Cost Segregation delivers results every time it's applied!

Ranch Buying in the Rockies

Posted on April 17, 2014 by Jeff Hobbs

Ranch buying in the Rockies (Rocky Mountain West) and building it into your dream property is a wonderful experience. Knowing a few things up front can make creating your vision even more enjoyable. I have found that many of my clients are surprised by the cost to build on a ranch, so I would like to explain the primary factors that drive these costs and provide a brief explanation for each of them. The primary factors are remote locations, engineering considerations, extreme temperatures, and necessary professionals.

Remote Locations

Colorado Rockies

Colorado Rockies

Building up a quality ranch in the Rocky Mountain West requires pulling from a workforce that is most often far from the location of the building site. I have seen cases where the general contractor traveled as far as 250 miles to build on a ranch. This is often necessary to find a company that possesses the business infrastructure, workforce and full understanding of all that a complex, multi-million dollar project entails. Using a workforce that is far from their home office adds cost because it requires housing, meals, transportation and increased wages for the workers. This is money well spent when you are getting a company that understands what it takes to do a remote ranch project properly.

Engineering Considerations

Much of the Rocky Mountain West is located in the Intermountain Seismic Belt. The potential for earthquakes requires extra structural measures to be taken. Montana, for example, has recorded an earthquake with a magnitude of 7.5. Though this magnitude is rare, many smaller quakes occur each year, giving cause for ranch structures to be designed and inspected by a professional engineer. Many structural elements are required that hide within the floors, walls and ceilings and add cost, though they go unseen.

Considering the fact that some areas in the Rocky Mountains receive over 400 inches of snowfall annually, a ranch's roof structures must be designed very precisely. Calculations must be made and engineered specifications given for each structural component that goes into the roof system, often times requiring expensive steel I-beams and structural lumber to be utilized.

  • Wind Factor

Wind is a defining part of the Western landscape, with gusts recorded over 100 mph. It blows through the valleys and makes it way up to the peaks. This becomes a very relevant concern when it comes time to build. Think about those long-abandoned barns and houses that dot the landscape of the West. They all lean with the prevailing wind. This is why modern building practices incorporate specified structural elements to hold the buildings upright and intact. These elements, though hidden, add cost.

  • Soil Conditions

When building on a mountainside, there must be geotechnical testing performed. This will give an analysis of the sub-surface conditions and let you know if the soil is suitable for a building site. Sometimes the soil is structurally sound. However, the soil on mountains can tend to shift, so this will require specified action to be taken in order to build a proper foundation that will hold the structure in place. In some cases, the existing soil must be removed, down to the depth determined by the engineer, and then replaced by structural soil. In other cases, the engineer will decide to leave the soil in place and do a micropile foundation. This is where many structural steel tubes are drilled into the ground until they hit bedrock, then they are filled with grout. The traditional concrete foundation is then built on these micropiles. This allows the soil under the structure to shift, while holding the structure in place. Either of these foundational elements adds to the cost.

Extreme Temperatures

The temperatures in the Rocky Mountains will range from sub-zero to over 100 degrees. It is common to have significant swings in temperature over short amounts of time, the ground freezes as deep as 60 inches, there’s high wind, heavy snowfall, and spring melting causes the streams and rivers to flood and all of these factors require that buildings are constructed to the highest, most modern standards available. Considerations such as waterproofing, insulation, cold roof systems, smart framing, ventilation, humidification, flood control, soil erosion control, waterway protection and road placement are just some of the countless things to consider. These factors are in addition to what a normal building project would require and consequently increase the cost.

Required Professionals

The common progression when realizing ones dream of owning a ranch is to contact an attorney, buy the land, hire an architect, hire a land and stream consultant, and finally hire a general contractor. However, this system is flawed in many ways. This line of thinking requires the buyer to have time to focus all of their energy on their ranch project. It assumes the buyer is fully up to date and educated on everything from soil conditions, to grazing right leases, to best construction practices, and the list goes on. The buyer is often wrapped up in “learning as they go” and find themselves frustrated at how all-consuming the actual work of realizing their dream of owning a ranch quickly becomes. The best way to maintain control of the project is to bring in all of the required professionals from day one. Much of the team should be assembled before or at least in conjunction with the ranch going under contract. This is necessary to help the buyer understand the viability of their project and if the land is suited to fully meet their requirements. A full team of professionals should include a ranch broker, land attorney, CPA, tax attorney, cost segregation engineer, agriculture and livestock consultant, environmental engineer, land and stream consultant, architect, general contractor, and an owner’s rep/program manager to oversee the entire process. At first this long list of professionals may seem like added cost, but at the end of the day, these professionals are focused on minimizing the cost of the ranch in both the short and long term through income taxes, real estate taxes, construction costs, and general overhead of the ranch operation.

Conclusion

The best way I can put it is that you have to look at the life cost when you are buying and building a ranch in the Rockies. This is not the kind of place where you can just throw together a simple building. You should assemble a team that has experience in this type of climate. Find resources that will provide you with detailed questions to ask each of them. Have them walk you through their quality assurance process and ask them to tell you some things they learned from the last house they built or designed that will make your project be their best one yet. Finally, ask them why they live in the Rocky Mountain West. Your team has to not only understand, but share your passion, or they will never be looking out for your best interest.

Guest Blogger:

Austin Rector, President

STOA Management, Inc.

Austin@STOAManagment.com

Phone: 406-579-4914