Investment Strategies For Horse Ranches

August 9, 2022

Hi, I'm Paige, half of the duo behind Fairway Stables™

This website is the one I've been searching for, for years; a compilation of knowledge on all things horsemanship, including practical advice on how to start an equestrian business.

No matter your experience level with horses or homesteading, I hope this is a place you can get lost in, and learn something along the way - we welcome everyone from vets, to lifelong ranchers, trainer, to nonprofits contributing.


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Whether you’re considering investing in a horse ranch for diversification or you have dreams of opening a horse business, there are many considerations in evaluating potential properties. Horse properties are a sound investment, but it can be overwhelming to choose the best equestrian real estate for your investment or business goals.

Here are some things to consider for investing in equestrian properties.

Table of Contents

Horse Ranch Investment Strategies
Horse Ranch Investment Strategies

Benefits of Investing in Equestrian Properties

Capital Security

Like any other market, the real estate market experiences occasional downturns. Equestrian farmland, however, is less likely to depreciate because data shows this type of real estate has strong capital protection characteristics over long periods. It’s also a renewable resource and has potential to generate perpetual income.

Stable Income

Equestrian farmland offers stable income for an investor. These properties serve as recreational or commercial places for equestrians, offering a steady source of income. Boarding facilities also offer rental income from horse owners and breeders.

The revenue from equestrian land is considered non-volatile. Even in poor economic conditions, these properties tend to hold high occupancy and are less likely to experience shortfalls in income. Along with rental income, equestrian land appreciates and offers potential for a high total return.

Hedging Inflation

Farmland in general is an effective inflation hedge, whether it’s specific to equestrian property or not. This is due to the historic positive correlation farmland has with inflation, meaning that the land increases faster than the inflation rate rises. This makes farmland more favorable to investors than other types of investments.

Investment Portfolio Diversification

Investors often diversify portfolios with stocks, mutual funds, bonds, and other types of investments. Equestrian farmland investments are excellent for diversifying a portfolio and helping an investor stay resilient amid market volatility. When the market is turmoil and uncertain, farmland tends to perform well.

Simplicity

Investing in equestrian farmland is a simple, transparent, and straightforward venture, even among real estate. The direct hold of a renewable real estate resource isn’t complex and irregular like other types of real estate. In addition, farmland typically has a fixed number of properties, compared to multifamily real estate with considerable shifts in supply and demand as buildings are torn down or constructed.

Tax Incentives

Farmland investments can offer tax incentives for investors to attract them. These may include standard tax incentives on income tax, capital tax, or inheritance tax. This offers a greater margin of profit for investors compared to other asset classes in real estate.

What to Consider Before Investing in an Equestrian Property

Structures

Most home buyers get an inspection before closing on a house, and the same applies to purchasing a horse property. Any existing structures on the property, including storage sheds and fences, should have the condition evaluated. You should also consider the layout of the structures and whether you’d want them moved or rearranged.

Like anything else, you don’t want to pay a lot for a property that will need major repairs or renovation, since that adds to your overall investment. Equestrian properties are niche and you won’t have endless options, so look for a compromise. For example, you may like the layout and have a stable in good condition, but you’ll need to replace the fence.

Acreage

Equestrian properties can vary widely in size, so it’s important to determine how much acreage you think you need. If you’re keeping a few horses for pleasure, the size you need will be vastly different than if you’re looking at a commercial operation with boarding, training, or breeding services.

Once you have an idea of the number of horses, you will need roughly two acres per horse for grazing. Then, you also need to consider the space for your stables, storage structures, arena, or other space. Keep in mind that even the best properties may have space that’s unusable, such as wooded or swamp areas.

Accessibility

The next factor to consider with your property is the proximity to towns and services. Your plans for the property will determine how close you want to be to highways, trails, public parks, showgrounds, or towns that have a strong equestrian community. You should also consider the proximity to vets and farm supply stores. These aren’t dealbreakers, but they should factor into your decision.

Natural Water Sources

Unlike most properties, equestrian farmland requires potable water for the horses, and if you plan on living on the property, for your home. If you’re not hooked up to a local water supply (common in rural areas), you’ll need some wells on your property. Streams, ponds, or lakes can supply water for irrigation or horses at pasture. Generally, horses drink as much as 10 gallons a day.

Existing Vegetation

The plants and trees that exist on the property serve both practical and aesthetic purposes. Practically, vegetation offers insights into the land’s condition and the soil quality, and you must be careful of noxious or invasive weeds. You may want to consult with a horticulturist to determine which plants are beneficial and which aren’t, as well as how much work you need to do to prepare it for horses.

Zoning

Before acquiring a horse property, make sure to check your local laws and regulations for land usage, water rights, or any ordinances that can present a problem. Ideally, your property will already be zoned for agriculture. Consult with town officials to see if there are any restrictions on structure placement or building codes that will affect your planning.

Drainage/Water Logging

Having natural water sources on your property is a plus, but there is too much of a good thing. Rainwater can significantly damage your property if it lacks proper drainage. Make sure the property isn’t in a flood zone or suffering from poor drainage, since these issues can create a lot of maintenance work and may damage horse hooves.

Start Your Search for Horse Ranches

Investing in horse properties can prove challenging, but these properties have several advantages in revenue, maintenance, and income potential among real estate ventures. When you find the right property, the possibilities are virtually limitless.

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