hunting, fishing and outfitting, sportsman organizations consider certain locations and types of U.S. farmland perfect resources for this specific need.”
According to Ming, farmland leasing to outdoor enthusiasts is a win-win situation for both parties. It allows hunters and fishermen new locations to pursue their interests, and landowners to financially benefit by opening up their land to accommodate the new, paying audience.
To date, recreational service fees on farms and ranchland are predominantly market-driven. To determine the recreational value of land, Ming advises landowners to calculate potential rates using comparative figures of land similar in size and wildlife populations.
“Hunting leases are among the most common types of recreation enterprises,” he says. “Leasing operations for this category are highly variable. They range from minimal landowner participation to vast landowner offerings of services and facilities.”
Ming says payments for a hunting lease are generally made on a per-acre basis for specific period of access.
“The average price of hunting leases is $3.50 to $10/acre,” he says. “Superior hunting may bring even more if the experience is rewarding.”
Hunting leases are often compared to time-share leases for a vacation condominium. In that sense, leases can be sold to separate groups or individuals at different times or seasons to hunt specific species of game. The time-sharing concept affords more flexibility for landowners and can maximize fees. Plus, one tract of land can be leased to an individual or hunt club several times during the same year for turkey, deer, pheasant or other seasonal game hunts.
Another popular concept is a shooting preserve that offers hunters an opportunity to hunt pen-raised game, such as quail. Ming says most hunting preserves offer guides, bird dogs, meals and lodging, as well as game cleaning and packaging.
Shooting-preserve hunts are generally sold as one-day, half-day or weekend packages. Fees range from $100 to $700/day, depending on the services.
Ming says developing a lease rate usually begins with some trial and error.
“Pick a rental rate you believe the recreational rights to your property are worth, and begin advertising,” he says. “You'll quickly discover if the price is too high or not enough. Don't be afraid to ask experienced outdoor enthusiasts for their opinions on what they believe the lease is worth.”
For many offering recreational leases on their land, the beginner's benchmark for fees is to accrue enough supplemental income to cover annual real estate taxes.
“This seems to be a good starting point,” Ming says. “Under this premise, the owner gleans enough additional income to pay the annual tax expense while slowly learning about recreational leasing.
“Over time, property owners can adjust leasing rates based on market value. They can build on what they have to offer, or base the rates on short- and long-term financial objectives for the property,” he adds.
Ming cautions against landowners basing a lease rate on what a friend or neighbor is charging. Because no two properties are alike, different leases will command different prices.
Landowners considering leasing land should be aware of risks and costs. One critical cost consideration is liability. To reduce liability, landowners need to take several steps:
Assure proper postings throughout the property.
Eliminate and prevent hazardous conditions.
Obtain adequate liability insurance.
Know exactly who is leasing your land.
Obtain legal services.
Require proper licensing and permits from users.
Require users to follow local and state hunting and fishing rules.
Known as the “general obligations law,” all U.S. property owners receive basic protection under federal law that protects them against liability claims by people using their property. However, such generalized protection isn't always good enough, says Terry Argotsinger, AFM, ARA, a partner with Stalcup Agricultural Service, Inc., in Storm Lake, IA.
“If you're considering recreational activities on your land, get liability insurance coverage. It's also wise to require people or parties utilizing the property to have their own liability coverage as a way to further protect yourself from possible lawsuits,” he says.
According to Argotsinger, an insurance coverage clause should be written into the lease and require the lessee to prove liability and property damage insurance.
The industry standards call for limits of $1 million in personal liability, and $100,000 for property damage or loss.
“The reality is anyone can be sued, no matter what they do to protect themselves,” Argotsinger says. “Think it through carefully, and give yourself peace of mind by knowing unforeseen accidents and mistakes can happen, especially when you're dealing with the general public.”
As for hunting and fishing licenses, permits and regulations, Argotsinger says landowners should know what's required and allowed on their property for each type of planned venture.
“Under most hunting and fishing leases, it's the hunter's responsibility to comply with state wildlife licensing requirements,” he says. “But landowners still need to be informed, and should contact the proper authorities to learn everything they can to ensure users are following all required standards.”
Leasing private ground under a contractual format reduces the level of liability for all parties while increasing safety, he adds. The end result is a more satisfying and higher-quality recreational experience.
The two most important aspects in recreational leasing are a trustworthy tenant who will be a good steward of the land, and a well-written agreement that sufficiently protects the landowner, Argotsinger says. Critical to success is a solid relationship between persons who are ethically and financially responsible.
“Certain provisions should be included in the lease and committed in writing,” he says. “Failure to document is where problems arise. The risk is too high not to have the terms on paper. It's your best protection and guarantee the process will go smoothly.”
Argotsinger outlines provisions most common in recreational lease agreements.
Names of lessor (landowner) and lessee (renter) — Lessee may be an individual, a group of individuals, a hunting club, sportsmen's association, fish club, bird watchers group or any other recreational group.
Description of lease purpose — Definition of services and activities allowed. May also include description of services and activities not allowed.
Property description — Descriptions of areas of access and those off limits. Include safety zones around homesteads, barns, pastures, livestock, adjoining properties, waterways, etc. Including a map is recommended.
Terms and timelines — Defined by days, weeks, months or season.
Rental rate — Amount the lessee will pay to lessor with specifications on payment dates, and all payment received by beginning of lease period. Deposits and penalties to be included.
Cancellation provisions — Terms for contract termination or cancellation should lessee violate provision of lease, i.e., littering, alcohol use, entering non-allowed areas, harvesting off-limit species, etc.
Lessee duties — Things required by lessee as directed by landowner, such as closing gates, repairing broken fences, proof of insurance, licenses and permits.
Lessor duties — Environmental maintenance, supervising tactics.
Wildlife harvesting — Particular species that may be killed in accordance with local wildlife management codes. Compliance with all state and federal game laws should also be stated in the contract.
Posting responsibility — Defining which party will post property and patrol to prevent trespassers.
Occupancy — Number of guests allowed onto property at any one time, based on size of property, access roads, parking and wildlife populations.
Understanding your land's realistic potential under a recreational lease is critical for success. An effective marketing plan is also necessary, says James Welles, ARA, chief appraisal officer with Farm Credit in Albuquerque, NM.
“To achieve your financial objectives for supplemental income, the marketing and promotion of your land for recreational activities need to be accurately aligned to the demands and needs of your target audience to create interest,” he says.
“Marketing a recreational lease is a continuous, year-round process. And it's important to understand that the primary reason a sportsman or hunting club will lease your land rather than another property is because they believe a better-quality recreational experience will be realized.”
As an avid hunter, Welles says sportsmen are most attracted to land with the following characteristics:
Privacy and less competition from other hunters.
Abundant game densities.
Accessible location and convenience.
Comfortable camping or lodging.
“You're not just selling a product, but managing the outdoor experience for your clients,” he says. “To stay in business for the long term, make sure you provide an experience the outdoor enthusiast will want to repeat.”
As for advertising, Welles says the message and description about your property must present a strong, favorable impression to the audience. He also suggests owners never try to sell something they can't provide.
“Nothing travels faster than bad information about hunting or fishing experiences,” he says. “Word of mouth is only as good as the services and land provided for the outdoor experience. A dissatisfied client is the worst kind of advertising. That's why it's important to give an honest portrayal of what the outdoor sportsman can expect when renting your land.”
When considering what types of advertising to implement, Welles suggests newspapers, magazines, brochures or direct mail; trade journals; sports shows; local, regional and national referrals; and the Yellow Pages.
Another marketing option is to use consultants. Welles says such professional services specialize in the marketing and promotion, and management and booking phases of the recreational lease process. For a fee, the consultant shoulders all the management roles, while securing for the property owner his or her required income for the service.
“The advantages in utilizing consulting services are vast and highly effective, especially for big-game hunts,” he says. “As experts in the field, these organizations can match the right audience with your property while handling advertising, coordination, contract negotiation and liability insurance coverage.”
The American Society of Farm Managers and Rural Appraiser is a non-profit entity of members who together manage more than 25 million acres of farm and ranch land for absentee owners, banks and trusts in the U.S., Mexico and Canada. Visit www.asfmra.org.