How do I tell if a ranch for sale is a working cattle business or just land?

A ranch listing can describe two very different things. One is a cattle business that happens to own land. The other is land that was once used for cattle, or could be. The photos look alike, with fences, pasture and a barn. What you are buying, and how a lender will see it, is not alike. Here is how to sort one from the other.

Signs of a going concern

A cattle business has animals, and it has paper. Look for a herd named in the sale, calving records, sales slips from auction marts or private buyers, and financial statements prepared by an accountant. Ask about equipment, hired help and the buyers who take the calves each year. If a seller cannot show any of this, the listing may be about the land alone.

Signs of land with improvements

A property sale often mentions acres, fencing, water, corrals and handling facilities, and says little about cattle. The herd may already have been sold, or the owner may keep it. Neither is wrong. It simply means the sale is a real estate purchase, and you would be building the cattle business yourself.

Why it matters for financing

Lenders look at land and at a running business in different ways. A lender may want records that show how a business has performed, or a plan from you if there are none. Talk to a farm lender early, such as the lenders described in our agricultural loan answer, before you commit to a path.

Questions that settle it

• Are cattle included in the sale, and may I see the count and the records?
• Can I see financial statements and the equipment list?
• Who works on the ranch, and will they stay?
• Are the pasture and water rights, or any leases, part of the sale?