|
|
 |
|
| Features |
Range Rovers
Constance Gustke
05/03/2004
|
Cowboy Economics
Funk always wanted to own a piece of Western history. “I
grew up in rural poverty,” he says. “I didn’t have enough money for a good cow.”
As his firm, Express Personnel Services, became increasingly successful over the
years, he purchased several small ranches, and finally staked his claim in Yukon
in 1990, purchasing a 1,200-acre property. There he breeds Limousin cattle,
revered for their lean meat, and stables rare black Clydesdales. Funk now owns
about 20,000 acres in five states. To unwind on Saturdays, he puts on jeans and
a cowboy hat and visits with the Yukon cowboys, occasionally attending cattle
shows. “I enjoy cattle,” he says. “They don’t telephone and they don’t talk back
and they love you as long as you feed them.”
One of his newest acquisitions
is a 3,000-acre ranch in New Mexico. Like Kent, Funk has invested in improving
the property, and has set aside land for the deer and elk, which he hunts. The
former owners, who worked the land for four generations, manage the property for
him, but could not have continued in their chosen way of life without an
investor like Funk. “Fourth generation ranchers and cowboys cannot make it work
financially,” he explains. “The price of beef is the same as it was in 1951.
They’re trying to make a living off of 1950 dollars while labor and machinery
costs have gone way up.”
Those of us considering the purchase of a ranch need
to understand that few make money. “I live for my ranches to break even,” Funk
admits. “But some have losses.” The perilous business balance of a working ranch
can be knocked completely awry by nonessential investments. In some cases, those
of us with no ranching background have mistakenly assumed that the ranch life
can be married to the luxury life without a significant additional financial
outlay.
Jeff Kanaly, vice chairman of asset management company Kanaly Trust
in Houston, advises clients on the economics of ranch life. He notes that many
new ranch owners try to fit their lush city lifestyles to their newly acquired
ranches—at a considerable cost. “When people see a ranch house and its four
bedrooms and 8-foot ceilings,” he says, “they say, ‘We need to tear it down and
replace it with a $1-million house and a four-car garage.’” The result can
be spiraling costs. “You’ve gone from a ranch to a resort home that requires
maintenance and care,” he says. This puts further strain on the already burdened
cash flows generated by the ranch’s operations. “A lot of people don’t realize
how big [expenses] can get as tractors, road maintenance and pens for horses are
added in,” Kanaly notes.
|
|
|
|
|
|
|
