Ranch Investor Podcast

The Value of Stories: Uncovering the Truth Behind Land Listings

• Ranch Investors • Season 7 • Episode 8

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Join our host, Colter DeVries, and land appraiser, Andy Rahn, as they talk about the nuances of the Montana farm and ranch market. From tax day reflections to market dynamics and seller psychology, this podcast episode is a deep dive into the challenges and intricacies of buying and selling rural properties in the Big Sky Country. Tune in for a candid conversation filled with anecdotes, market analysis, and humorous observations about Montana real estate.

#MontanaRanch #MontanaRealEstate #RanchLand #RanchLifestyle

Andy Rahn:

That fantasy that whatever you pulled out of your attic or basement is going to be this home run, and don't you think that's basically the phenomenon that sellers in Montana have?

Colter DeVries:

I'm Colter DeVries owner of Ranch Investor Advisory and Brokerage Services. I'm an accredited land consultant with the Realtor Land Institute and proud member of ASFMRA.

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Colter DeVries:

Andy Rahn, hello, welcome back. Thanks shoot 2024.

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I got to go.

Colter DeVries:

Go file an extension. Yeah, right, right, that's a free loan from the government oh, okay that's a zero interest rate loan.

Andy Rahn:

So can you just continually roll them over?

Colter DeVries:

Yeah, just, just, yeah, uh, refinance your, your tax due, right, right, re-amortize that for me. I'll pay it next year, I'll get you, I'm good for it, right, right till I die. Then you can come after everything I I've bought without paying taxes on everything I don't have yeah, everything I've transferred out before death. Well, yeah, April um 2024. What's going on in the ranch market?

Andy Rahn:

Well, I mapped for new ranches today so I've been kind of waiting, because usually spring, you know, we Green up, green on the fields, and snow in the mountains. a ramp up, because it's coming into ideal showing time right.

Colter DeVries:

That's what us brokers like to tell everyone. Yeah, yeah get it signed. Now. Get the listing agreement signed now. It's best showing season coming up green grass shots yeah, I gotta get my photography out there waiting to see.

Andy Rahn:

You know if we're gonna see some inventory rebuild and I mean maybe barely, but uh, still kicking around just barely over 300 listings, it'll the inventory will rebuild.

Colter DeVries:

As we continue to see the uh spread in bid ask the bid price and the ask price the spread, the difference is just widening.

Andy Rahn:

I have seen a lot of high price listings. Uh, come on the market. I'm, you know, just surprised at the pricing yeah, and the buyers aren't there.

Colter DeVries:

Yeah, and that's that's gonna. That's gonna reduce the conversion factor, conversion rate of properties leaving the market. So supply in the farm and ranch will increase.

Andy Rahn:

Well, and I haven't had a chance to follow up with these brokers and you know, not all brokers want to talk to you about this, but just those pricing, you know. I just you wonder if it's seller directed. I mean usually is um, especially when it's really high, you know, and it's just got to. I mean it usually is, um, especially when it's really high, you know, and it's just gotta be the classic. You know, Montana land seller that's got their price and but not very motivated past that.

Colter DeVries:

Oh, absolutely. I mean I made an offer on one listing in Eastern Montana recently, recently, and the offer was 50 of asking price. We were at a just over a two cap on that. How we came up with the value and the property was better. In my opinion. It was better attributed as a cap valuation because it was kind of an investor type property. There's a lot to it is. It's almost more industrial than it was agriculture. Um, I mean, what kind of an investor type property there's a lot to it is. It's almost more industrial than it was agriculture.

Andy Rahn:

Um, I mean, what kind of industry? Any timber?

Colter DeVries:

lot, just a lot of pumping costs a lot, a lot of pumping, a lot of irrigated farmland gotcha and so in my opinion, that's that plays well to institutional type investors. Cash flow flow type people are you're not going to go out there and play cowboy on several thousand irrigated acres?

Andy Rahn:

When it's costing you a thousand dollars a month to water.

Colter DeVries:

Oh, yeah, $10,000 a month, 12, 13, $14,000 a month. So, yeah, I put a cap rate value on. It came up, given what I thought, you know, just over a two cap, which I was, like you know the market that this is actually probably higher than what the market requires as a risk adjustment because of all the pumping. So really it probably should have been more like a three cap. So I thought that our you know our price offer of 50 of asking price was more than reasonable and we were told to pound sand yeah, yeah, I'm.

Andy Rahn:

I'm curious actually about that. I just recently a buddy of mine is considering making an offer not, it's not quite as low as 50, but it's close. And I am thinking you know why, bother and don't you run the risk of, you know, maybe even pissing off your seller and, you know, is it worth making an ask that low? I mean, you went through it.

Colter DeVries:

I mean if it's been on the market a while. I tend to believe that, yeah, it's worth making that offer because you're not the first guy to beat them up on price. You never want to be the first, second or third guy to beat them up on price. You want to be the fourth.

Andy Rahn:

Right, right, I will say I've had brokers selling. Brokers be a bit encouraging about it because they want their sellers to be beat up a little bit, because they know they need it, yeah, but they can't do it, or they've tried, you know and we want you know, we give them a CMA.

Colter DeVries:

And then when the sellers say, oh no, double it put it on the market take that CMA, double it and put it on the market. You, you know, then, when offers come in that were our BPO was at least a broker's price opinion, then it's confirmation right.

Andy Rahn:

This is what we told you and we were being factual and forthright with you back when I had my license, the last listing I had. We only got two offers in two years and they were both the exact same price and they were both half of what the list was. And I remember the seller at the kitchen table saying I just don't understand it, I just don't why. Why that number?

Andy Rahn:

Colter Devries: Because the buyer's done their homework, and they were. They weren't connected, they didn't, they didn't have access to each other's offers. So they were two independent offers, exact same price, half price, a list and the seller just couldn't wrap her brain around what was going on.

Colter DeVries:

That is funny Because farm and ranch is different than other areas of real estate, right, yeah, and I've been in the position of trying to buy a house right now, which is not fun. Fortunately, we have one under contract. But the first four offers I wrote I was off quite a bit. I was off 20% of the asking price, actually, on average. Yeah, I came in 20% less than asking price and that's because 2023 was weak in residential. Yeah, softened quite a bit and my theory was that interest rates are going to stay the same.

Colter DeVries:

Um, inflation's not going to continue ticking up. Although I'm wrong there, we're starting to see that it is ticking up again because the B illings residential market. We're back into multiple offer situations. I did write a full price offer on a house we really liked and there were seven higher than mine At full price yes, interesting, which was a funny situation because the listing agent she didn't have to, but she came back and she's a coulter. There's going to be seven more offers coming in and I said, bullshit, I'm not making an offer above asking price in this market and we really love the house.

Andy Rahn:

But we found one that works well. I'm just continually surprised how and I've been kind of thinking about the, the best language on this but how divorced sellers are from market phenomenon. So remember the presentation I gave that I give every year in February, and the most surprising thing that I came up with as I was, you know, going through all my data on that was showing that going into 20, the end of 2020, 2021, 22 which were record-setting years in the Montana land market like I'm not sure we'll see that again in our lifetime kind of kind of deal there was no bump in supply. There was no. I mean, you know, we know the story now. We burnt, we burned through inventory and that's where we're still at as a you know, as a depressed inventory situation, because we burned through inventory but there was no bump in the rate or the number of listings. No, I mean, what market doesn't have that big of an increase in demand and have a corresponding reaction with supply?

Colter DeVries:

However, there was all that off- market activity.

Andy Rahn:

Yes, that's true, but uh, I still, I, still, I still think, though it the data shows that there's a surprising disconnect between market forces and and the sellers in Montana. Oh, absolutely, I mean, I think, I mean you can comment on this, surely you know. I just think, I think when uh sellers go to market, it's largely internal factors that drive that. Families are ready. You know, whatever, you know what I mean. Like I, it's rare, I don't know. Have you ever heard, you know, someone say boy, you know, I've been watching the market closely and I, I think I you, now's the time to sell.

Andy Rahn:

You know, it seems like they get divorced they get you know the the breaking point if it's, if we're talking about, you know, old multifamily ownerships that finally hit the market. Usually it's some kind of breaking point within the family kind of thing. You know the offsite siblings have had it.

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Yeah.

Andy Rahn:

Forced to sale. Or you know mom dies or dad dies and that's it, or you know stuff like that oh, I can.

Colter DeVries:

I can relate personally. We're kind of going through that right now with my family and uh, part of the ranch and I was. I was drawn up the cma and I, you know, trying to tell all my brothers and my dad what I think it's worth and uh, then I got to thinking about it as someone who has an interest in this, I'm a part owner of that yeah I was like, well, bullshit, if it you know, the market's telling me it's worth that, but I would never sell it for that plus, your dad's looking at you and he's like didn't I wipe that kid's ass, just like yeah last week.

Colter DeVries:

Yeah, why should I take his opinion, um, when we've got, you know, a lot of implications of wealth and legacy, dynasty and all the years of hard work?

Andy Rahn:

On your opinion yeah, that's what I think really comes down to. If we're talking about, like your family, multi-generational ownerships, as you know, it's that's the last asset or it's accumulation. It's about, you know, so, and I was going to say this earlier like it never ceases to amaze me when you're talking about ag operators because their sophistication around markets with their commodities or equipment or is like unbelievable. Right, I mean they are market, they could have some of these guys could have p, should have an honorary PhD, and they do but then land, it just all goes out the window and you try to talk to them about supply and demand or what the market's doing, and they just look at you like you're the biggest idiot.

Colter DeVries:

Well, and going back to my experience with residential right now is yeah, so I was writing offers at 80% asking price and one of the agents she goes coulter. I know that you're a farm and ranch guy, that this isn't your area of expertise, but I know that you guys like negotiate over huge differences, millions of dollars in a huge spread. Bid ask, spread 40, 50. That's not residential. Your offer is not going to work. You can't come in and make an offer 80 of asking price on a home.

Andy Rahn:

That's so funny hearing you say that a residential broker talk, because I feel like don't we do that? In the opposite, don't we uh roll our eyes about residential brokers like they don't know shit? You know, they got this simpler market and you don't understand. You know?

Colter DeVries:

Yeah like well, and her point was that they've got it more dialed in. I would I wouldn't argue with that liquidity is quicker, I would say, because they price things more accurately.

Andy Rahn:

I would call it a higher functioning market. A better functioning market there's. There's more, certainly you know, higher volume and more standardized product. It's more of a commodity more comps, yep you know, I mean land in Montana is just doesn't fit, you know, as a commodity.

Colter DeVries:

No, no, no replacement so it's I.

Andy Rahn:

I struggle with the term market sometimes. Sometimes I'm like I'm not, I don't know, calling this a market quite. Well, you know what it reminds me of is I've been getting heavy into Antiques Roadshow on PBS. Is this your blow off steam?

Colter DeVries:

Is this your like? You come home and tell the wife and kids to shut up and drink your your cocktail and watch it, yeah, yeah. So since I'm a millennial, I don't drink, because you know that's that's the new thing is millennials, oh yeah, yeah, are drinking mocktails and yeah they don't have as much sex, they don't drink.

Andy Rahn:

What's the what's? Yeah, yeah, it seems like things are going downhill to me, but what do I know?

Colter DeVries:

Do they have any fun at all you're not drinking and having sex you guys are a bunch of stick in the mud, right, I thought it's supposed to go the other way around yeah, so that's.

Colter DeVries:

I come home, turn on a little uh, Antiques Road show on PBS and my wife watches the Real Housewives of Salt Lake City and drinks fake wine, and I have just the millennial dream, yeah, and I have my uh, decaffeinated coffee, yep, and uh, you know what? The wide range of things that come across there from jewelry, jewelry, art, furniture, antiques, historical relics like Chinese, pre-era Chinese pottery All these things. There is a market for them, right, right, and you do have the appraiser who comes and gives you his opinion, but you just don't know what it's worth until it goes to the auction block. And all of these. What I've noticed is a lot of what they feature, these pieces. You should watch this, you should get into some Antiques Roadshow.

Andy Rahn:

You know I got to admit I have watched a little bit of is it Pawn Stars kind?

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Of a similar deal.

Andy Rahn:

Yeah, yeah, where crazy characters come in and demand that they sell their piece of crap.

Colter DeVries:

Know that their jewelry is real when it's not, and all this stuff. These aren't, these aren't crazy characters, these are every man's on the antiques isn't part of the appeal of that deal.

Andy Rahn:

I mean, some of it's, some, some you know it's junk, but it isn't the whole. It's almost like a lottery thing, right, like some yes some funky little thing that you know has been in your family's attic for generations. You pull out and turns out it's a multi-million dollar and they and they're surprised and yes it's like winning the lottery. Isn't that kind of the?

Colter DeVries:

Premise of the? Yeah, because like a side table, a federalist side table from the 1700s. I saw yesterday he valued at 250, 000 and then they updated. They thought that today it was worth 600,000 and I was like for a side table. What did Thomas Jefferson like? Sign the declaration of independence on this like.

Andy Rahn:

What is?

Colter DeVries:

Spill some scotch or something. Yeah, and that's part of the thing is the story behind these pieces. So everyone has a story and a lot of times the appraiser will say, well, you know, actually this is worth more. If you can, if you can verify and prove that story, cooperate, if someone can do that what you're telling me.

Andy Rahn:

I took an appraisal course and there was an art appraiser in there and he told the story about an Andy Warhol uh print. Uh, he was screwing around with an intern and uh, she tried to. She tried to shoot him and the bullet went through the print and it's not not one of his best pieces of art but it's one of his most valuable because of that story so, there, you own the story.

Colter DeVries:

That's, yeah, you own the right to tell that story. That's like a? Um, it's like a copyright, it's like a, a trade secret, um, artistic rights. Well, that's, that's what you're buying. You're not actually buying the damn thing, right, you're? You're buying the, uh, artistic creation of the story behind it.

Andy Rahn:

Well, now you're making me think. You know all the listings I look at and map as part of Montana land source, how uh poorly sometimes that is marketed. I mean, obviously, uh, brokers are more and more leaning into that all the time, I guess, I would say, and sometimes it's just pretty eye rolly, you know, but other times I've done some eye roll.

Andy Rahn:

Yeah, I wasn't mentioning any names but sometimes it's like Whoa, you know this, this place really does have a pretty cool story and it's and it's presented well and that kind of stuff, you know. But I mean, that's the dream, isn't that part of the dream? The cow play cowboy dream is you know some historical event happened there or you know whatever there's there's, there's your own piece of history, you own a piece of the West.

Colter DeVries:

Yeah, absolutely yeah, you own a piece of the legacy there. And then some of those stories talk about the market. Like Jim Espy, he sold a ranch that was near Fort Bighorn, which Fort Bighorn was paramount to the frontier of the west in Montana, and John Colter carved his name into some sandstone on that ranch. He sold either that or Jim. I have a funny story about something like that. Yeah, we can get to one later.

Andy Rahn:

Like that what about the property where John Dutton was shot? Is that going to? Is that going to?

Colter DeVries:

But the thing like John Colter, yeah's historical, it's really cool, it's super unique probably not going to influence the value all that much. Uh, because the the market for john coulter um fans is pretty limited pretty small right?

Andy Rahn:

I bet not.

Colter DeVries:

A whole lot of them have millions of dollars in their back pocket for a ranch, no, no, I mean well, and his name, you know, doesn't carry that of Lewis and Clark.

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If it was a.

Colter DeVries:

Lewis and Clark signature. It'd be worth a lot more on the ranch. But yeah, John Colter, you know that's a more nuanced historian. History buff, Sure sure, John Colter, you know that's a more nuanced historian. Uh, history buff, sure. Sure it's a limited market, there's that. I'm sure that aspect didn't influence Jim's sale any more than one percent, right, right well, and there, you know, we've seen things.

Andy Rahn:

Uh, for some reason it makes me think of. I've appraised a couple places with dinosaur bones and it's like and this and the whoever you know I'm working for wants a high value in these cases. And talking up the value of the dinosaur bones, I remember I did a project in Northern Montana and a, a ranch with a ton of dinosaur bones and the, the buyer bought it for the bones, but he, he paid market price for it was mostly a dry cropland place with a whole bunch of um bluffs, a whole bunch of um breaks, and the breaks especially is where the bones were exposed. But on, you know, the, the plateau, the tops were all cropland and it was like I don't know, back back then it was like 700 an acre, you know, 615 acres, 700 an acre cropland. That's what he bought it for.

Andy Rahn:

Uh, so you know, like there was no evidence in the market that bones brought any more than yes than wheat and and Indian artifacts like arrowheads.

Colter DeVries:

So we're going to bring up this story. I I had a seller who was just pumping his property to me, just telling me you know, there used to be Indian battles out here. And and, uh, you gotta, you gotta put that in your brochure, you gotta feature that there's been Indian battles. And I was like, well, okay, going back to like, uh, antiques, Antiques Roadshow yeah can you verify this?

Colter DeVries:

Can we? Can someone corroborate your story? Um, let's look into it, let's have you know. Let's, let's provide proof. Rather than sell blue sky. Let's not sell too much blue sky here. Yeah, yeah and uh, he's like well, that's your job, you gotta look into, you, gotta find that out. He's like, but what I, what I'm gonna do is I'm gonna come, I'm gonna put a bunch of stones in a circle, tp rings. We could do that, right, and I was like I'd rather you didn't. Now that you told me right right don't.

Colter DeVries:

Don't do that now, because I'm not. We're going to just drive by it and someone's going to see a bunch of stones in a circle and I'm not going to put my reputation by saying, yeah, those are teepee rings you know it's back to the old.

Andy Rahn:

What's it called? The rent, old, uh, Antiques Roadshow? Yeah, I mean that fantasy that whatever you pulled out of your attic or basement is going to be this home run. And don't you think that's basically the phenomenon that sellers in Montana have.

Andy Rahn:

You know there have, even though the actual number of times that you know those kinds of these home runs or whatever get hit are much lower than people actually think. Yes, but they get out or they get, they get exaggerated. But so every seller thinks they've got a Thomas Jefferson. Yes, and you just haven't put enough ads in the Wall Street Journal. Is the problem? Yeah, as the broker.

Colter DeVries:

And another thing with that uh, home run, quote unquote I think that that can be normalized or it can be. It's kind of a relative issue. So when they think they're hitting a home run, if they go back and they do the compounded annual growth rate since they bought the ranch and say the 40s or 50s or 30, you know, whenever their great grandpa bought it, um, their compounded annual growth rate might turn out to be 5%, right, right, over the that many years. Um, it's, it's just a big boon in their lifetime. But over the longterm 5%, yeah, that's that's. It exceeds the normal of 3%, right?

Andy Rahn:

Doesn't mean beat the equities market, though.

Colter DeVries:

Yeah, and, and that's why I'm saying it can be normalized in a sense that this home run isn't quite the home run you think it is, cause it's actually within a reasonable range of time, value money adjusted.

Andy Rahn:

Well, it reminds me. I've known of quite a few properties that, yeah, had a really stubborn, obstinate seller and generally the market does eventually catch. You know, they might take 10 years, or because there's there's properties on the market right now that have been on the on the market for 10 years, and you know, and then it happens and the seller is like, see, I held out and I got my price. But you look at the time value of money and the opportunity costs that they foregoed and that and I've had this conversation trying to get sellers to be more. And it's funny too, right, because you know we've been in very favorable market conditions. You're trying to convince them to sell in a favorable market condition for a good price and they, you know they want to fight with you and then dink around for years to tell they finally get it sold. But, yeah, the lost opportunity they had at that time.

Colter DeVries:

Yep, which probably looks like a break even.

Andy Rahn:

Yeah.

Colter DeVries:

Yeah, absolutely. But in their minds I held, held out. I held out strong and I got what I asked for. Yeah, I can go to the coffee shop with my head held high and brag about.

Andy Rahn:

I got what I asked for yeah, yeah, you know I'm flashing back to the episode you had with dallas, the owner of um uh ranching for profit, yes, and his comments you guys were talking about, you know a little bit bemoaning the loss of the multi-generational you know uh family operator, but he made a comment about how God awful, uh inefficient some of those places are, and especially the ones that sell, and that that actually really resonated with me. Um, and I think there's something to do with that. When it comes time to trade too, right, just not, I don't know if efficient is the right word, but they're not approaching the sale of it all that Analytical, yeah, I mean yeah, the old generational operator running his ranch doesn't use KPIs.

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Yeah.

Colter DeVries:

They're not. They're not doing balance sheet analysis and cashflow analysis. And then, when it comes to analyzing that asset, yeah, um, they're not doing that either.

Andy Rahn:

You know that reminds me of. There used to be ever remember, Phillips uh, office supply on main street Bozeman. Is that too old for you? I believe so, yeah, it was this old and it was it, uh, you know, closed. Right, that was the news. I mean, I've been there forever, downtown store, right, and I was somewhere having you know conversation about this. And some guy says you mean, that place that's been trying to go out of business for 20 years, like you'd go. You'd go to buy a pencil there and, as likely as not, the eraser would be rock hard when you went to go right.

Andy Rahn:

So it's like well, you bemoan whatever a local, you know historical place, but it's like these, you know these places gotta, if they're not efficient, if they're not, you know, producing um food or fiber at an efficient rate, if they're not supporting people on the place, you know yeah, why do we need to support lifestyles?

Colter DeVries:

Why is that noble right?

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Why is?

Colter DeVries:

There more inherent value to people having a lifestyle that they desire and that they chose and that they are wanting to pursue voluntarily, on their own accord.

Andy Rahn:

It is pretty sad when you show up in a place and the place is pretty beat to death. And now that I'm kind of thinking about this and talking about it, sometimes the people look a little bit beat to death.

Colter DeVries:

Yeah, for sure. Hey, I'm worn down and you know it's a. I can attest to that. That's personal.

Andy Rahn:

Yeah, yeah. And I mean we don't want them all to. We want to preserve culture, we want to preserve all that, but there's got to be a middle. I mean that's why the what's the outfit called?

Colter DeVries:

Ranch of Profit.

Andy Rahn:

Stuff like that is so great actually trying to help people potentially make it.

Colter DeVries:

Well, we're getting into campaign season and we have the number one senate race in the United States. Is that right?

Andy Rahn:

Yeah, well, I guess that's it's been. That race has been that way many times yep, I mean going back to Tester and Burns. Right, didn't Tester and Burns? Yeah?

Colter DeVries:

First break that well, and and then and then Danes and the former governor. Bullock yeah so that the Montana seat has always been viewed as a contested one to swing the Senate. Well, not always, but in the last 16 years, right, right, because they viewed Montana as a purple state, which has been right historically, yeah, and so now, um, you know, we're going to have the most funded senate race in the nation, the highest dollar senate race, which brings out all the Carhartt jackets, right American flags, guns.

Colter DeVries:

Carhartt jackets uh, cowboys, farmers, John Deere tractor, yep and um, one one of the issues that keeps coming up on. You know both sides, they, they spin it, they pitch it how they want, because they they want to be viewed as the populist right, right that they're part of the good yep, yep and uh, it's this idea of protecting the family farmer and and uh, supporting the family farmer.

Colter DeVries:

And I, I see a lot of this. I'm like you know that that's kind of bullshit to me, because a lot of these, a lot of these people, that sounds elitist with your decaf coffee over there.

Andy Rahn:

Yeah, people are listening to this.

Colter DeVries:

Be like god it's culture or progressive in San Francisco. Which podcast am I on?

Colter DeVries:

Um, but they one, they, they chose to be farmers and ranchers and a lot of it is lifestyle. They're not driven by KPIs and, like you said, efficiencies and economies. And then two, what I've seen from my network, my peers and just my own experience being in it, a lot of these people, it's a trait, it's a skill set, they're good at that. You're talking about politicians, family farmers, family farmers yeah, family farmers, and they're to me. I'm wondering, sitting here, wondering well, the rest of us? We have to be adaptable, right, we have to change. When, when our industry goes to, when my business goes to, I have to adapt. I have to find something else to do, I have to pick up a new skill, a new trade. Why don't they?

Andy Rahn:

Oh yeah. Well, it's one of the most subsidized industries in the country, you know ag yeah, oh yeah absolutely, you know, you know, yeah, speaking of political season and whatnot, well, and of course, one of the issues is, uh, foreign ownership of of land right.

Andy Rahn:

What a bullshit issue we had the chinese balloon, you know, and everything like that. I, yeah, I, I feel like it's trying to put toothpaste back in a tube and maybe, maybe you remember this or can correct me, didn't. So you know, we've been in desperate need of processing facilities. You know, we, we got really in this uh zone where we're producing, you know, all these calves, the world's best calves, and shipping them to other places to get processed. We lost all our processing and there was a multimillion dollar big processing unit proposed for mile city and it was Chinese money, jdcom and the Chinese. They came out and the stock growers were, were all about it. You, you know. Now, all of a sudden, foreign ownership is like this political issue and everybody's worked up about it, and you know they keep running those ads.

Andy Rahn:

I'm going to stop China from buying us farmland well, and the the, the toothpaste out of the tube for me is, I mean, we have a, we have a free market. We don't? We don't, I mean aside from, like you know, criminals or something, we don't, uh, ask people where their money comes from. I mean, we take money, right, so we have a free, open market, yeah, um, but now all of a sudden, you know, for political expediency, we want to and and we're and it's a globalized society, globalized world.

Colter DeVries:

It's a complete bullshit issue. Because one, it's not a problem, yeah. And number two how are you going to limit the ccp from buying us farmland without limiting everyone else? Well, you know who?

Andy Rahn:

Um, I actually went to a presentation that MSU put on on this and you know who, what, what foreign well, first of all, the biggest you know the most. The most foreign foreign well, first of all, the biggest you know the most the most foreign money is coming from Canada.

Colter DeVries:

Canada the Ontario teachers pension fund.

Andy Rahn:

Yeah, I mean the, the, the amount of bad actors China, Venezuela, Iran, uh Iran and South Korea or North Korea, you know is is minimal. First of all, and you know what most of the foreign uh entities are buying is energy, um, energy lands, lands for wind leases and oil leases, and that's the biggest target, is energy.

Colter DeVries:

Yeah, why take $10 million of your sovereign wealth and turn it into $7 million? Yeah, no, it's. If I were. So they're like well, the Chinese bought farmland near an air force base in north Dakota, all right, okay. Well, if I was the CCP with nefarious intentions, I wouldn't just come out as the CCP and buy farmland. I would would have a trust in Switzerland that owns an LLC in the Netherlands that owns an S Corp in Ireland that also is part of a trust in the Cayman Islands and that trust would buy the land. So maybe you need to open up a consulting firm.

Colter DeVries:

That sounds like.

Andy Rahn:

Oh, what the hell is it called when you sell out your own country? Traitorism?

Colter DeVries:

Well yeah, traitor but but there there's a, there's a legitimate term for that when you sell out, yeah, turncoat?

Andy Rahn:

I don't know Benedict Arnold right, right, yeah, I find that sedition.

Colter DeVries:

Uh, maybe, yeah I didn't pay attention. I think it's sedition. Yeah, that sounds right, because, uh, the other the other word I often confuse it with is uh, what the hell they? They try to call people like me on January, insurrectionists, insurrectionists. Yeah, yeah, so to consult for the CCP on buying farmland, I'd be a seditionist.

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Yeah.

Colter DeVries:

Not, not, not an insurrectionist like I was in Washington on January 6th.

Andy Rahn:

Are they coming for you?

Colter DeVries:

Next I'm going to get a knock on the door. So I did once say I'd try to keep this nonpolitical. See how that went. What else is going on since you?

Andy Rahn:

Last came. You know it's funny. I feel like I got to tell a Bozeman story. I had a nice across- state road trip. I went to Butte, I went to Missoula. I have family in Missoula and you know, met with some folks out there and had a great time, felt like just like a second hometown out there. I mean, I did my freshman year of college out there and, like I said, have family out there and you know, just had one of these trips where you just love Montana and open road and all that kind of stuff. But then I come back to Bozeman and I'll remind people I lived in Bozeman for about 17 years, up till about six years ago, and I decided to check out the top of the armory the nine- story.

Colter DeVries:

Yeah, I went and had a drink up there.

Andy Rahn:

Yeah, I was going to have a drink at the armory non-alcoholic of course of boredom or loneliness, until I sat at the top of the armory and had an $18 old fashioned and uh was treated with almost complete uh disinterest and disdain from the Uber hot bartender. Yeah, it's, it's a whole other culture, isn't it? Yeah, and you know, like I said, I I lived there for 17 years. You know I think I'd have some some uh clout. Yeah, do you know who I am? You need to go to the American Eagle for that. Yeah, it was funny. I was telling some friends, complaining to friends about it, and they were like well, obviously you went to the wrong place. The hop is still still there for you buddy yeah, the legion.

Andy Rahn:

Well, it was funny because I stepped foot in the Rhino at Missoula and I didn't even tend to stop, didn't even tend to have a drink, and three hours I'm chatting up with the whole bar. Everybody knows somebody, that knows somebody. You know, classic old Montana.

Colter DeVries:

The Rhino was the bar I went to when I went to school there in Missoula. Yeah, yeah, well, geez. So now we're talking about these cultural differences. Coming to Montana, I did go to. I stopped through Missoula the other day too and went to a coffee shop where the coffee stirrers were pasta sticks more sustainable. Oh, yeah, yeah. And then I went into the bathroom. They had a list of local events and only in Missoula, in the men's, or it wasn't a men's bathroom, it was women's. Either it was either, either either anything were you confused or you was it.

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I was a little scared to go in like am I gonna look like a pedo if? I get this wrong.

Colter DeVries:

What's the answer here? I don't know what these signs are, um, but yeah, on on the bathroom wall was uh an advertisement for West African dance classes in Missoula, Montana and.

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I was like boy that is.

Colter DeVries:

That is very different than, uh, what I see in Ekalaka, Montana.

Andy Rahn:

Yeah, you know I was. I spent quite a bit of time just walking around downtown Missoula cause I hadn't been in a while, and I definitely saw some of the same Bozeman type stuff. You know, high-end shops and shiny people and stuff. But you know, uh, I think I feel like Missoula is still putting up something of a fight. You know it's just it's the liberal, for maybe people that don't know out of state it's. It's where the liberal arts school is, University of Montana, so it's always been the hippie capital of Montana, you know, for a long time. And, uh, social consciousness has been, or whatever social justice, yeah, right, that's been its deal.

Andy Rahn:

Uh, and I've been in Missoula, like I feel like it's at least putting up a fight, it's at least pushing back, whereas Bozeman is just completely folded yeah Bozeman is just like well, in downtown Bozeman, which has often been celebrated as a great, you know, even historic, you know, down in Montana downtown, at this point it's almost all shopping and not for locals, you know high- end shops and all this kind of stuff. I mean there's, there's the holdout Ace Hardware and a couple of bars and stuff.

Colter DeVries:

But you know, yeah, and that whole. They are elitist. Wow, that was a broad generalization. That's rich, coming from an elitist and wow, that was a broad generalization that's rich coming from an elitist, well, and I was gonna say who am I to cast a stone when I'm like you guys aren't Montanans. Right right, Bozeman is 20 miles from montana yeah, yeah that sounds a little snobby and elitist.

Andy Rahn:

Well, you know, although and I mean this is honestly what pushed me out I, I love Bozeman. I probably at one point thought I might stay there forever and I don't think it's a characterization of the people that have moved in, I think it's a factor of volume. It's just been inundated. You know, it's just community phrase. You just don't recognize people on the street and all that kind of stuff, and I think, with the exception of, maybe, Whitefish, you know, those two communities are the only, you know, our communities in Montana that are completely transformed, I mean almost unrecognizable from what they were a generation ago. Like I'm saying about Missoula, it's putting up, it's still kind of trying. It's trying to navigate those waters of new types, new level of wealth you know, all that kind of stuff.

Andy Rahn:

But, and you know towns like Livingston and there's a number of them, you know, but I of stuff but uh, and you know towns like Livingston and there's a number of them, you know, but I think Bozeman and maybe Whitefish are just completely.

Colter DeVries:

They're unrecognizable yeah, Bozeman did elect a uh, a young socialist mayor. Yeah right, I mean that, that's pretty wild.

Andy Rahn:

Yeah, I mean Bozeman used to be cow tech, yeah town yeah, yeah, it's changing, but we we've got to adapt right right, right, but places like you know Billings has this just slow and steady growth rate that never changes, no matter what you know and look at the amount of new units, homes and shit going up in buildings and, yeah, commercial like man we've.

Colter DeVries:

What is the new numbers? We've grown population probably 20 in the last five years I don't think it's that as that high but but it's huge.

Andy Rahn:

Yeah, it's not 20 it's a big change yeah, so I wanted to bring this up. Uh, you know, talking about the landmark and stuff, and in inventory, you know it's been speculated, uh, whether or not there might be a secondary market. All the people that moved here in such a haste, um, you know a couple winners. Of course we haven't had any brutal winners to speak of, but yeah you know that.

Andy Rahn:

You know making coming with, not with, some haste, you know, is there going to be a fall out within a few years of people not being quite what they expected, and is that going to create a secondary market, almost your attrition washout.

Colter DeVries:

Yeah, the people I run into like at the gym who moved here. Some of these are COVID refugees. Yeah, and they love it.

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They love Billings.

Colter DeVries:

And they had no connection. It was a cold move. It's hard to sustain, right, if you don't have family or an employer. Right, especially for a millennial with kids, like if you don't have mom and dad around, grandma and grandpa. Raising kids is pretty freaking hard, right. And so for some of these people their cold move has lasted. And and another one is like people in my daughter's Montessori, dude they love it. Elitist, liberal elite.

Andy Rahn:

That's what's going on here.

Colter DeVries:

Anti-public schools.

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Yeah.

Colter DeVries:

Yeah, they seem like they're here to stay.

Andy Rahn:

Well, another demographic that I can speak to and I'm kind of one of them is people moving back home. That never thought they would do that, maybe here, you know, if you asked them 20 years ago, you know they'd be like, oh Christ, no you know. But uh, you know, it's part of it's an age thing. I think that's probably pretty natural, you know, as you get to a certain age, like, oh, hometown doesn't look so bad and maybe and I'm talking as a gen extra right, older generation parents are aging. Oh, gotta be closer to mom and dad, that's aging out.

Andy Rahn:

But I also think there's a cultural change and I think about even really small towns. In Montana, I mean, every little town in Montana has a groovy coffee shop and a brewery and uh, you know what I mean. Totally so like people that when Harlow has a brewery, yeah, yeah. So especially small- town Montana, and people that were kind of like you know, I'm out of here, type deal, never looking back then, and maybe they've gone somewhere and gotten beat up in the big city for a while and they're just like you know, home doesn't sound so bad and there's cultural amenities that I was really missing. I mean part of why I fled. But now you know the, the, the brewery has a guy strumming guitar you know every Friday, Saturday night in the corner.

Colter DeVries:

So it's like, oh, I got some the map of uh sex offenders is far more spark, sparsely populated.

Andy Rahn:

And I wasn't so hardcore that I, like you know, I'll never come back to Billings kind of thing. But um, yeah, you know, and it's like this place looks pretty darn good compared to a lot of other places.

Colter DeVries:

I'd noticed that, like you know, about 10 years ago when the boomers started retiring and moving back to the boomers who went off and made their careers elsewhere and then came back to well, my home area, carbon county like I loved seeing that.

Colter DeVries:

They came back and got on the museum board and the cemetery board and got involved. And one guy who we're going to have on the podcast he like a phd toxicologist so he knows statistics, he knows research very well, he has been testing Rock Creek and he's put together a study that shows that all the development happening in the Rock Creek valley, with septic systems and drain fields, is causing higher nitrogen levels in Rock Creek. And that's all volunteer work on his own time. He's a retired boomer and like dude, that's what we need. We need talent like that coming back with the time right. And I love seeing that because at the same time you get these people on these boards for like, uh, cattlemen's groups and farm groups and they're like, oh, you young people, you got to get involved and it's like we got to raise some damn kids here. We got to establish our careers.

Andy Rahn:

You got it. We got to pay for your social security fund do you want to work till you're 85, right?

Colter DeVries:

Uh no, you guys go to the community meetings and sit on those boards and committees and that shit. Because we have, we, we've, we have constraints, right. So it's good to see the boomers coming back and applying their talents and their time.

Andy Rahn:

Yeah, yeah, you mentioning Rock Creek made me think of the floods a couple of years ago and, uh, spent a fair amount of time on the river that summer, you know, after the floods were gone and it was. It was amazing because the lower Yellowstone, which is usually pretty brown, was pretty clean, right, flushed out, you know, except for the occasional refrigerator or washing machine floating by.

Colter DeVries:

See, and that's why people love it here is because it's a fridge and not a dead body.

Andy Rahn:

Yeah, yeah, that might be coming. Yeah, that might be coming.

Colter DeVries:

Oh well, 45 minutes in any, any, uh any market analysis. Some numbers, data, statistics to bring up.

Andy Rahn:

Let me see, let me pull up, let me pull up this handy website, Montana Land Source that's got live market statistics. Yeah, I mean, you know, like I talked about earlier, just waiting for inventory to rebuild, but I mean we've got 50% less new listings so far in 2024 than 2023.

Andy Rahn:

Wow, that's a surprise, I know, but I mean inventory. While I say creeping up, I guess that's not really true, I mean just barely so still seeing shorter days on market number of sales is up from last year slightly. You know, I just think we're. I just keep thinking. I've been criticized for using this word recovery because most people think recovery is from a bad time, not from a good time. But as an appraiser, you know I see extremes on either side is kind of the same they're, you know, they're disruptive markets and unreal markets. So I'm not bothered by the term recovery, but I just get the sense that it's kind of a let things sort out, let the let the let things sort out.

Colter DeVries:

Let the let the take years. Yeah, it's going to take years to normalize back to 2019 activity, right levels and right metrics.

Andy Rahn:

But you know there's still demand is still strong. From what I hear from from all the brokers. They all talk about, you know, having buyers that just haven't found the right place and that kind of stuff low it's all due to low inventory can't find what you want.

Colter DeVries:

The salesmen are telling you that demand is strong, yeah grain of salt that's like, uh, this, this other property I was working with on a buyer right now actually, and again, we on this other one, we're at 50, our evaluation versus asking price. We're, we're 50 from where, where they are at. And the listing agent keeps telling us oh he's, he's really motivated, he wants to sell this ranch, he's got another one in mind, he, he wants to get moved to that other one. And I'm I'm like, yeah, he's motivated, at his price. Yeah, exactly right.

Andy Rahn:

Exactly right, aren't we all? Well, you know one thing I've always embraced as an appraiser. I love the concept, so like when I write an appraisal, you know I'm not I am not an advocate, I'm not supposed to be an advocate. If anything, I'm an advocate for the market and I've always I've always liked that, wanted to lean in to that. So I think I always have some optimism when we get through extremes and kind of come back to normalcy, that that normal market factors will. But it's always fleeting.

Colter DeVries:

There's one thing I kind of take from all of this is that I don't think farmer ranch is knee jerk. It's not volatile. I don't think farmer ranch is knee jerk. It's not volatile. Didn't move a lot, as you, your data shows, wasn't? A lot of people are rushing to sell when times were good.

Andy Rahn:

Well, here's an interesting. I've actually this is reminding me, I've kind of been working on a blog along these lines Again, just talking about the Montana land market, and one thing that occurred to me the Montana land market is just, it's so as a highly imperfect market we talked about that earlier. Just, you know, it's a non-disclosure state, there's not a lot of price discovery, it's not a commodity with similarity, you know, between products, but so it's a highly imperfect market. But it is a very free market. You know, when I got thinking about it, we have very little, we have very little outside influences. I mean, you know, there's a little bit of government program for new, but I mean almost none for, like, beginning farmers or something like that right, there's significant.

Andy Rahn:

I mean. So you know when things do sell, when, when, when properties are bought, it is a free market and, uh, some people wanted to dispute that or fuss with that. If it's, you know, wealthy out-of-staters or conservation organizations or that kind of stuff, they you know. But the reality is those are willing buyers, willing sellers. We actually have a very free market in Montana, unless you're the CCP called Colter DeVries.

Colter DeVries:

Um yeah, I don't have any other thought. I don't have any other thoughts around.

Andy Rahn:

That it's kind of a quiet time. Yeah, quiet, quiet time in the market I would.

Colter DeVries:

I think it's just tough to get anything done because the the bid ask spread, it's too wide, there's, there's, and there's no reason for sellers to sober up. They don't have to sell. There's not high debt there's no liquidity crisis right. They've been on it for 30 years. They know that there's no reason to Montana, land sellers are remarkably strong.

Andy Rahn:

I mean they tend. They tend to be mean. Occasionally you see families that are, you know, in trouble or that kind of stuff. It's pretty rare actually. I mean, they're usually pretty. We'll wait this sucker out as needed you know, whatever it takes.

Colter DeVries:

Yeah, and I don't. I don't see that changing. I like I said, I think a lot of these places I'm looking at with these buyers, um, I'm I'm about 40% off in my CMA from where they're asking and it's just hard to bridge that gap and it probably won't get bridged. These deals won't get done.

Andy Rahn:

I got a call the other day about the market and I was kind of talking about all the I don't want to say negative factors, but just the things we're talking about, that you know, inventory is down and volume I was telling the volume story volumes way down, and you know all this kind of stuff. And he says, oh, great, that means, does that mean there's deals to be had? I busted out, laughing a little bit. Well, it was just interesting because, as I rewound what I just been saying in any other context, that be the natural conclusion, right, like, oh, you know, clearly, you know, in a, in a, in a, in a more normal, more rational, more functioning market. That would be the result.

Colter DeVries:

Yeah, but we just our market does not play by the same rules I've got all these watermelons that are about to, about to go rotten, right, right right.

Andy Rahn:

Yeah, yeah, it's a durable product. I guess that's part of our issue too.

Colter DeVries:

Yep. Well, thanks for coming on. Yeah, it's been good, good to be back here. Thanks for inviting me. You're on Montana Land Source.

Andy Rahn:

Yep. Check out mtlandsource. com live market stats and every listing on the market 200 acres and up is mapped and available on our map app.

Colter DeVries:

And thanks for tuning into the ranch investor podcast.

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