For some, owning a ranch is a way to get back to nature and escape the bustle of modern life. For others, ranching is their source of income and a way of life. Whatever your reasons for wanting to buy a ranch, there is no doubt that Texas is a great place to purchase your future ranch, but before you pack your bags you need to consider how much a Texas ranch will cost.
Like all real estate, the cost of a Texas ranch fluctuates depending on the market. Currently, the average price of rural land in Texas is hovering around $3,000 per acre, and with most ranches being at least 500 acres, you can expect to be spending over $1 million for the average Texas ranch.
There are a lot of things that affect the price of a ranch besides acreage, though. The level of development, what you intend to use the land for, and location can all affect the price. You will also need to consider how much money you need to put down to purchase a ranch and how much it costs to maintain a ranch. Keep reading to learn more about all the factors that go into ranch costs in Texas.
Article Contents
How Much Does It Cost to Buy a Ranch in Texas?
Knowing the average price per acre is an excellent way to start estimating how much a Texas ranch will cost you. The size, and thus the price, of ranches in Texas, varies wildly. There are ranches for sale for under $500,000 that are only around 100 acres, while there are also ranches available for $3 million or more that are around 1,000 acres.
Unfortunately, the price of land in Texas has been rising steadily for the past several years. It seems unlikely that the price per acre will drop significantly anytime soon, and more likely that it will increase even further.
Remember, though, that Texas is an enormous state (it is bigger than many nations). The average price can vary quite a bit depending on where in the state you are buying land to start your ranch. For the best deals on ranch land, you will want to look in the South Plains, Panhandle, and West regions of Texas.
If you look in the Hill Country, Northeast, and South Texas the average price becomes significantly higher, reaching close to $6,000 per acre which is double the state’s average.
What Besides Acreage Affects the Price of a Ranch?
Still, there are several other things besides acreage that can affect the price of a ranch in Texas. Ranches with large up-to-date homes will cost more as well as ranches with extensive fishing and hunting capabilities and ranches with waterfront property. This is true for any home on the market. Ranches that already have extensive facilities and infrastructure can cost significantly more, hitting the $10 to 12 million mark.
Here is a list of things that can affect the price of a ranch:
- Acreage
- Location
- Condition of the home
- Extent of fishing and hunting
- Inclusion of additional facilities such as barns, corrals, fences, etc.
Just like everywhere else, raw land will typically cost you less acre to acre than a ranch with modern facilities and home. However, if you choose to go with an undeveloped ranch, you will need to set aside money for its development, and this can be a significant cost.
How Many Acres Do You Need to be Considered a Ranch?
As you have seen, acreage is probably the single greatest factor when calculating how much a ranch will cost. The difference between the price of a 4,000-acre and a 500-acre ranch is quite large. This naturally raises the question: what is the minimum acreage you have to own for your land to be considered a ranch?
Technically, there is no minimum requirement for your land to be considered ranchland. A ranch is defined not by size but by its operations. A ranch is dedicated to the raising of livestock such as sheep, cattle, or horses. Ranches tend to be large because maintaining these herds requires extensive pasture for grazing.
However, a ranch does not have to be upwards of a thousand acres to maintain small herds of cattle or sheep.
- In general, places that specialize in beef cattle need to be close to 500 acres to be considered a ranch.
- Family farms get more leniency with many considering 100 or 200 acres to be a ranch.
- To be designated a large ranch you need to have well over a thousand acres.
Still, there is nothing stopping anyone that raises livestock from calling themselves a ranch. There is no rule book, although there are those who would frown upon a 50-acre farm calling itself a ranch.
In terms of what you will find for sale, Texas ranches vary from over 50 acres to almost 5,000 acres. You can purchase a small family ranch or a sprawling wilderness depending on your funds and wishes.
What's the Difference Between a Ranch and a Farm?
Again, the size actually has nothing to do with the difference between a ranch and a farm. It is all about how you use your land. A farm is any land used for agriculture. A ranch is land used for the raising of livestock.
What does this mean? Technically, a ranch is a farm. Raising livestock is agriculture, so a ranch is more like a type of farm rather than something totally distinct. For clarity’s sake, the type of enterprises that we generally call farms specialize in growing produce more than livestock.
Essentially ranches have pastures and herds of livestock, while farmers have fields and rows of crops, but there are many places (especially family operations) that combine these two aspects. There are also other specialized farms besides ranches such as those devoted to dairy cows or pigs.
You can still grow crops, if you wish, on a ranch, and you can still have livestock on a farm. In modern days, many ranches are expanding their operations beyond just beef cattle. Because of this, you may find ranches for sale with additional operations beyond just grazing land.
What Kind of Expenses Will I Incur on a Ranch?
Unfortunately, the purchase price is not the only money you will be spending if you choose to buy a ranch. Maintaining that many acres of land comes with a hefty price.
As stated already in previous sections, ranches have livestock and taking care of livestock costs money. The land itself should provide food in the form of grazing, but you will need to hire ranch hands to move the herds for better grazing and to take care of their other needs.
There are lots of other things on the land that need to be maintained as well. These include:
- General repairs
- Keeping an eye on the local wildlife and habitats
- Maintaining the living quarters
A ranch is a huge responsibility. Many people hire a manager to deal with the daily running of a ranch, and their pay will be part of the costs.
Luckily most well-run ranches tend to pay for their own upkeep. Ranches make money through the sale of their livestock and other agricultural products they may produce. Some ranches also make money by leasing hunting and fishing rights on the ranch.
However, you must remember that it takes time for a ranch to become a money-making enterprise. You should expect your finances to take a hit with the maintenance of the ranch at first. Your ranch will never make any money if you do not invest in it and in people to work it, which will incur some expense. It is not unusual to be in the red for a while when you start out on your ranch, so do not get discouraged.
How Much Money Down Do I Need to Buy a Ranch?
Very few people have enough in the bank to buy a ranch outright. Loans are an option, but, just as with any real estate, a down payment will be required. How much will you need to put down to buy a ranch?
Unfortunately, even though a ranch often comes with a home, the main purchase is the land. Buying land usually requires a much larger down payment. A land loan can require as much as 30 percent of the purchase price as a down payment. For a million-dollar ranch, that is a $300,000 down payment!
The exact down payment depends on several factors. These include:
- The payment schedule for paying back the loan
- Collateral offered on the loan
- The type of buyer (those buying a ranch for recreation versus those buying for income and business)
Because the down payment can differ so much because of these factors, it is important that you look at multiple loan offers to find the down payment that works best for you.
Are There Banks that Loan Specifically for Ranch Purchases?
When it comes to loans and financing, there is not much distinction made between farming and ranching. Thus, you will not be looking specifically for ranch loans but for loans for farmland or agriculture.
There are banks that specialize in these types of loans. Here are some banks that specialize in financing buying agricultural land in Texas:
Remember that many other banks that do not necessarily specialize in land loans still offer them. You should always check around to see what kind of deal you can get.
You can also find options from places other than banks. There are many credit unions that offer loans specifically for buying agricultural land. Sometimes these non-bank options offer lower down payments, so they may be worth checking out for many aspiring ranch owners. Examples of these include:
There are many more ways to get a loan for buying a ranch in Texas. Checking out what is available in the area you want to buy and considering what you need from the loan in terms of down payment, payment schedule, and interest are great ways to start narrowing down your options.
Final Thoughts
Buying a Texas ranch is not cheap by any means. Still, owning your own tract of wide-open space and stunning nature is worth it for many ranch owners, and a profitable ranch can come to pay for itself over time.
There are many options when it comes to both size and price with Texas ranches, and there are almost as many different places to get financing for your purchase. If owning a Texas ranch is your dream, start searching today!
