AMA - Winery/Vineyards, Agriculture, Environmental Issues

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AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason Moreland
Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes

Morning, Bigger Pockets!

I want to try to give back to the community that has helped me so much. If anyone has any questions on investing in the winery/vineyard space, agriculture, or questions about environmental issues, I would LOVE to help you out! Ask me anything ("AMA") you want to know or questions you might have and I'll do my best to answer or connect you with someone who can.

My background: ~8 years professional environmental consultant and wildlife biologist (phase 1/2's, wetland delineation/permitting, oil & gas, etc); ~3 years in the oil and gas industry doing environmental work; partner in standing up one of the biggest wine grape vineyards in Texas by acreage, also currently standing up a high-end "custom crush" winery in the heart of West Texas vineyard country; ~6 years financial modeling/underwriting residential and unique real estate and business opportunities; 8 years total investing in real estate, mostly SFR and small MFR holdings in West Texas and DFW

Hope I can be helpful to you!

-Mason

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y

its so nice to talk on BP about something other than my tenant is a turd  or how do I buy this property with no money LOL.

talk about appreciation.. when i lived in the napa valley prime Rutherford step cab land up and running was about 200k an acre then it went to 400k then up from there not sure today but I suspect its up there.. 

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  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    @Pete Harper, thank you so much. What a neat story, welcome back to the homeland! That is exactly the type of community feel I want to foster here in Texas. The more we work together for the industry to succeed, the farther we will get! I moved back to DFW (near my hometown) after living in West Texas for years, and I only lasted a couple years there before I went back! Hard to give up the lifestyle of outdoor recreation, vineyards, open country, et cetera.

    I'll check around in my circles to see if someone might be looking in that area. We have several contacts in CA that grow grapes. PM me with some details and I'll do what I can!

    0Reply
  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    Some photos of things going on lately. First batch of new tanks arrived today!

    0Reply
  • Evan Bellingar
    Investor · Newberg, OR · Member since 2016 · 90 posts · 19 votes
    5y

    @Jay Hinrichs I manage several vineyards in Dundee. Remember which ones you sold?

    0Reply
  • Evan Bellingar
    Investor · Newberg, OR · Member since 2016 · 90 posts · 19 votes
    5y

    @Mason Moreland servers hundred acres per person is incredible! Is that a flop system of some kind, mechanically harvested? Here in Western Oregon, we figure about 8-10 acres per person, full time. Do you mechanically shoot thin?

    How many acres do you have in development? How many bearing?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Evan Bellingar:

    @Jay Hinrichs I manage several vineyards in Dundee. Remember which ones you sold?

    I would have to look at a map it was middle 90s  LOL..  when our only focus was timber. 

    However the parcels I bought logged and resold were up by Domain Drahuan ( sic)  and did a half a dozen props over well Williakenzie is located

    we were quite active if I think back on it.  

    and we did some over in the Amity hills..  and I owned 700 acres right out of Willamina.. but my partner from Napa did not think it was 

    a viable site.. He was president of Berigner and wine world and bought wine world from Nestle in about 2000.. one of the top 10 most influential persons in the history of American wine industry..  

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  • Evan Bellingar
    Investor · Newberg, OR · Member since 2016 · 90 posts · 19 votes
    5y

    @Steve Morris nice! Is your VRBO in town or in wine country. We have a couple just west of Newberg.

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  • Evan Bellingar
    Investor · Newberg, OR · Member since 2016 · 90 posts · 19 votes
    5y

    @Mason Moreland I haven’t noticed grape prices being steady here in Oregon. But I definitely agree that they appraise well and have seen some amazing appreciation. Cash flow, not so much.

    1Reply
  • Evan Bellingar
    Investor · Newberg, OR · Member since 2016 · 90 posts · 19 votes
    5y

    @Jay Hinrichs I always thought someone could make a business out of buying timber land for timber prices, log it, and plant the southern slopes to vineyard, and sell it as a bearing vineyard. I knew a guy who bought a 20 acre parcel of farm ground that wasn’t build able, planted it to vineyard, got the income requirement over several years due to grape sales, and then sold it as a build able site with a bearing vineyard on it. He did VERY well!

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Mason Moreland:

    Some photos of things going on lately. First batch of new tanks arrived today!

    now that is some flat ground..  I have to think with developable land stretching forever .. values will stay pretty mild.

    compared to CA OR WA were vineyards are on slopes and up on mountain sides and there is limited valley land.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Evan Bellingar:

    @Jay Hinrichs I always thought someone could make a business out of buying timber land for timber prices, log it, and plant the southern slopes to vineyard, and sell it as a bearing vineyard. I knew a guy who bought a 20 acre parcel of farm ground that wasn’t build able, planted it to vineyard, got the income requirement over several years due to grape sales, and then sold it as a build able site with a bearing vineyard on it. He did VERY well!

    EFU  in our days people would do Christmas trees but those would not create the 80k a year you needed so that ended.. then they tried EMU and that fad ended.  issue we had was its hard to net 80k a year on smaller parcels leaving hundreds if not thousands of parcels in the Willamette valley unbuildable vis a vi being zoned EFU  or Timber 

    as you know Oregon has some pretty weird laws when it comes to building in the rural areas.. I learned that the hard way over the years. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Evan Bellingar:

    @Jay Hinrichs I always thought someone could make a business out of buying timber land for timber prices, log it, and plant the southern slopes to vineyard, and sell it as a bearing vineyard. I knew a guy who bought a 20 acre parcel of farm ground that wasn’t build able, planted it to vineyard, got the income requirement over several years due to grape sales, and then sold it as a build able site with a bearing vineyard on it. He did VERY well! 

    We did that for 10 years from 92 to 2002..  but sold the parcels for homesites however as stated a good number of them ended up with some sort of vineyards on them..  

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  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    Loving all the conversation! @Jay Hinrichs, I think it’s neat hearing about these non-residential RE sorts of things from you. Very cool stuff, you’ve obviously had some interesting and varied experiences. Yes, flat is an understatement. As the saying goes, you can stand on a tin can in Lubbock and see Dallas. I wouldn’t expect appreciation anything like California ($400k+ per acre). The high plains attract some tough hardscrabble folks, not so much estates, condos, and apartments. We are agriculture, oil and gas, or education based economies out here. Fredericksburg (Hill Country/Central Texas) is where most of the wine is sold in Texas and the views are, but it’s a much more difficult grape growing environment for sure. 


    @Evan Bellingar, it is pretty wild. Yes, everything that is vine management related we are able to do mechanically except for the more obviously difficult to mechanize things like training/install type work and repairs. Think Central Valley, y’all single curtain two cordon type training. Box pruned. Very similar climate and soils to Central Valley CA. The fruit markets definitely sound different here than the west coast. We are very steady at $1.6k-$2k/ton, spiking up to $2.4-$2.6k/ton ifsupply is tighter. For example, within the state of Texas we consume about 10k bearing acres worth of fruit per year to produce our wines, and all of those wines are essentially consumed in state. However, for grape production, we only have around 5-6k bearing acres. There is a large vacuum in the market there we are working to fill. It will be very difficult to get Texas wines exported out of state when we can’t even keep up with half of what is consumed for in state winemaking! One of our goals is to get Texas to where wineries can profitably produce QUALITY price point ($10-$20/bottle) wines that are 100% Texas (everyone knows how big we are on our Texas “brand” here!).


    We have several hundred acres in development and a nice chunk producing. Half in experimentally trained vines (ones we used to do proof of concept/testing before the big block) and half in VSP (non-mechanical, high-end geared vines). Goal is to get several hundred more acres into development here pretty quickly in a different location but same region. Reduces your risk profile by spreading out your holdings geographically.

    1Reply
  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    *tall, single curtain


    excuse the typos please, on my phone!

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Mason Moreland:

    Loving all the conversation! @Jay Hinrichs, I think it’s neat hearing about these non-residential RE sorts of things from you. Very cool stuff, you’ve obviously had some interesting and varied experiences. Yes, flat is an understatement. As the saying goes, you can stand on a tin can in Lubbock and see Dallas. I wouldn’t expect appreciation anything like California ($400k+ per acre). The high plains attract some tough hardscrabble folks, not so much estates, condos, and apartments. We are agriculture, oil and gas, or education based economies out here. Fredericksburg (Hill Country/Central Texas) is where most of the wine is sold in Texas and the views are, but it’s a much more difficult grape growing environment for sure. 


    @Evan Bellingar, it is pretty wild. Yes, everything that is vine management related we are able to do mechanically except for the more obviously difficult to mechanize things like training/install type work and repairs. Think Central Valley, y’all single curtain two cordon type training. Box pruned. Very similar climate and soils to Central Valley CA. The fruit markets definitely sound different here than the west coast. We are very steady at $1.6k-$2k/ton, spiking up to $2.4-$2.6k/ton ifsupply is tighter. For example, within the state of Texas we consume about 10k bearing acres worth of fruit per year to produce our wines, and all of those wines are essentially consumed in state. However, for grape production, we only have around 5-6k bearing acres. There is a large vacuum in the market there we are working to fill. It will be very difficult to get Texas wines exported out of state when we can’t even keep up with half of what is consumed for in state winemaking! One of our goals is to get Texas to where wineries can profitably produce QUALITY price point ($10-$20/bottle) wines that are 100% Texas (everyone knows how big we are on our Texas “brand” here!).


    We have several hundred acres in development and a nice chunk producing. Half in experimentally trained vines (ones we used to do proof of concept/testing before the big block) and half in VSP (non-mechanical, high-end geared vines). Goal is to get several hundred more acres into development here pretty quickly in a different location but same region. Reduces your risk profile by spreading out your holdings geographically.

    what is your yield per acre.. that was always the issue in Oregon that my Napa partners talked about..  If I recall Oregon area that we are discussing in this thread is the Dundee hills area and its almost all Pinot and I seem to recall yields being 2k tons per acre or something close to that .. were as Napa valley can be 5 to 7 tons per acre .  its all relative of course..  Keep up the good work exciting to be at the start of something.. future is bright now doubt.. Kind of reminds me of the British Columbia wine industry in the Okanagan valley.  this is the very northern extent of the Sonoran desert that runs up the east side of the Cascades into southern BC and terminates in Kamloops BC. 

    You would not think that it would be feasible for anything but New York style ice wine.. but they do pretty nice cab blends  Kind Of like Aussie wines ( which I really like ).. but the point is all of BC wines are consumed in BC or Canada.. none of it makes it to the states. 

    Burrowing Owl is one of the top labels in BC and most of the activity is from Kelowna south to along highway 97 to the WA border.. 

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  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    @Jay Hinrichs that’s a neat label name. We are covered up in burrowing owls here in Midland, love em. With how hot and sunny it is we can ripen quite a bit per acre and still get high quality results on all our different trellising methods. Speaking frankly, we don’t know exactly how high the ceiling is yet for our mechanized trellising acreage. It is around 20-38 tons/acre in California using similar methods and climate/soils. At some point soon we will play with the experimental acres to see how it responds to being pushed harder. We will have to tune the main bearing acres in to find where the “sweet spot” is, where the tonnage quality, economics, and being kind to our vines all converge.

    On VSP trellising we can pretty easily hang 6-10 tons per acre depending on variety and ripen it to high quality. This assumes you use an informed approach to fertility and water management, nothing haphazard.

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  • Andy Hains
    Specialist · Yavapai County AZ · Member since 2018 · 15 posts · 6 votes
    5y

    Hey Mason, nice to hear someone talking viticulture on Biggerpockets! I've been bootstrapping a small vineyard in the high country of Arizona, and working with a friend on a winery business plan. We'd like to take things to the next level and have a medium sized vineyard (30-50 acres) and winery. One of the environmental issues here in Arizona is water, grapes are a low water crop, but as you know, still require significant water in the southwest. There's a golf course available out here, and we are thinking developing that into vineyard would be a great opportunity to decrease the water use of that location. Any thoughts on things to consider with that concept? Also what have you seen as a successful path for funding in vineyard developments? Off the top of my head the golf course acquisition and redevelopment could be around $8 million, and that seems to be a tough sell when returns don't trickling in for 5+ years...

    1Reply
  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    @Andy Hains nice, keep at it! What varieties are you guys growing out there? What kind of soils/water availability and capacity are you looking at? Total acreage of the golf course is ~30 acres?

    $8MM does seem like it would be difficult to make the numbers work, but I am also coming from a different environment as far as base land prices with good water ($3.5k/ac). Maybe if you can get an additional value add bootstrapped up initially like event venue, tasting room, etc to ease the cashflow drought. Plant a vineyard everywhere as the “rough”? Forgive me on terminology, I’m not a golfer!

    From an environmental perspective, I would be wanting to know exactly what’s in the irrigation water and soil there. Depending on how long it’s been a golf course, all sorts of pesticides and herbicides may have been used on it. Soils could be different than what you expect at shallow rooting depths as well due to trucked in fill material, so look at that. A Phase 1 environmental assessment or at least groundwater testing would seem wise.

    For financing, we have found Ag Credit banks in the FCS system are the friendliest to work with. Try to find ones with vineyard experience, but don't put all your eggs in one basket and work several avenues at once. Some commercial lenders may have appetite for it as well, but we haven't gone that route yet. I would expect around 65-75 LTV, prime plus 2%. Between 1 and 3 years interest only with annual payments lined up with expected cashflow timing And term of 15-20 years. Don't be shocked if a lender requires you to have all funds for the establishment years of operations and debt service in an account with them to mitigate risks. That can be a big hurdle if presented.

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  • Andy Hains
    Specialist · Yavapai County AZ · Member since 2018 · 15 posts · 6 votes
    5y

    Very good points, I had the same thought about pesticides at the golf course. Would have to find out if the soil and water could be revitalized over time. It's over a 100 acre property with a good aquifer below it.

    In Arizona we've had good success with Italian, Greek, Spanish, and some Rhone varietals, thicker skinned reds particularly. Tannat, Barbera, Aglianico, Sangiovese, Petite Verdot, Tempranillo. Not too many whites, but Malvesia Bianca, Viognier, and Picpoul Blanc have done well here. At my vineyard I have Cabernet Sauvignon and Petite Verdot. In Arizona, Cabernet Sauvignon isn't anything to write home about, but I'm thinking a 50/50 blend with the Petite Verdot could be a decent wine.

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  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    -Sorry to folks who don’t care about grape varieties-


    That’s very similar to here. Viognier and Picpoul Blanc do well here also, viognier was a bit of a revelation several years back when folks realized it would perform here. I’d really like to experiment with some Greek vines. One of my friends who is also a herpetologist by training also ended up in the industry and specializes in Greek wine. He is Greek/Texan, a herpetologist, and wino, fun combo haha.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Andy Hains:

    Very good points, I had the same thought about pesticides at the golf course. Would have to find out if the soil and water could be revitalized over time. It's over a 100 acre property with a good aquifer below it.

    In Arizona we've had good success with Italian, Greek, Spanish, and some Rhone varietals, thicker skinned reds particularly. Tannat, Barbera, Aglianico, Sangiovese, Petite Verdot, Tempranillo. Not too many whites, but Malvesia Bianca, Viognier, and Picpoul Blanc have done well here. At my vineyard I have Cabernet Sauvignon and Petite Verdot. In Arizona, Cabernet Sauvignon isn't anything to write home about, but I'm thinking a 50/50 blend with the Petite Verdot could be a decent wine.

    like this   http://chardonnaygolfclub.com/   ?   although this golf course is set in a little valley between the SF bay and Delta / valley so it has a venturi effect almost every afternoon.. IE lots of wind.

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  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    @Jay Hinrichs that’s about what I envisioned.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    5y

    @Jay Hinrichs   You've never heard the story TV Munson and Phylloxera and how Texas saved the world wine industry. 



    of https://vintagetexas.com/blog/archives/19549#:~:text=In%20the%20mid%2D1800s%2C%20the,laid%20fallow%20from%20this%20infestation.

    1Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    5y

    @Juan Gonzalez   Gunter, Ivanhoe, Saint Jo, Tyler, Celina, GRAPEVINE, and many other places.   

    +

    1Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    5y

    @Mason Moreland   I was shocked one day driving between Tahoka and Brownfield to see what I thought was giant fields of grapes by Reddy Vineyards.  Flat land of course, which probably is a surprise to the rest of the world.  I guess the Plains cool nights and hot days might be a plus.  https://www.reddyvineyards.com...   Never have seen the Llano vineyards that I remember, but surprised I have not run into them before.   Where are your grapes?

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  • Mason Moreland
    OP
    Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
    5y

    @Bruce Lynn, Reddy Vineyards is quite large! We have similar acreage under cultivation. Good people and growers, and one of the bedrocks of the TX industry.

    Llano Estacado is a large grape buyer and mostly focuses on winemaking and marketing their labels, not vineyards/growing. They do have some vineyards, buy lots of grapes from TX growers, and truck in from California.

    Munson was a world treasure and nearly single-handedly saved V. vinifera wines, truly a cool story and pretty cool Texas played a huge part in it. When I was last in France his was a fun story to bring up ha!

    We are north of Lamesa, toward the southern end of the AVA. The hot sunny days and cool nights (95*+ daytime and 50's-70's at night) and ultra-low humidity are wonderful to live in and pretty helpful for growing grapes. Add in the constant breeze and it's a great region to work outdoors.

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