Curly Butte Ranch — Investment Analysis
This report analyzes a proposed $48,500,000 acquisition of a 21,452.25± acre property, with in-place cash flow anchored by Agricultural / grazing lease (28,000 AUM at $50/AUM, $1,400,000) (plus 1 more line), Hunting lease (10 client at $7,500/client, $75,000), and Short term rental - 1 (12 months at $1,500/months, $18,000). The analysis assumes a 10-year hold, land appreciation of 4.5% annually, and 65% cash equity at closing. The balance is financed on a 25-year amortization with a 10-year term; the remaining balance comes due as a one-time payoff at the end of the holding period.
Executive summary
Year 1 in-place operations produce a cap rate of 2.95%, a cash-on-cash return of 0.32%, and a debt service coverage ratio of 1.08x — modest current income relative to the purchase price, typical of a land-value-driven acquisition where the investment thesis rests primarily on appreciation rather than current yield. Over the full 10-year hold, the projected 5.76% IRR and 74.39% total ROI reflect that thesis: 80.8% of the purchase price is allocated to land value, projected to grow at 4.5% annually and drive the bulk of the property's value at exit.
Going-in costs & financing
At $48,500,000, this acquisition is priced at approximately $2,261 per acre. Land value ($39,175,000) makes up 80.8% of the purchase price, with improvements accounting for the remaining $9,325,000. Total cash invested at closing is projected at $31,750,000, reflecting a 65% down payment plus closing costs and other acquisition costs. The loan is structured on a 25-year amortization with a 10-year term; because that term lands exactly at the end of the 10-year holding period, the remaining balance ($12,896,881) is treated as a one-time balloon payoff funded from sale proceeds rather than a mid-hold refinance.
| Purchase price | $48,500,000 |
| Property size / price per acre | 21,452.25 acres · $2,261/acre |
| Unimproved land value / acre | $1,826/acre |
| Land value (going-in) | $39,175,000 (80.8% of purchase price) |
| Improvement value (going-in) | $9,325,000 |
| Closing costs | $10,000 |
| Repairs / improvements | $0 |
| Other acquisition costs | $15,000 |
| Total cash invested | $31,750,000 |
Financing: 65% down, 6% interest, 25-year amortization with a 10-year term (balloon due year 10) paid in a single annual installment, $200,000 in loan fees.
Income & expense detail (Year 1)
Year 1 gross income of $1,605,500 is led by Agricultural / grazing lease (28,000 AUM at $50/AUM, $1,400,000) (plus 1 more line), Hunting lease (10 client at $7,500/client, $75,000), and Short term rental - 1 (12 months at $1,500/months, $18,000). Operating expenses total $173,825, with the property management fee (8% of effective gross income) at $128,325.
Land & lease income (Year 1)
| Agricultural / grazing lease 28,000 AUM × $50/AUM | $1,400,000 |
| Irrigated cropland 750 acres × $150/acres | $112,500 |
| Gross income | $1,512,500 |
Vacancy / collection loss: 0%
Recreational income (Year 1)
| Hunting lease 10 client × $7,500/client | $75,000 |
| Gross income | $75,000 |
Vacancy / collection loss: 0%
Structure rental income (Year 1)
| Short term rental - 1 12 months × $1,500/months | $18,000 |
| Gross income | $18,000 |
Vacancy / collection loss: 8%
Annual operating expenses (Year 1)
| Property tax | $13,500 |
| Insurance | $12,000 |
| Maintenance / repairs | $15,000 |
| Utilities | $5,000 |
| Property management fee | $128,325 |
| Total operating expenses | $173,825 |
Management fee: 8% of effective gross income
Year 1 income statement
Year 1 net operating income of $1,430,235 against $1,327,899 in annual debt service produces a debt service coverage ratio of 1.08x — the loan payment is covered, but with a thin margin. Year 1 pre-tax cash flow is projected at $102,337.
| Land & lease income (gross) | $1,512,500 |
| Less: vacancy / collection loss | −$0 |
| Recreational income (gross) | $75,000 |
| Less: vacancy / collection loss | −$0 |
| Structure rental income (gross) | $18,000 |
| Less: vacancy / collection loss | −$1,440 |
| Effective gross income | $1,604,060 |
| Less: operating expenses (incl. mgmt fee) | −$173,825 |
| Net operating income (NOI) | $1,430,235 |
| Less: annual debt service | −$1,327,899 |
| Less: capital expenditures (Year 1) | $0 |
| Pre-tax cash flow | $102,337 |
Growth assumptions
Gross income is projected to grow at 1% annually and operating expenses at 1.5% annually over the 10-year hold. Land value is projected to appreciate at 4.5% annually, with no separate improvement appreciation rate assumed. Scheduled capital expenditures: Fencing / cross-fencing replacement (Year 3, $30,000) and Dwelling (Year 4, $450,000, adding to property value).
Land value $39,175,000 appreciating at 4.5%/yr; improvement value $9,325,000 appreciating at 0%/yr. Over the 10-year hold: 1%/yr income growth, 1.5%/yr expense growth, with the following year-specific overrides to total income: Year 1 at 100% of normal. Scheduled capital expenditures: Fencing / cross-fencing replacement (Year 3, $30,000); Dwelling (Year 4, $450,000, new structure adding to property value, depreciating 2.0% by exit).
Sale proceeds at exit (Year 10)
At exit in Year 10, the property is projected to sell for $70,603,577. After $3,530,179 in exit costs (5.0% of sale price), net sale proceeds are projected at $67,073,398. The loan's balloon balance is retired this same year, funded directly from the sale, and is folded into that year's debt service rather than shown as a separate payoff here.
Value allocation at exit
| Land value | $60,837,577 |
| Base improvements | $9,325,000 |
| Dwelling (added Year 4) | $441,000 |
| Total property value (sale price) | $70,603,577 |
Contributory value of structures added during the hold — replacement cost new (RCN) at exit, less depreciation applied in the standard cost-approach order: physical deterioration, then functional obsolescence, then external (economic) obsolescence, each stage computed on the value remaining after the prior stage, not as independent shares of RCN. The entered rates are the preparer's own judgment call for each structure and apply in full as of exit. The percentage in parentheses is that stage's rate against its own starting balance.
| Structure | Yr built | Original cost | RCN at exit | Physical depr. | Functional depr. | External depr. | Total depr. | Contributory value |
|---|---|---|---|---|---|---|---|---|
| Dwelling | 4 | $450.0K | $450.0K | $9.0K (2.0%) | $0 (0.0%) | $0 (0.0%) | $9.0K (2.0%) | $441.0K |
Net sale proceeds
| Projected sale price (Year 10) | $70,603,577 |
| Less: Sales commission (5% of sale price) | −$3,530,179 |
| Less: Marketing (flat amount) | −$0 |
| Less: Sales concessions (flat amount) | −$0 |
| Less: loan payoff (already retired in Year 10) | −$0 |
| Net sale proceeds | $67,073,398 |
The loan's balloon balance was retired this same year, funded directly from this sale — folded into that year's debt service rather than shown here, so it does not get subtracted twice. See the loan amortization schedule for the payoff amount.
Total exit expenses: $3,530,179 (5.0% of sale price).
Property value, loan balance & equity
The charts below show how property value, loan balance, and equity build over the hold, alongside the year-by-year cash flow. Cash flow dips around Fencing / cross-fencing replacement in Year 3, Dwelling in Year 4, and the balloon loan payoff at exit, which is expected rather than a sign of underperformance.
Equity = property value − loan balance. The dashed line is the running total of capital invested — purchase price plus closing costs, repairs, and other acquisition costs at the start, stepping up with any capital expenditures during the hold (dots mark the specific years a capital expenditure occurred).
Annual cash flow
Year-by-year projection
Annual cash flow dips around Fencing / cross-fencing replacement in Year 3, Dwelling in Year 4, and the balloon loan payoff at exit, but stays positive in other years. Cumulative cash flow across the hold is projected at -$11,703,385, offset at exit by $67,073,398 in net sale proceeds, for a total projected ROI of 74.39% and an IRR of 5.76%.
| Year | Gross income | Oper. exp. | NOI | Debt svc. | Cap. exp. | Cash flow | Property val. | Loan bal. | Equity | Cum. CF |
|---|---|---|---|---|---|---|---|---|---|---|
| Yr 1 | $1.61M | $173.8K | $1.43M | $1.33M | – | $102.3K | $50.26M | $16.67M | $33.60M | $102.3K |
| Yr 2 | $1.62M | $175.8K | $1.44M | $1.33M | – | $116.4K | $52.11M | $16.34M | $35.77M | $218.7K |
| Yr 3 | $1.64M | $177.8K | $1.46M | $1.33M | $30.0K | $100.6K | $54.03M | $15.99M | $38.04M | $319.4K |
| Yr 4 | $1.65M | $179.8K | $1.47M | $1.33M | $450.0K | -$305.0K | $56.48M | $15.62M | $40.86M | $14.3K |
| Yr 5 | $1.67M | $181.8K | $1.49M | $1.33M | – | $159.5K | $58.59M | $15.23M | $43.35M | $173.8K |
| Yr 6 | $1.69M | $183.9K | $1.50M | $1.33M | – | $174.1K | $60.78M | $14.82M | $45.97M | $347.9K |
| Yr 7 | $1.70M | $186.0K | $1.52M | $1.33M | – | $188.9K | $63.08M | $14.38M | $48.70M | $536.8K |
| Yr 8 | $1.72M | $188.1K | $1.53M | $1.33M | – | $203.8K | $65.48M | $13.91M | $51.56M | $740.6K |
| Yr 9 | $1.74M | $190.2K | $1.55M | $1.33M | – | $218.9K | $67.98M | $13.42M | $54.56M | $959.4K |
| Yr 10 | $1.76M | $192.4K | $1.56M | $14.22M | – | -$12.66M | $70.60M | $0 | $70.60M | -$11.70M |
Gross income is shown before vacancy / collection loss; NOI reflects effective gross income (after vacancy) less operating expenses, so Gross income − Oper. exp. will not equal NOI when vacancy is greater than 0%. See "Effective Gross Income" below.
Loan amortization schedule
25-year amortization, 10-year term — the final row below shows the balloon balance retired the same year, funded from your sale proceeds at exit (folded into that year's debt service, so Net Sale Proceeds shows $0 loan payoff). Shown through the loan term (Year 10); a yearly payment of $1,327,899 is split between interest and principal each period.
| Year | Beginning balance | Payment | Interest | Principal | Ending balance |
|---|---|---|---|---|---|
| 1 | $16.98M | $1.33M | $1.02M | $309.4K | $16.67M |
| 2 | $16.67M | $1.33M | $999.9K | $328.0K | $16.34M |
| 3 | $16.34M | $1.33M | $980.3K | $347.6K | $15.99M |
| 4 | $15.99M | $1.33M | $959.4K | $368.5K | $15.62M |
| 5 | $15.62M | $1.33M | $937.3K | $390.6K | $15.23M |
| 6 | $15.23M | $1.33M | $913.9K | $414.0K | $14.82M |
| 7 | $14.82M | $1.33M | $889.0K | $438.9K | $14.38M |
| 8 | $14.38M | $1.33M | $862.7K | $465.2K | $13.91M |
| 9 | $13.91M | $1.33M | $834.8K | $493.1K | $13.42M |
| 10 (incl. balloon payoff) | $13.42M | $14.22M | $805.2K | $13.42M | $0 |
The highlighted final row's Payment and Principal include the balloon payoff — a lump-sum retirement of the remaining balance — on top of that period's regular scheduled amount.
Key terms & how to read these numbers
Effective Gross Income (EGI)
All rental and lease income (land & lease, recreational, structure rentals) after subtracting an assumption for vacancy and uncollected rent. This is the realistic income the property is expected to actually collect — not the theoretical maximum if every lease were paid in full, every year.
Net Operating Income (NOI)
Effective gross income minus operating expenses (property tax, insurance, maintenance, management fee, etc.), before the loan payment or capital improvements. NOI reflects the property's core profitability independent of how it's financed — two buyers, one paying cash and one using a loan, would see the same NOI.
Cap Rate (Capitalization Rate)
NOI ÷ purchase price. A quick, financing-independent snapshot of return, useful for comparing properties at different price points. Because it ignores the loan entirely, it does not reflect what actually lands in your pocket if the property is financed.
Cash-on-Cash Return
The property's actual cash flow in a given year, after the loan payment, divided by the cash actually invested (down payment, closing costs, repairs, loan fees). Unlike cap rate, this reflects the effect of financing — it's the return on the money that came out of your pocket, not the full purchase price.
Debt Service Coverage Ratio (DSCR)
NOI ÷ annual loan payment. Shows how many times over the property's income covers its debt payment. Lenders typically want to see at least 1.20-1.25x before approving a loan; below 1.0x means the property's income alone does not cover the mortgage payment.
Price per Acre
Purchase price ÷ total acreage — a common benchmark for comparing land value against other properties or recent sales in the area.
Total Cash Flow Collected
Each year's net cash flow — NOI minus that year's debt service minus any capital expenditures — added up across every year of the hold. This is the actual cash the property put in your pocket while you owned it, separate from what you receive when you eventually sell it (Net Sale Proceeds, below). The two are combined in Total ROI.
Net Sale Proceeds
What is left after selling the property at the end of the hold: the projected sale price, minus selling costs (commission, marketing, concessions), minus any remaining loan balance.
Total ROI (Return on Investment)
The total dollar gain over the entire holding period — all cash flow collected along the way, plus proceeds from the eventual sale, minus the cash originally invested — expressed as a single percentage. It answers "overall, across the whole hold, how much did I make relative to what I put in?" It does not account for when the money came in.
IRR (Internal Rate of Return)
The annualized rate of return that accounts for the exact size and timing of every cash flow — the money invested up front, each year's cash flow (positive or negative), and the final sale proceeds. IRR is the more rigorous cousin of Total ROI: two properties can show the same Total ROI but different IRRs if their cash flow arrives at different times, since money returned sooner is worth more than money returned later. IRR is the standard measure investors use to compare a property against other opportunities (a savings account, the stock market, another property) on an apples-to-apples, per-year basis.
Estimates only. This analysis is based on the assumptions provided and is not an appraisal and not financial, legal, or tax advice. Independent due diligence — appraisal, title, survey, water/mineral rights, zoning, and inspections — along with consultation from qualified professionals is required before making a purchase decision.