We did somewhat similar as what the OP wants to do. With the direction of our attorney we set up the barns/lots as C Corp. Which leased the barns/lots from us leaving the house as our private residence
The C-Corp. Then was the responsible party to insulate our private assets away from the farm. We selected a C-Corp. structure over S because of the method we were using to distribute the income.
Tax advantages were numerous. The C-Corp. always made money even after paying us the lease.
If you go into this venture without the intent of profitability, the IRS may view the entire project as a hobby
I'm also curious how this worked out, especially since I'm in Southern California... not a lot of covered arenas here, and I would say that $1500/month would definitely be under-charging. My bf (trainer) rents a 26 stall barn for twice that, no covered arena. Manure haul-off is extra... pretty sure electricity is, too.
I'm guessing this has already been resolved one way or the other, but like everyone said- just make sure that all terms are written out clearly and understood by both sides. You don't want a trainer that doesn't pay on time or doesn't keep the place neat, and at the same time, you don't want a trainer who is upset with you because they feel that you aren't doing some maintenance that they believe to be your responsibility. (It should be very clear who does what). But- this is a fairly common situation, it can work out or it can go badly, just depends on the parties involved and of course, how clear the agreement is between the parties!
Very appropriate thread for me as I am in the exact same situation as OP for a property in North County, San Diego. in fact, clanter and others have been extremely helpful in advice on setting up the business structure, and pitfalls I hadn't thought of.
I also got a liability quote for about $1500.
The difference for me is that I can afford to let the facility sit absolutely empty (my own horses will be there of course), and therefore I can wait for exactly the tenant I want- credit check and references will be a must.
Mine is smaller- 12 stalls will be up for lease- but there are two rings, lots of turnout, 2 very large barns for storage, and it's really well situated for many disciplines. There's also a 3BR guest house separate from the main house that will be up for lease, and I'll give preference to those who want to lease boht the horse facility and the guest house.
I've been trying to decide whether to charge for the whole thing (I'm thinking about $1250-1500) whether leasee has 1 horse or 12, or have a base charge of $500 and then do a $100/horse charge. The second is obviously more to the tenant if they are full, but on the other hand, if for some reason they lose a lot of clients, they aren't paying the whole bill while sitting half-empty. Up for negotiation, I guess.