When it comes to clearing land, it can be a monumental task and very expensive. Yes, landowners can seek out government programs that have been designed to help the land owner, but like anything else involving the government, there are strings attached. I can cover that topic in another blog post. My point today is for you to look at the cost of land clearing from a much higher point of view.
Let’s say you bought a raw rural 100 acres five years ago for $500,000 and cleared about 35 acres to improve access and open up some features. This could have happened all at once or over a period of time. Now let’s imagine the density of those 35 acres is estimated to cost between $1,800 to $2,400 per acre on this piece of property. This means the cost to clear 35 acres is going to be between $63,000 and $84,000.
Now, roll that cost to clear the 35 acres across the entire 100 acres, and you’re looking at an overall improvement cost of $630 to $840 per acre. Which comes out to somewhere between a 12% to 17% increase in cost on the overall value of the land. In some cases, the land clearing costs could be much lower than what I have forecasted. However, in this case, we are increasing the value of the 100 acres to $563,000 to $584,000 with no other improvements other than the cost of the land clearing performed.
Below are two maps pulled from an article written in 2019 by the Farm Bureau. One map shows the overall five-year change in the average value of Agricultural Land, which, in this case, Texas, was around a 17% increase over five years. The second map indicates the year-over-year average in which Texas was a 3.4% increase. In this case, you would easily recoup your costs to clean up over a five-year hold on the investment with no other improvements.
Now, keep in mind these maps are from 2019. We saw a surge during COVID, and from 2020 until most recently, we experienced a price explosion in which our year-over-year was closer to a 7% increase. We have leveled off now due to high prices and high interest rates. So, I suspect we will see something closer to what we witnessed pre-COVID or until the next major event happens. That said, even at 7% year over year for five years, that’s a 35% increase in value on a $500,000 property to $675,000.
So looking forward, if you spend a little time and money performing some land clearing tasks, not only will this help to enhance your experience of a property while you own it, but it is also beneficial and appreciated by those looking to purchase a property. It is a fact that improved land that has been cleaned up and ready to experience will move much quicker in a slow market and bring more money than those that haven’t spent a dime cleaning it up. The advantage of the mulching method is that the property instantly goes into recovery mode immediately after land clearing since there are no piles to eliminate. This allows you to quickly maximize your land clearing investment.
My point is, Texas is strong market and a minimal investment in your land will get returned. In some cases much faster than five years, and especially if we focus our efforts on clearing areas that bring the biggest return on investment. This is why recommend site visits with the Cedar Eaters professionals to determine where we can make the largest positive impact in the shortest amount of time.
