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View Full Version : WTD with Extra House on Farm?



pony4me
Dec. 5, 2010, 09:36 AM
We only have 23 acres, but the house and 1 acre next to us is for sale. It also has a small barn/shop. If we bought it, we were thinking of just renting out the house, since we are able to cover the farm work ourselves. However, COTH has a wealth of ideas and opinions, so I'm seeking input. Thanks!

LauraKY
Dec. 5, 2010, 09:43 AM
That's what our trainer does. She has at least two houses (maybe three) and rents them all out. Works out great for her. You do have to screen your renters very well, though.

SMF11
Dec. 5, 2010, 11:11 AM
We've found that around here the rent does not cover a house's expenses, if there is a mortgage. I would say you should have another very good reason for buying the house, besides the rental income.

(If you don't need a mortgage, then it might work, someone else smarter than me would need to do the analysis!)

pony4me
Dec. 5, 2010, 11:36 AM
No mortgage on our farm, and there would be none on this house. We're older. One of the few advantages to getting older is that you've got 20 years of house payments behind you. This house and acre would give our place 200 more feet of road frontage on a road that soon will be a five lane, in the city limits. There are subdivisions all around us. If/when acquired, we'd have a 24 acre rectangle, instead of the 23 acre almost-rectangle, with a corner cut out for this house. So it would be a long-term investment. Meanwhile, it could generate some rental income.

The road is reality, not speculation. It's being built in sections, and this is the last section to be built.

coloredcowhorse
Dec. 5, 2010, 12:46 PM
Just bought 40 acres with state highway through the middle, less than 2 miles from interchange with interstate 80, in an area of developing gold mines (two already exist, several more in planning/permit stages) and two homes...both older mobiles but livable. Due to mobiles NOT being on a foundation they are not considered "real" property (lowers taxes which are only $71/quarter anyway) and the seller had to carry his own paper as banks won't finance. Mortgage is under $1K/month and I rent one out for $500 plus half the electricity (one meter for entire place). She buys her own propane and does her own TV/satellite/phone. Works well as renter has two horses so we can cover chores for each other if needed, get help hauling hay etc. Out of pocket for my home, second home, two wells, fences, cross fences, 40 acres is under $500/month....just barely more than I was paying for rent of a studio apartment sized house and several corrals and pens on the edge of town.

If looking for long term investment it sounds pretty good plus having a rental gives you some added income. It CAN be a pain...a friend has several rentals and upkeep can be a bit much if renters are not good. And evicting one that is bad can be a nightmare depending on your state laws.

clanter
Dec. 5, 2010, 12:51 PM
make it into retail property... a farmer's market?

Chief2
Dec. 5, 2010, 02:16 PM
My brother's bought his farm with two houses on it. At first he rented the smaller home out to the trainer. Now our elderly mother lives in it, making it easier for us to care for her.

fivehorses
Dec. 5, 2010, 02:36 PM
If you can buy it, buy it.

I have a similar situation, a house on a half acre lot on the road in between my property.
I am now dealing with renters who are the neighbors from Hell.
latest thing they did was to target practice with paint ball guns on thanksgiving day, while I was out for an hour running errands.
Needless to say, my horses were petrified, and it about ruined thanksgiving.

About 10 years ago, I had another set of neighbors who were obnoxious in that they tried to pressure me to sell by filing complaints to various state and county departments. None were founded, but it was a 2 year pita.
Horses were not harmed as my new neighbors are doing.

I had the opportunity to buy this house when the original folks moved and offered it to me for cheap money. I didn't have the money then(just paying my own mortgage was hard enough) and don't like to regret and look back, but I wish I had bought it.
Now, after living here 20 years, I am looking to move, because this is just a lose lose situation, and don't want to deal with awful neighbors again. Sure, they might move, but in 10 years, who knows who is my next neighbor from hell.

Buy it, Strong Buy recommendation.

poltroon
Dec. 5, 2010, 02:52 PM
I would buy it and rent it out.

JanM
Dec. 5, 2010, 03:37 PM
Maybe you could rent it out at a very affordable price to someone who could be your eyes and ears when you are gone? That would be very comforting for you, and a good deal for the renter. If you are near a university then a grad student or instructor might be good, since they are older than the usual college student age, and hopefully more mature and reliable. Or maybe a retiree that wants to live in the country, but still wants neighbors close by, and needs an affordable place. Just make sure you strictly limit the number of tenants so you don't end up with one reliable renter and their entire family or a bunch of roommates you didn't want to rent to.

JackSprats Mom
Dec. 7, 2010, 09:10 PM
As long as it seems a good price in this market, sounds like you're financially secure, it would seem a good long term investment so I would go for it.

We're going to try and buy the 10 acres next to us as I believe the more (acreage) the merrier in a growing area.

RLF
Dec. 8, 2010, 08:07 PM
I personally would rent it to someone with an interest in your farm, possibly a boarder, trainer, etc.

If it's a 'horse person' you know they will have (hopefully!) common sense about being a good neighbor to a horse property, plus if they have an interest in the property (their horse is there, or their clients come there) they are more likely to work with you rather than against you.

Any rental situation could go real bad, and unfortuntely people only give their 'good' references. But if you take your time and find the right person, it could be very rewarding.

My hubby would say to rent the rooms out individually- by the week... i dont' know what state you are in, but here you do not need to go thru an eviction process if you are renting a room by the week. Simply put their stuff on the lawn and change the locks.

If you didn't want to rent it to a person, maybe it could be converted to serve as a commercial rental (if zoning allows it). it would be kinda neat to have a vet's office, or tack shop or something to that extent.

pony4me
Dec. 8, 2010, 09:35 PM
Thanks for all the replies! I absolutely love the tack shop idea, but would have to wait until the road is done, and then get the zoning changed. Our city does not have a good English tack shop. The nearest one is about 40 miles away, and their customer service is deplorable. I just bought a new high end saddle that the manufacturer sent directly to my trainer because the tack shop (which was the area's authorized dealer) would not return the reps calls asking what size demo I wanted.

Of course running a tack shop has nightmares all it's own. At least I'm well connected with a good barn, and am an accountant. Not afraid of numbers, financial statements and tax returns. The big scary thing is the cost of the inventory I'd need, so I'd have to think about it carefully and let common sense prevail. Just renting it out would be safer, assuming I got good tenants.

RLF
Dec. 8, 2010, 09:45 PM
...that's not saying that you'd have to OWN the tack shop... maybe you could find a good commercial tenant. You might have less headaches (assuming you don't mind the traffic during the day) if it's a good, stable business. ...and it's common for the person leasing the property to pay for certain improvements to the building to make it appropriate to their business.

nightsong
Dec. 9, 2010, 02:58 AM
Buy it out of self-preservation. It's baically a corner of your property anyway, and who KNOWS what kind of neighbors/businesses you might get...:eek::(:uhoh:

JanM
Dec. 9, 2010, 06:34 AM
I don't think I would rent to a tenant who is a boarder or provides a service to the farm, because if the relationship goes south then you have tenant problems combined with the service problem.

If you have reliable high-speed internet and other communications options available, then maybe a home business type of tenant would work. Something like an online travel agency, or consulting business? That way you wouldn't have a high volume of traffic, but still have a profitable tenant.

I think it's a great idea to buy it to increase your land size, and frontage. Have you checked to see what the effect on your zoning would be with a business of some type in that corner of the property? I hope it wouldn't effect you tax status or have any other unintended effects. And if you use it as a rental you need to clearly define any and all uses of property, number of tenants, restrictions on what the tenants can use the property for, about items like coming on your property, or near your animals, and what behaviors are prohibited (fireworks, size and number of parties, etc).

ToTheNines
Dec. 9, 2010, 08:43 AM
I agree with JanM. Keep it separate. I have a small apt on my farm, and would love to find the perfect tenant, who rides with me, takes care of horses when I'm gone etc. But that has not happened in over ten years of various tenants.

It is not that rewarding. Most of the type of tenants you like will have pets (right? we horse people tend to like people that like animals!). It is not so much the tenants that are hard on the property, but their pets. Also, someone else's barking dog is WAY WAY more annoying than your own. As others have said, be sure to screen carefully. Maybe use a property management service to help screen your prospects and do the lease. Use a short term lease, for your own protection, so you can end it if you don't like the people.

The closest I ever go to that perfect horsie tenant was a young lady that knew horses pretty well. But she she came home with a puppy (after I rented to her on the basis of her one existing dog). I had to tell her she could keep it, but then she let it chew all the corners of the built-in wood cabinetry. There is something about being a tenant that makes people just not care as much about the property.

But as far as buying the property? Absolutely! Can never have too much land.

Zu Zu
Dec. 9, 2010, 09:08 AM
Buy and decide the best way to use it later = just get it ~ IMHO

suz
Dec. 9, 2010, 05:55 PM
i'd totally buy it and use it as a rental or staff housing.
i have an apt in my home i barter help for. my tenant is not only a great friend now, but i never have to worry about a farm sitter or help with the animals with her here.
she gets a farm to live on and safe fencing for her big dogs in exchange for her help around the place.
works really well for both of us.

ladybugred
Dec. 10, 2010, 11:11 PM
Buy it. Rent it. THRU A MANAGEMENT COMPANY. You DO NOT want those 2 AM, my loo doesn't work since I flushed a cat down it, calls. Sell when you are ready to retire, or just want a lump of cash.
If you have ultimate say over your neighbours, they can never make you want to pull your hair out!!

LBR

judybigredpony
Dec. 12, 2010, 09:26 AM
Thanks for all the replies! I absolutely love the tack shop idea, but would have to wait until the road is done, and then get the zoning changed. Our city does not have a good English tack shop. The nearest one is about 40 miles away, and their customer service is deplorable. I just bought a new high end saddle that the manufacturer sent directly to my trainer because the tack shop (which was the area's authorized dealer) would not return the reps calls asking what size demo I wanted.

Of course running a tack shop has nightmares all it's own. At least I'm well connected with a good barn, and am an accountant. Not afraid of numbers, financial statements and tax returns. The big scary thing is the cost of the inventory I'd need, so I'd have to think about it carefully and let common sense prevail. Just renting it out would be safer, assuming I got good tenants.

RE-sale on consignemt...good quality english tack.
Keeps you New inventory down...serves a purpose outlet for sellers who live in area glutted with English tack shops...