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All Forum Posts by: Mason Moreland

Mason Moreland has started 1 posts and replied 191 times.

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

@Jay Hinrichs I’m glad! $400k is crazy!!! Underlying raw land value must be high as well, $30k+?

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

Again I would point out that the wine industry is separated out into very distinct/unique businesses each with it's own set of upsides/downsides as I mentioned above. A vineyard is wholly different business model from a winery business model, and a winery that sells "labels" operates nothing like a "custom crush" winery (provides processing and winemaking services for those selling labels). Each should be considered separately from the other when analyzing strategy and financials. Comparing a vineyard to a winery selling "labels" would be like saying the business models/financials on syndicated multifamily properties are the same as wholesaling SFRs just because they are both real estate businesses.

@Steve Morris, it can be a struggle as a winery selling "labels". If your winery model is to make a "label" and market it, you have a lot of competition in the space. You have to carry a lot of inventory to feed demand out of season and not run out of product during the year, this carries a cost. To be successful it is like selling any other "widget" and is as @Jay Hinrichs said, you have to run lean and be REALLY good at marketing and moving your product. This is the main reason I prefer the "custom crush" winery model to a traditional winery. Sell the services (shovels) to the wineries/labels (gold miners). You carry no inventory and get paid essentially upfront. You don't get a big name or get famous doing it though!!!

Even deeper on the growing/vineyard side, farming annual row crops versus growing perennial grapes is a vastly different business model, has much greater appreciation potential, and far different income/acre than row crop farming. Much more akin to an orchard or traditional improved residential/commercial real estate. In annual row crops, you are largely dependent on the whims of government subsidies and drastic worldwide commodity market swings. Wine grape prices are usually steady (when Napa isn't on fire) partly due to the long turn around times to start new acreage, and they are not tied to government subsidies. Land values here go from $2,500-$4,000/ac for irrigated row crop and you will be lucky making a 6% CoC return in good years with row crops. Vineyards typically appraise well over $30k/acre before reaching first production. Annual CoC yields for vineyards match those of good multifamily residential deals in tough years/years you take an insurance check, and lap them thrice over in normal/good years, but you take on risks and mitigation measures of different names, but similar magnitudes, to a residential property operator.

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

For anyone interested in rough-justice numbers on the Texas wine industry, take a look here. There is no mandatory reporting in Texas, so these are all approximate, but it is an interesting slice of data!

https://www.nass.usda.gov/Stat...

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

@Jay Hinrichs, talking "high winds" with folks in the Central Valley of CA is always funny! You should see faces when we tell them our version of "high winds" is when we get sustained 50+ MPH winds almost every year, priceless. For wind, it tends to be more of an issue when vines are young/training and it could break new cordons, it depends on trellis style but you may have to use temporary catch wires, taller shelters, or more ties. For hail, that can absolutely wipe you out! Most times it will simply reduce yield/acre, but if you get that once in a century hail it can do some damage to vines. VSP grapes can also be hail-netted (called bird netting everywhere else I suppose!). 

Freezes can damage vines on either end of the season, either a "late" freeze late into spring after green up, or "early" in early fall. There are several strategies to protect from untimely freeze events (air turbines, burning hay, taller trellising away from the colder ground-level air, etc), but the most cost efficient are taller trellises and choosing varieties that develop at the correct times to avoid freeze damage and take advantage of our hot weather to ripen. Typically folks get multiperil crop insurance to protect against both yield loss and vine death from freeze/hail/other natural disasters. Luckily we have little fire risk on the high plains, as essentially all the region is in row crops which act as excellent fire breaks.

That's exactly right, Jay. With the "wind up" time to vineyard production, you can almost plant the exact opposite varieties of what are in favor at the moment and end up with what everyone wants when you come into production!

@Mike Reynolds, I hear you there! I'm a RE/business geek that enjoys a glass, definitely not a sommelier! Llano Estacado is one of the biggest/older brands here in Texas and is based out of the high plains here in Lubbock. 

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

@Mike Reynolds, that's fantastic! We are HUGE proponents of the Texas beverage industry, we'd love to help her out any way we can. I'll send you a DM with my contact info. We'd love to see more wineries and vineyard acres here in-state!

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

@Jay Hinrichs, to sum it up succinctly, Texas is where Napa was in the 1960's. Lots of farmers experimenting for many years and a few folks getting really serious.

In Texas the are four main growing regions and each has vastly unique climates and soils, and in addition each vineyard may have it's own training/trellising method that lends itself to different varieties. The regions, generally, are the High Plains (my area, from Midland up north to Amarillo), the Trans Pecos/High Desert area (Ft. Stockton, Ft. Davis, Marfa), North Texas (north of DFW), and the Hill Country (central TX). Each has their difficulties and differences, but generally the easiest area to grow is the High Plains (deep sandy loam soil with calcareous base, hot days/cool nights, flat topography, low humidity, good groundwater and rainfall). The most popular varieties tend to be those from hot growing regions of the world and include Tempranillo, Mourvedre, Sangiovese, Viognier, Malbec, Primitivo/Sangiovese, and your usual suspects (Merlot, Cab Sauv, Sauv Blanc, Pinot Noir) due to market preferences more than climate suitability.

On flavors, like I said above, Texas is a wildly varied state, like CA, in climate, soils, and methods, so basically everything from traditional whites/reds you might find in CA to crazy native grape/hybrid variety wines!

There are two main reasons you've probably never seen a Texas wine on the shelves. One is that we are constantly operating at a fruit deficit. Winery permits have grown enormously in the state, but vineyards can take a long time to catch up with fruit demand. We only have around 5k bearing acres currently (I'm working on that!). On great years we can only provide half of the fruit needed to produce the Texas-made wines consumed just within Texas by Texans. The second is that essentially all wine made in Texas is consumed in Texas and never makes it out, much is still direct-to-consumer, largely because the wineries don't need to get into distribution! 

The deficit of fruit/juice/bulk wine is shipped in from California. The same is true for other wineries east of the Rockies. Our goal is to provide the raw materials not just for Texas, but for every winery needing fruit this side of the Rockies. That will mean getting Texas well over the 10k acre mark.

On mechanized vineyards, there will always be a space to find a "niche" in all businesses as you do in real estate (multifamily, flips, BRRRR, vacant land, wholesaling, etc). This is one problem in Texas, almost everyone does exactly the same methods and tries to compete in all the price-point niches of wine. We need to dial things in and find our niches here. There is certainly a market for hand-managed vineyard wines, and they have to command a price commensurate to the labor costs to make them worthwhile for the grower ($40+ per bottle). Margins are tight in the high-end space, like you mentioned in Oregon. Mechanized vineyards can produce the same, or better, quality fruit as traditional vineyards with margins several multiples higher than traditional vineyards. This puts you into a more logical (for me) market of targeting those $7-$40 "everyday" wines. It's like syndicating large multifamily properties vs. buying class-A SFR's with traditional financing and self-managing one at a time. Mechanized vineyards are a niche in the industry. Most of the profitable big-wine players are/are heading the mechanized route (EJ Gallo, Constellation brands, etc). The "pie" of consumers is larger, end product quality is great, and the margins are much better. We still have traditional hand-managed VSP trellised vineyard, and I expect we will plant more, but I don't anticipate it being our bread-and-butter niche as the market is significantly smaller at that price point.

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

@Mike Reynolds, neat! Here in Texas or elsewhere?

Might be a distinction to make between the different parts of the value chain to answer your question. To get to bottle you loosely have a few steps and a wine industry business can be on any one step (or sub-step) or multiple steps to vertically integrate.

- Vine Greenhouse - grafts the vines

- Vineyard - grows the grapes

- Winery - processes the fruit and makes the wine

- Label - the actual brand on a bottle (marketing/distribution)


A winery can “turn on” basically immediately, you just have to get juice into fermenters! A vineyard can take 3-7 years to “turn on” depending on your management philosophy and methods. Ours make first production 3rd year and stabilize around year 5. One thing someone can take advantage of as a winery permit holder to reduce startup equipment costs is use “custom crush” services where customer has a winery permit but the custom crush facility can process the fruit and assist or do all the winemaking in their facility.

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148
Originally posted by @Alex Uman:

Hey @Mason Moreland, my long term retirement goal is to start a small vineyard/winery when I'm done working. What would you say is the largest difficulty in vineyard management. Not looking to start a wine empire, more so just a late life passion project.

Afternoon, @Alex Uman!

That's a great goal for retirement! Part of why I got into this is the passion of it, I love agriculture. From the vineyard management side, if you are running a small vineyard of your own I think the biggest difficulty is labor cost/availability. Even a small vineyard requires quite a bit of labor during the growing season (training vines during early stages, pruning, spraying fungicides or foliar nutrients, maintaining the row cover crops/mulch, fixing irrigation leaks, harvesting, et cetera). A family could certainly run a few acres themselves if you have a few kids/extra hands, though! The nice part about vineyards, as our vineyard management partner says, is the vines "go to sleep" and give you a nice off season during winter!

One thing we've done to help mitigate the labor need is design our new vineyards going forward to be "touchless". Beyond the initial install/training phases, we can run every aspect of vineyard operation by machine (except irrigation repair, grab a shovel!). We can run about 320-400 acres (about a half-section) with 1 or 2 full time folks + equipment. This method can pose issues for smaller acreage as the initial equipment/install investment is high. It could be something to look into if you can co-op with other folks locally to use it jointly or find a vineyard management company near you that specializes in helping manage vineyards. They would typically already own all the equipment and have labor ready to go.

Post: TX and CO single/multifamily rentals investment good or bad?

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

You can find great deals anywhere in Texas, but like @Tyler Bains said, Lubbock and other secondary/tertiary markets with growth opportunity probably offer the highest returns, most appreciation upside, and lower barriers to entry. Having also been in Colorado, I can say I prefer Texas as the regulatory environment (even on the local level) is MUCH less restrictive. Sure makes life for you and your tenant less complex. 

DFW, HOU, and ATX are great, if you can find a great deal, but the barrier to entry is higher (higher prices, wayyy more competition for deals). It's like only looking at SanFran, LA, San Diego in California or NYC neighborhoods in New York.

Good luck!

Post: AMA - Winery/Vineyards, Agriculture, Environmental Issues

Mason MorelandPosted
  • Specialist
  • Midland, TX
  • Posts 198
  • Votes 148

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