Yuma County Dryland

[tmoindustries]

https://www.reckagri.com/properties/clarkville-dryland/

TMO talked to listing broker 10-19-22

[tmoindustries]

Notes from TMO call:

• Outright sale not auction, divorce, cousin farming it would maybe continue
• Plenty of farmers to farm - to be tenant
• It could be in CRP. Currently Not. Maybe $45 to $50 per/acre
• No water rights - except in the ground.
• No improvements currently. Could build house. Zoned Ag. Yuma County. Not in any town/city.
• No deed restrictions or Conservation Easements. Seems clean. Simple farm deal.
• possibly 50% mineral rights - thinks - some revert back to 2025. O&G not active in area.
• Don't care when closing 2022 or 2023.
• No owner carry - ready to move on.
• has Prelim title, Issa map, no surveys. House was subdivided off the property.
  • broker sending me info
• Roads south and west - county roads.

[mccallj57]

Random thoughts

• With 261.5 acres @ 45/acre that would be 11,767 per year.
• Less taxes 767
• Less maintenance/management of 15% (1,765). Even if we do it ourselves it is still an expense
• Yield of 2.23% (at purchase of 410K). which was normal before. But well under Treasuries.
• But looks like a viable target in my opinion to dicker on.

[tmoindustries]

See two attached files: B-II and FSA

(just a comment, we need to think through using git to share files like this)

FSA Info.pdf Schedule B.pdf

[tmoindustries]

Some interesting things come up:

[mccallj57]

Clarkville for Sale 2019.pdf Clarkville for Sale 2020.pdf Clarkville for Sale 2021.pdf Cropscape maps

[tmoindustries]

oops - i closed the ticket

• while not the way they do normal carbon, 318 acres of lets say 1 tonne p/ac p/yr that is 318 tonnes per year at lets say a buffered/discounted price of $5 p/t is about $1,600 p/r - we have been calling this practice based or stewardship carbon - would be an interesting model to test out, not sure how CRP would play into this though (see: additionality in carbon)
• we could look at creating a building envelope and doing a lease or smart contract to someone who wants to build it and do a group lease OR we could build a house or bring in a tiny home etc.
• we can use basinStack to look at other potential uses such as biodiversity, horses, recreation, historical, etc
• would be interesting to dig into mineral rights and use basinStack to evaluate keeping them or "retiring" them for more carbon credits
• I'd also like to see the "way back" land use of what was there before farming (prob grassland but might be able to get a better carbon number) maybe even bison!

[tmoindustries]

why is @mccallj57 not a "member" - showing as "none"

[mccallj57]

I see the Pawnee National Grassland is not too far. Though the interstate bisects us. They change the CRP everywhere, but would I would think prairie grasslands would work. But would need to research it more. But probably could just plan on status quo for 2023 and rent to neighbor. And then come up with more nuanced plan.

[mccallj57]

I didn't see any major clinkers in the title though and the royalties are interesting if we could maximize carbon credits when the lease expires.

[tmoindustries]

left a comment in discord about low cap rate with not much upside or depreciation. I think for 2-3% we should be able to add value and get to 5-6% at least but don't see it here.

Even though this is a test I think we need to make sure we are using RE fundamentals to assess deals. Basin on our goals, these come to mind:

• income in place, with at least 2 years on a lease if commercial or solid occupancy with lease for residential
• depreciation so we can test out how we do tax returns and accounting etc
• don't pay for upside and potential. Price has to be based on local market comps and in place income. Not what if's or if we did etc
• i am open to be convinced but feel like we should stay away from "businesses that look like real estate" i.e. car washes and self storage
• i could be convinced on short term rental if we had a management co that handled everything
• I would actually for go most of the above IF there were tangential reasons to do a deal like is if for example it helped TATR and farmapper or basin or build_ etc.

I will do some looking for more deals. However, re the last bullet I do see this deal helping a few of our ventures and we should keep discussing.