With some generous support from my parents toward the downpayment, my hobby farm dream looks like it will become a reality. My husband and I are weighing options and I thought I'd ask for your thoughts, since my mind is a jumble of thoughts.
I've got a dream place in mind but it's a stretch and we wouldn't qualify without counting boarding income (an established farm with 15 acres (5 in a hayfield) and 12 stall barn). It's connected to an awesome horse community, a trail system with a pony club, got a nice but not excessive home. But we would need a commercial loan to get that place so we could count the boarding income. (We are about $700/month short with non-boarding income on the payment). Has anyone managed to get a commercial loan for their part time boarding hobby farm? Pros/cons? We are short of a 20% downpayment so have to decide if we try to go big or go home, or scale down. We could maybe finagle some more funds from my in-laws on a loan situation.
If I scale back the dreams to what we qualify for and could afford without running a boarding operation, the pickings are slim. Possibly a 40 acre farmette on a river (looks like 10 acres might not really be "usable") in the horsey community very close to the trails. We might be able to get them to come down since it's been on the market and has an outdated, smaller farmhouse. It's not set up for horses right now but has two good larger pole buildings. Might be hard to get a loan for (we're working on a "portfolio" hobby farm loan from a local bank) because fewer comparables - they would prefer no more than 10 acres.
There are some other places with fancier houses than we need but on around 10 acres, and a couple fixer uppers on larger tracts of land (20 acres). Also an affordable place but nice with a distinctly rustic style and only 7.5 acres, with *only* 3 horses allowed.
Lastly, there is a decent farm house with two decent looking barns on 30 acres, but about 15 minute drive from the center of the horsey area. Looks perfect, but only a "good" location and not a "great" location. Not riding distance to trails or equestrian events that make the horse community so cool.
Knowing what you know now as a farm owner, what would you go for? More land or better horse friendly location on a smaller acreage? I keep going round and round in my head, trying to figure out what's going to matter more to us when we actually live somewhere:
- A big hayfield that you can get all you need plus extra or riding over to the pony club with my daughter on trails, connecting to indoor arenas or regular trainers without having to build one yourself
- Relying on others or making your own investments but having everything "just so" as you like it?
- Getting a fancier house with a big payment or saving 100k but having to fix up a house over the years?
- Boarding a few horses on the side to ease costs or not having to board other people's horses but having fewer amenities of your own?
What do you wish you had done differently, if you had to do it over again?
How did you decide yourself?? This is worse than choosing a stallion for my mare.
I ride dressage and have two horses (mare and coming yearling, hoping to breed again) and one child with another probably in the future. We both work but I freelance from home. Thanks for your thoughts! I keep reminded myself not to agonize, this is awesome that I have the chance to make this happen sooner than 10 years from now.
Don't buy more than you can afford. I would buy the run down house on smaller acreage but in an area where you have permanent trails. Life is easier if you are in a horse oriented area. Twenty years ago, we bought a house that was a bit of a financial stretch. It has taken us 20 years to get to the point where we have extra money to replace the 40 year old windows, do other updates, and take regular vacations.
Don't buy what you can't afford, and don't buy anything that needs fixing if you can't afford to do the work without risking your financial cushion. Also, don't rely on making money on boarding, because as many threads on here show, boarding isn't going to make money by itself.
I 'll echo ..Don't buy more than you can afford. Don't depend on boarding income. That source could dry up quickly and without notice. The you'll be in a big pinch. The mortgage payment rolls like the seasons... day after day.
The 5 acre hayfield isn't worth much. Unless you have a neighbor to hay it. You'll have trouble getting anybody to transport their equipment to work it. If you want to do it yourself, you'll have to buy a lot of old, old (fix it all the time)equipment or expensive old (fix it sometime) equipment. Forget new equipment cost. Plus your time and labor... haying is hot, hard work. I know.
Boarding, at best you will cover cost, at worst, you will have to keep putting your money where others default in the care of their animals, or worse, dump them on you to care for.
Then you have to go thru weeks/months fighting to gain ownership, so you can move them and get out from under that expense.
The horse industry is shrinking and may eventually become, similar to that in other countries, for professionals running riding centers, that board for clients and train and show and give lessons.
There is less and less need for people owning a horse and boarding it somewhere without all the amenities of good facilities and trainers and much going on to enjoy their horses with good horse company.
The public left making use of private boarding barns is shrinking, be sure you can have a good, solid customer base for that kind of boarding barn.
That you may depend on boarders to pay for your place, that needs to be re-considered in today's horse world.
Another chiming in to say "don't buy what you can't comfortably afford without relying on boarding income."
That is how people get in trouble. Big trouble.
If you want a home for you and your horses, find one that you can afford. If you choose to do boarding on top of that, fine. But it's not something you can count on for income and it can be difficult.
I would also say that unless you and hubby are VERY handy, stick to looking at places that don't need a lot of work. While the price might be nice, renovation costs money and time. Time and money you may not have once you pay the mortgage and get your regular chores done.
Good luck. Hang in there.
A good horseman doesn't have to tell anyone...the horse already knows.
Boarders come and go, and sometimes don't pay. And cause wear and tear on your farm. Make sure you can afford to pay for everything and not rely on boarders. Do you or your husband have business experience? Running a business? Running a farm? They are completely different.
Have you talked to a tax person about business status, filing, accounting? If you go with a commercial loan, are there any specifications in use/filing/zoning/etc? I don't think you can use a commercial loan to buy a hobby farm, but I could be wrong there.
Do you or your husband like working outdoors, in all weather? Will you be hiring someone to do the daily chores, or doing them on your own? Your riding will be taking a back seat to running a business, UNLESS you are strict with boarders and their expectations (ask me how I know). I was a BM at a barn where the BO let the boarders run the show, and then she bitched and moaned about never being able to enjoy her own horses...She also got way way over-crowded, which has its own set of problems. I was a BO of a smaller facility, and I had no problem telling the boarders that I wasn't there to babysit, to be an armchair vet or farrier, and I was not their maid (nicely, and it was in the contract). So I could get up, feed and chore, ride my horse, and go to my "real" job, and not have my phone ringing off the hook or kids running rampant.
The boarding made me money because I was careful with everything, and I could have "paid" myself, but instead reinvested the money into improvements. It didn't compliment the mortgage at all. Can you afford to do that?
I'm going to pile on with the rest here.....don't buy more than you can afford without boarders!
I boarded horses for many years at my small farm. I charged $400-$600 a month per horse (changed over time and I gave some people a deal for the amount of work they were willing to put in). At the end of the day I counted the board money towards making the cost of my horse's feed a little less expensive, period. There was not a dime of that money that ever made it as far as the mortgage.
When we were trying to sell this place we had a couple who wanted to lease it from us. We were excited about the prospect (and would have been happy to do so) until they said that they just needed to figure out how many horses they needed to board in order to come up with the $350/month extra they would need towards board. Screeeeech! That brought that to a full stop Counting board money towards a mortgage/rent payment implies that you're making money off of having horses there and completely discounts your time, use of the facility (including wear and tear), liability/insurance, etc.
I'm not saying it's not possible to make money, but for a small non-professional boarding operation, I find it highly unlikely that will be the case.
As far as payments go. I was very careful about who I let in here, and never had anyone late on a payment. But I was amazed at how much of a drop in the bucket each board check really was towards feed/bedding/time, etc.
__________________________________ Forever exiled in the NW.
I do have experience working in barns, including full time in two working student stints for 4 years. I know how much work it is! I haven't every been the one to pay the bills but I have been a careful observer of what worked and didn't and have been collecting info on costs for a long time. I also run my own freelancing business so I'm familiar with business tax issues. The commercial loan seems to be suggested every time I mention earning any income from the property, so I don't know of any hobby farm rule for commercial loans. Also, the hobby farm seems to be a pretty amorphous concept. One realtor listing says a 40 acre "farmette" while another says 5 acre "farmette. Freddie Mac seems to say more than 10 acres is non-conforming.
The "dream farm" is directly on the aforementioned trail system which is a land conservancy. It's not on the market, but the owners are interested in selling. If we got that place, we would inherit about 5 boarders who have been there for 13+ years. Their hayfield is next door to a neighbor who cuts the hay, sells them more of it in the meantime and even has done a trade situation for boarding in exchange for hay. The owner of the farm tells me 4 boarders at $300/month is her break even point for her hay, grain, insurance and taxes. That place is pretty turnkey, could board right away, changing nothing and buy all of her equipment. They also keep horses out as much as possible including overnight except in winter. The house is decently sized and in great shape. The drawback is it needs a new mound system, which I've heard can run up to 50k. But they would take it into account in the price. She also says she never advertises and due to the location on the trails, boarders would just appear in the driveway inquiring about boarding. I met this farm owner almost 2 years ago when I was looking for boarding and they are honest people.
There are several farmers around who cut hay for the horse barns with hayfields. That's the approach I would take before considering doing the haying myself (having only done the stacking hay part!)
We are landlords in our current duplex and while I understand boarding is a different thing than tenants, I'm familiar with setting rules and clear expectations at the beginning and speaking up. (Amazing what a $40 on time payment "discount" does to keep payments prompt at the 1st of the month). I also have picked up a few tips including collecting a "last month's board" deposit when getting a new horse to help screen out flakes. My thoughts on boarding are that I wouldn't mind having a couple boarders to help offset costs, but ultimately it would be nice to not HAVE to have them forever. I also know there are people like my younger self who help with chores for reduced board for a horse, this is what I had in mind to help out with barn labor.
Buying on the high end makes me nervous, but I've also heard that buying an existing equestrian property is cheaper that converting a property yourself.
I wish there were more mid-range homes on acreages. It seems to be McMansions or tiny outdated houses or utter dumps. As it is, while my husband is really handy, having our duplex has giving me a realistic appreciation for how long things take to do while leading one's life at the same time. I would rather not buy a dump expecting to gut it and spending tons of time renovating. The kind of the options right now though seems to 10 acres with newer built, overpriced, more house than we need or 10-20 acres with really crappy house. Maybe getting a construction loan to renovate would still be worthwhile so someone else can do the major work?
I do appreciate all your thoughts and concerns. It's helping to sort through all the factors in this decision.
DH and I are buying in the near future, and I've found the same thing as you: expensive big houses on "land" that is in no way ready for horses, or property with existing "barns" that are usually for cows and tractors, and the houses are a dump. DH leans towards the latter, saying he can fix the house up...which he can...but theory and reality are oft not the same, and his projects are often a week or more long complete with lots of color commentary and complaining. Pass.
It is a big risk to buy a property you cannot afford. If you cannot pay the mortgage w/o boarders then you can't afford it. I actually like the last property you mentioned on 30 acres. A dream property can become a nightmare real quick when you lose a couple of those boarders who you must have to make your payments.
Proud to be owned by 2 appaloosa mares and an ornery mule.
If you can't pay the mortgage without boarders, it's not worth it. And check with your mortgage person - mine told me that my loan would not allow me to use my property for any kind of commercial useage. I don't know how enforceable that is, but I'm not risking it (and I don't want to).
I worked at barns for years, and boarded for even longer - I have no desire to board anybody else's horse. Having responsibility for my own is plenty! If, as you say, "ultimately it would be nice to not HAVE to have [boarders] forever" - it sounds like you really don't want them, either. Plus, no offense to the boarders at the "dream place" - but I don't think I'd want to "inherit" boarders at a place that I intended to make my home - I'm sure they're wonderful people, but what if you want to change things? People can be pretty resistant to change - and since they were there "first"... that wouldn't be something I'd want to get myself into.
Don't stretch yourselves so thin. I am REALLY sorry to say this, but if you need so much help with money, you need to shop for less at this point. You can't count on boarders, as a consistant income. They come and go, are a BIG headache to deal with and consume vast amounts of time and energy to do things to a higher standard. Boarding always SOUNDS like easy money, until you have to start listing all the parts to it.
Then you have to consider what happens if one of you is laid up. Injured, sick, will you still be able to meet the payments without help? This is critical in your figuring your money. If someone loses their job, can you still pay with only a partial income? You must consider these "worst case" scenarios, they HAPPEN to everyone, almost always a terrible surprise to you.
When you have already pared things to the bone, but having to meet big payments every month, there is no stretch for surprises. Kind of like doing a circus act, you keep dancing, juggling all the balls and things are fine. But one TINY slip, not dancing fast enough, long enough, and the whole thing falls down on you.
Go back and read the MANY COTH stories of folks who tried their dream barns, wore their bodies out, still lost the place and are totally broke now. They couldn't have done anything more, worked 16+ hour days EVERY DAY, but just couldn't juggle things anymore. No profit to their work, barely making ends meet. Some get to hate their equines for sucking the life from them.
As an alternative, you might consider leasing a barn setup, giving it a go without the HUGE INVESTMENT of your total money savings. You still pay the monthly fee, but are not locked into a place and OWING your families their money back. Give yourself a time limit, maybe 2 years, to see how your ideas work out. Then you and spouse can sit down with the numbers, to actually KNOW if you are "making it" or deluding yourselves. You may not have time to ride your own horses or compete if you like to, because all your time is needed to keep up the barn and facilities of the rented place. It is very easy to burn out under such a load, every day, though we all think "not ME!"
I just think that dreaming big is not enough. A facility that is going to cost more than you have, is a BAD way to start. Spouse could get resentful, puts a big strain on your relationship, with farm eating every penny and free minute in your lives. Enough to maybe break the relationship.
Working hard is great, putting in your time and effort for a goal is a good thing. However life is not a fictional story, you have to be realistic, not take on more than you can actually handle. Handling means doing things that you can AFFORD to do without help. You might need that family help later on for something even more important! Parents often give more than they can afford, hurting their own income as they get older, can't earn more. Maybe your families are VERY well off, money is not a problem. STILL you as a couple are SUPPOSED to be adults, managing on YOUR income, or abilities to get a loan for your goals. This is life, how you play it.
I would say that the barn you want is not a good goal at this time. Any kind of problem would rip your fabric of survival apart, with every penny of income, pre-spent before it arrives. Loss of boarders, hay price increase, expenses to manage the farm or even a big tax increase on the land! You can't foresee problems that will cost you money you don't have. Since there would be no cushion of money available, any problem would be major, could make you lose everything. Just a financially irresponsible move to make at this time in your lives.
Old family motto is "If you can't pay for it, you don't really need it". Harsh, but keeps us from going in over our heads on things we REALLY, REALLY want.
You guys are good medicine for my dreamy eyes obscuring stark realities.
I felt a tiny bit relieved when our loan officer ruled out the price of the "dream farm" for a residential mortgage. I suppose that was my inner voice saying the same things you all are saying. I have never wanted to be stressed out by a mortgage every month or "overhoused" and it seemed dangerously close to that. Since our appointment last week, I've been ruminating a lot on all these things. I had hesitated to start off boarding someplace with so many boarders, I wouldn't mind dipping a toe in boarding with a couple of horses but not 10 to start. I think that was my good sense kicking in.
So ruling OUT the begging, borrowing and stealing for the dream farm, what do you all thing of the remaining options 1) 30 acre farm in the wrong location assuming we can convince them it's still a hobby farm), or 2) smaller 6-10 acre place with a fixer upper or 3) little more expensive house 6-10 in the right location?
When I think it through with the 30 acre place in the wrong place:
I want an outdoor arena to ride in, I could trailer to a trainer if need be, eventually in 5 years perhaps pay to put up a 20 x 40 m indoor to avoid temporary boarding every winter (we live in the upper midwest and an indoor is required if you want to ride during the winter). I would miss being near to the Pony Club facility and the gorgeous trails (with cross country jumps to boot), but ultimately I would be a self-contained equestrian unit and would not be overwhelmed by the mortgage payment. I would have lots of pasture and cheap hay someone else would bale. We could optionally have a couple boarders.
The 6-10 acres hypothetical fixer upper in the right location:
Would be connected to a community and could use trail system to ride over to visit a trainer or clinic at a neighboring farm. Would be 10 minute drive closer to the city where my family and friends are. Would have to buy hay every year from outside sources. Would maybe have to spend a lot of time/money on house in the beginning or spend a bit more on a fancier house that we necessarily need. Would probably like the neighbors more (lots of like minded people).
I'm not sure if I'm over-valuing the horse community part... the trail system is totally appealing, but if I'm riding and wanting to compete in dressage, that's a lot more arena time than trail riding anyway.
Is 30 acres of land overwhelming to care for compared to 10? Is 30 acres a sweet deal that one would be glad to have later on? (sell extra hay, not worry about overgrazing, put some land in low ag taxes)
Maybe this spring will yield a few more properties to look at and the choices will not feel so limited. I think the low rates and low values will hang around another year or so, so I'm not in a huge rush.
Sounds like your gut was telling you what you needed to hear, and I'm glad that you a) listened to it, and b) feel good about that!
With respect to your current options, either of your 6-10 acre options sound better to me than the 30 - but that's because I'd rather pay for nice hay that someone else has done all the hard work to make. If you're relying on your own hay fields for hay, but on someone else to provide the equipment and labor to actually cut and bale the hay... that's not a situation I'd be happy with on an ongoing basis. What if there's a drought, or hay gets rained on before it's put up? You could lose a whole cutting (or more), and then how does that impact your deal with the farmer who does the harvesting? There are lots of potentially iffy situations that can arise (what happens if "your" hay guy's tractor/equipment breaks down, or something happens to him? Or he just decides that he's going to get his own fields taken care of before he comes to do yours?) Not saying that bad things are going to happen, but it really seems like hay is not a crop for folks (like me) who are into reliable, low stress things!
Between the fixer-upper and the more expensive house? Same kind of thing - would you rather spend the money at the front end and have an "easy" house to live in, or are you good with spending the money along the way and maybe living with a crappy furnace/roof/whatever for a few years? Will the (concievably) lower mortgage payment on the fixer-upper allow you to do those repairs/rehab fairly readily, or will you still have to save up for a long time to fix the place? Can you do any of the work yourself? Will the fixer-upper pass an inspection, or is it an as-is situation?
I know how I would (and have) answered these kind of questions - you have to contemplate them for yourself. And honestly, I figure that if it doesn't feel "right", and I'm not going to feel happy about the purchase? Then don't do it - something else will always come along.
Although if I were REALLY into reliable and low stress, I'm sure I could just keeping boarding forever. I'm thinking this farm will be both challenging and wonderful, like many things in life. Got to have an adventure sometime!