January 23, 2023 | By: Wade Sharp |Investing, Land Loans, Landownership, Rural Living
8 Ways to Profit from Rural Land in Texas During an Economic Downturn
Texas land investments can often generate returns in the long run — even if you don’t develop the land. Since land is a finite resource, it holds its value for years to come.
However, Texas land investments can help you reap rewards sooner, as well.
Once you find land in Texas to purchase, the question becomes: now what? What types of land development are best for you? Is your land a good inflation hedge? How do you develop your land in a way that drives profit in the shorter term?
These questions are important now more than ever. With words like “inflation” and “recession” constantly in the news, it’s helpful to understand the best practices and strategies for investing in Texas land during an era of economic uncertainty.
Here are 8 ways to profit from Texas land investments — even during an economic downturn:
Come up with a unique agritourism idea
In the U.S., agritourism continues to rise in popularity. From 2012 to 2017, revenue in this sector increased from $704 million to almost $1 billion (and that data did not include wineries). Globally, agritourism is predicted to be nearly a $16 billion industry by 2030.
Agritourism is just what it sounds like: combining agriculture and tourism. This can happen through tours or classes on your land that allow visitors to participate in harvesting, purchase your products on-site, learn how you grow a certain crop, or interact with livestock.
Common agribusiness ideas include “pick-your-own” opportunities (like pumpkin patches or flowers), horseback riding, seasonal activities (like corn mazes) or tours demonstrating how something is made (like apple cider).
Rent your land for pasture
As of January 2022, there were more than 91 million head of cattle and calves throughout the U.S. And all those cows have to stay fed. More than 12 million of those are in Texas.
Sometimes, if a livestock producer doesn’t have enough grazing land of their own, they can rent pasture from other landowners. This can be a relatively low-maintenance way to profit from your land, even if you don’t own livestock yourself.
There are a few different ways to determine an appropriate pasture rental rate, including basing it on a per animal unit of carrying capacity, or a per head per day basis. In Texas, you could likely make anywhere from $1.20 to $14 per acre for your pasture land.
Rent out your land for recreational activities
Camping reservations throughout the U.S. have been on the rise, especially after the COVID-19 pandemic began, and more people wanted to spend time outside. In fact, more than 10 million households camped for the first time in 2020.
And all those campers need somewhere to go. Texas can be a beautiful option for camping, especially depending on the kind of terrain you have on your land. You might be near mountains, have streams or other waterways, or be near the coastline.
To run a profitable campground, you’ll need to figure out a solution for water and plumbing. There might also be zoning considerations to keep in mind. But with interest in camping continuing to increase, jumping on that bandwagon (with your land) could be a profitable decision. You can even list your land on a site like Hipcamp, which lets private property owners list campsites for rent to guests.
You could also develop your land for other recreational activities, like ATVing, sports fields, or festivals and other local events.
Hay the fields
Even if you don’t raise your own livestock, there are likely plenty of producers in your area that do. You could consider using some of your land for hay production, then selling it to other farmers.
It’s often cheaper to plant hay than other crops. Planting an acre of hay could be roughly $100 cheaper than it would cost to plant corn or soybeans, for example. With those lower production costs, it could be a better opportunity to make more money from your land.
Keep in mind this is a more hands-on approach to profiting from your land, and you might need to factor in labor costs.
Host infrastructure like solar panels, cell towers, or wind towers
For more passive income, you could consider renting out your land to companies that need space for infrastructure, like cell or wind towers. The companies will pay for any maintenance costs, while you simply collect a rent check.
Solar panels are also a popular choice for land development in Texas, especially if your land is flat and open. Lease rates for solar farms can range between $250 and $1,000 per acre per year. How much you can earn depends on your land tract’s size, how close it is to substations, etc.
Rent out your land for billboards
Much like charging companies to put their infrastructure on your land, you could also profit by being a billboard landlord. You won’t have to do any work in order to host a billboard on your property, and you won’t incur any costs. But you can expect to net between 10% and 18% of a billboard’s income.
Lease out hunting rights
There are routinely well over 1 million hunting licenses issued in Texas each year. And all those people have to hunt somewhere. Could you rent your land to them?
How much you can earn from hunting leases depends on your geographic region, what kind of terrain you’re on, the layout of your property, etc. But you could probably expect between $20 to $45 per acre annually from hunting rights.
If you’re thinking about leasing hunting rights, you might also be wondering how to develop land in Texas to make it more attractive to hunters. This could look like thinning out areas that include a lot of trees, or offering a “base camp” for hunters if you already have a cabin, trailer, or something similar on your land.
Just make sure to check if there are any hunting restrictions in your region. You can check these out on the Fish & Wildlife Service’s page.
Harvest and sell timber
If your Texas land investment includes wooded areas, you could profit from selling that timber.
While timber prices have evened out a bit from their record highs in 2021, you could still use timber sales as a path to profit.
For example, you could earn $30.55/ton for pine sawtimber in Northeast Texas, or $27.47/ton in Southeast Texas. Statewide, the average price for mixed hardwood sawtimber was $33.48 in 2022, which was an 8% increase from last year.
How much you could earn from your wooded land can depend on the species or size of the trees, whether you’re near a mill, and other factors. You can check timber and log pricing info via the USDA.
Is land a good investment? And is it a good inflation hedge?
Inflation in the U.S. is currently at its highest levels since the 1980s. To hedge against that inflation, many people are looking for lower-risk investments — and maybe even more income streams.
The good news? Historically, growth rates for farmland investments have been about 2% above the inflation rate over time, according to Kansas State University Ag Economics professor Dr. Allen Featherstone.
Investing in Texas land — even during times of economic uncertainty — can be a strong investment. Land traditionally holds (and increases in) value over the long term. And when you develop rural land in Texas, there are many opportunities to generate income in the short term, as well.