Investing in Texas can often generate returns in the future even when you do not develop the property you own. Land holds and often increase in value because it is a finite resource.
Your Texas land investment can generate additional income for those who decide to not develop and make improvements in the near future. Many folks, upon investing, ask themselves “what now” or “how can I generate income from my investment”.
Currently there exist a lot of uncertainty in our economy. Your land investment can be a hedge against some of these economic circumstances.
Land leases allow Texas landowners to earn income by leasing their property for purposes such as ranching/farming, minerals, hunting, and other assignments. Leases are agreements between the landowner and a lessee and are legal binding contracts. The benefit to the Landowner is income and the party leasing the land gains access to the land for a specific defined purpose for a specific period of time.
POSSIBLE LEASE OPTIONS AVAILABLE TO TEXAS LANDOWNERS:
AGRICULTURAL LEASE:For generations landowners have leased farm and ranch land, which can benefit both the landowner and the lessee. These leases provide the landowner with an additional income source. It also contributes to the land remaining in agricultural production to continue exemption status. For the leaseholder it can allow them to expand their operation without investing in additional land. Leasing land provides new operators the opportunity to start a farming/ranching operation.
Leasing land to another person for grazing can benefit both the landowner and the lessee. It allows an additional source of income for the landowner and permits the lessee to run livestock on land without incurring the long-term debt associated with purchas- ing property.
FORAGE PRODUCUTION LEASE: Production of grasses that are grow exclusively to be consumed by grazing animals, because of the various geography in Texas many varieties of forages can be grown and harvested. There are many possible opportunities to lease a portion of your land to others that grow and sell forges, the most common is hay.
HUNTING LEASE: There is substantial demand by individuals seeking leases to hunt on Texas land. There are over 1,000,000 hunting licenses issued every year. Leasing your land to hunters can be a favourable option for additional income generation. NOTE: Landowners leasing for hunting must obtain a Hunting Lease License from Texas Parks and Wildlife.
MINERAL LEASE: These leases allow the lessees the right to extract mineral from your land. Most common leases in Texas are for oil and gas exploration. Landowners receive royalties. These leases allow lessee the right to explore and remove minerals from the land, this possible can have an impact on the surface of the property. Oil and gas leases can be very complicated; a land owner should seek out legal advice prior to make sure they are protected.
AIR RIGHT LEASE: Air rights means the vertical space that extends about a landowner’s property. The landowner holds the rights to the land and the airspace above it – this can offer a substantial income opportunity. The property owner must take into account air traffic and the interest of neighbors, if a structure overhangs into a neighbor’s property, they have the right to remove it. The most common utilization of air space in rural Texas are wind farms, cell towers, and radar structures.
SOLAR LAND LEASE: Development of solar energy in Texas is in the early stages. Solar lease usually are established for 20 to 30 years. Many times, because it requires the installation of continuous positioned panels, the use of the land surface is impeded. Keep in mind that the lease payment will usually be the only income generated for the property leased.
CELL TOWER LEASES: Cell tower leases can be a lucrative way for landowners to generate income. Lease rates vary significantly based on location and demand. Typical leases are long-term (20+ years) and may restrict future development of landowner’s property.
Important Considerations Before Leasing Your Land
Before entering into any lease agreement, landowners should:
Thoroughly understand the lease terms and duration.
Review local zoning laws and state regulations.
Clearly define the allowable uses of the land in the lease.
Identify who is responsible for ongoing maintenance.
Document the condition of the property before the lease starts.
Understand all financial obligations and tax implications.
Ensure terms are in place for the land to be restored and all equipment/structures removed after the lease ends.
Always consult with a qualified Texas land attorney or real estate professional before signing any lease. Their guidance ensures that your rights and long-term interests are fully protected.
Ranch Connection is a full service Land and Ranch Real Estate Brokerage established in 1984.
If we can assist you with selling your ranch/land please contact us at cynthia@ranchconnection.com
Please visit our website at www.ranchconnection.com
By: Dave Norris/MARKETING – davenorris@ranchconnection.com
