Do you BOs depend on boarding payments to pay your mortgage?

[heavensdew]

We are seriously looking at buying an existing boarding barn that is up for sale. Our question is do you (the BO) figure all of the boarding payments as paying most of your mortgage? Is this risky in this economy?
My argument is that we should be able to pay the mortgage with the minimum filled barn. Is this feasible for most or are you in big trouble if the stalls or pastures are not filled?

[FlashGordon]

The boarding barns that I've seen survive longterm are the ones that do not rely on boarders to pay the mortgage.

This day and age it may be tricky to get financing if you are looking to pay the mortgage w/ board payments. A friend of mine just tried to purchase a property with this sort of theory and the bank required a very hefty down payment (rightfully so) which ended up killing the deal for her.

[Bluey]

Everyone I know has a second income, or a husband/wife with one and that pay all the bills.
They are happy if the horse operation will cover it's expenses and get to save some and make improvements if some months it goes over the operating costs.
Now, that is boarding.
Lessons, training, showing and horse buying and selling, those run thru different budgets.

Most barns I have been in, boarding is just not covering barely other than it's own operating expenses, not fixed ones like mortgage and maybe a few of the BO's horse expenses.

[Miss Motivation]

No. We should come close to a break-even on boarding next year, after several years of improvements (over $600,000) and start to pay a chunk of our very considerable property taxes. A terrible investment in a neat lifestyle.

Before you consider buying a barn, you need to have worked out a business plan and cash flow plan to see if it is remotely feasible.

Your boarders will NEVER understand what it costs to run a decent facility, so don't expect them to. Come in with a cast-iron plan, make the rules comprehensive and accessible, use contracts, and still expect to get your heart stomped on from time to time.

But late at night, when the owners are gone and you can walk through the barn telling the horses goodnight, or on Christmas Eve when you sit in your silent stable and reflect on your lifestyle, or when you see a little girl grinning after her first lesson, the goofy behavior (HOW MUCH toilet paper did we use this week? You want your horse turned out for FREE? You want ME to pay your shoer? You feed your horse so much hot supplemental stuff he's a hived-up maniac, and it's MY fault?) recedes and the nice things about being able to do what many dream of takes on more weight.

You absolutely should have your plan in place, with real costs, before you consider a public barn. Your boarders are not your friends, though you will be friendly with them. They are your customers and as such, will criticize everything you do to others without speaking to you first, and will put full responsibility for their horses on you, not themselves.

Proceed with caution, knowledge, and passion.

[Bluey]

Remember to budget for those boarders that never pay in time, are weeks behind and those that flat never pay and leave.
Some of those are a reality, especially today, for what I hear.
Some even leave their horses behind.:eek:

[Woodland]

BEFORE you buy any business you should have a business plan written out. PLEASE please please go see your local SBA for their help in this matter!

[Woodland]

Remember to budget for those boarders that never pay in time, are weeks behind and those that flat never pay and leave.
Some of those are a reality, especially today, for what I hear.
Some even leave their horses behind.:eek:

OMG AMEN!!!!!!

[eqinegirl]

Boarding horses is a break-even business at best. You will make money with lessons, summer camp or sales. Do NOT try & pay a mortgage with income from boarding. It won't work.
Good luck to you.

[blondmane]

You better believe I do! My DH has been out of a job for 19 months! Still in the red but horses taken care of....

[sidepasser]

I never did, I had lessons and a part time job to pay my mortgage. Everyone knows boarders can be fickle and you can have a full barn one day and a half barn the next..lol.

I never wanted to be dependent on boarding to pay my mortgage, it might be perceived as affecting care and that is the one thing I NEVER wanted anyone to question. I believe boarding can be profitable, it was for me, but also because one should "give a little extra" rather than skimp. Some people "skimp" because they rely too much on the boarding to take care of the mortgage payments. Not a good thing. Better to have a secondary or third source of income whenever possible so no matter how many boarders you have or don't have, it doesn't come into play in the numbers game.

Just my opinion - YMMV.

[ThirdCharm]

Unless you have an absolutely unheard-of profit margin, not a good idea. Boarding barns are notoriously unprofitable. Once you figure in buying hay, grain, shavings, paying the help, insurance, etc. etc.--all as essential as the mortgage!-- you'll see what I mea.

Jennifer

[Couture TB]

That is the reason most barns fold in a few years. People buy them planning on using the money to pay the mortgage. If you don't have the money to cover the monthly bills out of pocket then it is not a good idea.

[BeeHoney]

Ideally your boarding rates should be based on all of your expenses, including your mortgage, taxes, insurance, etc. as well as the obvious feed, hay and labor. Realistically, boarding income will not necessarily end up covering those things. Why? Things always cost more than you think, there are always extra costs and repairs and supplies and things you never thought of. Plus, add in some slow-pay and no-pay clients. I would never advise someone to buy a property they couldn't afford otherwise to do a boarding business.

And Miss Motivation, I love your wry humor about the boarding business. That's the other aspect of it...while on the whole I enjoy having a boarding stable it can be incredibly maddening endeavor. Clients have no clue why their board is so much more than the cost of the feed, hay, and bedding. They figure that since I have my own horses and keep them on the property (and would have the property anyway), then it doesn't really "add that much cost" for me keep their horses, too, so why should they have share the cost of the barn, the arena, the fence, the mortgage...?

I am very glad that I do not rely on boarding to pay the mortgage, because some clients can be frustrating and exhausting to deal with and it is nice to be able to say "bye" when you want to. Or at least to know that you could say "bye" if you wanted to. :)

[Cloverbarley]

I own my farm and everything used to run the farm outright so I don't have a mortgage/truck/tractor/trailer/machinery payments/etc to pay each month. I really don't think it is doable to be honest if you are just looking at boarding as a stand-alone business. We have a number of fingers in many pies and we do rather nicely out of all of them BUT aside from the keep of all the horses here, we have small monthly outgoings for the farm. Most BOs I know around my area have other jobs and their spouses work full time elsewhere.

You really do have to factor in these boarders who do not pay on time though, and the ones who aren't able to pay for, sometimes, months at a time. I am able to let these things ride for a while but if you had bills coming out on a set date each month and you needed all of your boarding money in by that date then I think you may be a little worried every month or so, because no matter where you are in the country and no matter what type of barn you run, you will always get the boarders who just will not pay on time!

[Bluey]

The way a friend tells it to me, boarding brings the clients that then buy horses and take lessons and go to shows and that is where money comes from.
Boarding is a washout or can lose money, rarely make any.

One trouble, some/many boarders are struggling to make ends meet, that is why they have to board, don't have their own place and horses at home and they see the BO has land, a nice house and barn and several horses.
They don't know the expenses the BO has to cover and think the BO has more money than it needs and it is ok not to pay, or not pay on time and anyway to resent having to pay at all.
That seems to be a fact of life when boarding, the reason many boarders are just not very quick to pay, they don't think the BO really needs the money.

[gettingbettereveryday]

Different business, but same concept: We rent out a small farmette that we own in the Midwest. We would love to sell it, but in the current market, we're going to lose our shirts.

Anyway, we rely on our rent payments to make our mortgage (since we pay rent on the place we live in here on the east coast). It's a horrible business plan since half the time our renters were late, and now they just left without giving us thirty days notice, without paying their final month's rent, and without finishing out their full lease term.

So in addition to having to find a new renter for a rural property in November, we also are facing the prospect of suing these deadbeat renters for lost income and unpaid rent, a process that our lawyer assures us will probably yield exactly nothing since our former tenants are obviously complete deadbeats. (For the record, we did a credit check, etc., but those tools are just a moment-in-time snapshot. As it turns out, they have horrible credit, but they applied to rent our property and signed a lease right before some pretty gruesome crap hit their credit reports.)

People lie. They cheat. They pay late. They demand the moon. They steal. They make outlandish promises. And anytime you have to rely on them to help you make your payment, you are looking for a headache. Remember: the best laid plans oft go awry.

(And please, don't get me started on the people who have come through to look at the property since deadbeat tenants vacated--our rental management company just quit based on the hassle it has been through trying to secure reliable tenants. My personal favorite was the guy who looked at the place multiple times, had us run a background check and credit report which costs us money to do, agreed to take it and set a move-in date, and looked at the lease documents and blew a gasket and declared them "too restrictive" because we limit the number of horses you can keep on the property based on county regulations and because we insisted that anyone living in the property would have to be listed on the lease. I like animals better. Humans suck.)

[TheJenners]

When I did it, the board money paid for the monthly feed and the annual hay, plus a little extra for supplies for improvements. My then-husband had a FT job and I had another PT job in addition to the barn. His salary paid the mortgage and our personal bills (groceries, utilities, etc) and the rental of any equipment we needed when improvements were done; my salary paid for my vet and farrier needs. Some times there was extra because I was full and everyone paid, or I had a boarder who wanted everything under the sun and was willing to pay for it, or other happy extremes, but usually not.

Also, I did NOT pay myself a "salary" from the board money, as I know some do. I counted the money I wasn't spending on board as that...kinda...

[Bluey]

I was thinking that by now everyone has posted all that is wrong and why trying to run a profitable boarding stable doesn't pay.

So, if you can pull it off and have enough money to carry that stable in the bad times, thru the boarders that don't pay, etc. you can eventually have a small happy family of good boarders, that get along and pay on time and that would maybe still not pay your mortgage, but not be a headache either.

You will just have to take the better times with the bad ones and see how much risk you are willing to take.

Boarding can be very satisfying, especially if you have enough put aside to cover the many times it doesn't pay for itself.

A good business plan with contingency plans will be your friend, along with rules upon rules about getting paid and no exceptions for anyone.
Can you pull that off, be hardhearted when several boarders hit hard times?

[IronwoodFarm]

Since the OP is looking at an existing business, as the BO to show you the books on the business. That will tell you a great deal about that specific business.
I also agree that if you have depend on the boarders' payments to cover the mortgage, then you should not buy the barn. If you can't afford the mortgage outright, then you really can't afford the farm.

[LauraKY]

We make money on training and lessons. Boarding is break even. We're lucky, we owned the farm anyway and decided to start boarding to help pay the expenses for our horses, which it does, but it would nowhere come near paying the mortgage or even for the improvements (which we would have made anyway for ourselves). We figure we have about 20 to 25% gross profit on boarding. Love those easy keepers!