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Cost of South Dakota Land Ownership vs. Outfitter Hunt

By: Chris Hitzeman – UGUIDE South Dakota Pheasant Hunting
Published: March 5, 2010

Some of you may have read the original article that was published on this topic back in February 2007. This article is a follow-up to that article since some things have changed in the market as far as land prices and knowledge about the outfitter industry.

If you haven’t read the original article you may wish to start there. Here is the link:

As with the original comparison, this article also details the cost comparison of 2 pheasant hunting dreams. One of owning and managing land in the prime pheasant country of South Dakota and the other of experiencing the next best thing: An outfitted wild bird self-guided pheasant hunt.

Well I am going to assume you have reviewed the previous article and so we'll get right into the details. I talked to some South Dakota realty experts at Pheasants Forever Pheasant Fest in Des Moines in February of 2010. Through the discussion, I discovered land values in the prime pheasant areas in South Dakota ranged from $1,500/acre up to as high as $6,000 as you head to the east. For estimating purposes we will use a conservative $2,500/acre average land price for our example. In addition we will use a 2,000 acre purchase since that is what most hunters I talk to require when booking a pheasant hunt for 4 nights lodging and 3 days hunting. Most would suggest there would not be enough hunting on less than 2,000 acres for 3 days.

Some other assumptions about the purchase is that it is already setup for hunting having 25% of total acres (500) setup for hunting and the rest in cash rent farmable acres (1500). Of the 500 acres we can assume that maybe 200 would be in CRP, 100 acres in food plots and the rest in sloughs, trees and other fallow acres. We will just assume that the property happens to come with a nice lodging facility that will comfortably lodge you and/or your hunters. This would run around $100,000, but for this example, it is included in the $2,500/acre value/price.

First we will get the land purchased and then we will go into cash flow (how to get it paid for).

So we are purchasing 2,000 acres of land at $2,500/acre purchase price. A typical land deal will require 20% down and 20 year amortization with interest rate of 7%.

The Purchase:
2000 acres @ $2500/acre = $5,000,000
20% Down Payment Required = $1,000,000 (Cash)
Balance on 20 year mortgage @ 7% interest = $4,000,000
Annual Mortgage Payment = $378,000
Annual Property Taxes = $30,000 (2500 X $12)
Total Annual PITI = $408,000

The Income: (assumes cash rent or CRP of $100/acre. Relates to land price)
Cash Rent on 1500 acres @ $100/acre = $150,000
200 acres of CRP @ $100/acre = $20,000
10 Groups of 6 hunters per week @ $695/person average = $41,700
Total Annual Income = $211,700

The Expenses (annual):
100 Food Plot Acres – Fertilizer/Seed/Labor/Rent Loss @ $100 acre = $10,000
Water and Electric = $2000
Labor or equipment to manage food plots, CRP, other Farm related = $10,000
Property and Liability Insurance = $3,000
Business expenses for getting 10 groups of hunters per year = $12,500
Total Annual Expenses years = $17,520

The Cash Flow:
Annual Income = $211,700
Annual Expenses including PITI = ($425,520)
Long-term Annual Cash Flow = ($213,820)

OK, with all the assumptions in place for a typical South Dakota native wild pheasant hunting ranch, here’s how the cost of ownership numbers shake out: $1,000,000 to take it down and roughly $213,820 in annual expenses or negative cash flow.

Now of course this doesn’t factor in tax breaks, investment appreciation, etc. It also doesn’t capture all the true expenses either.

Simply show this to your wife and she will think you are really a good shopper when you book that UGUIDE South Dakota Pheasant Hunt.

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