Sport Horse Spotlight

0201171029b-1

Real Estate Spotlight

THC_1

Sale Spotlight

COTH_without Subscribe
  • Welcome to the Chronicle Forums.
    Please complete your profile. The forums and the rest of www.chronofhorse.com has single sign-in, so your log in information for one will automatically work for the other. Disclaimer: The opinions expressed here are the views of the individual and do not necessarily reflect the views and opinions of The Chronicle of the Horse.

Announcement

Collapse

Forum rules and no-advertising policy

As a participant on this forum, it is your responsibility to know and follow our rules. Please read this message in its entirety.

Board Rules

1. You�re responsible for what you say.
As outlined in Section 230 of the Communications Decency Act, The Chronicle of the Horse and its affiliates, as well Jelsoft Enterprises Ltd., the developers of vBulletin, are not legally responsible for statements made in the Forums.

This is a public forum viewed by a wide spectrum of people, so please be mindful of what you say and who might be reading it�details of personal disputes may be better handled privately. While posters are legally responsible for their statements, the moderators may in their discretion remove or edit posts, though are not legally obligated to do so, regardless of content.

Users have the ability to modify or delete their own messages after posting. Moderators generally will not delete posts, threads or accounts unless they have been alerted and have determined that a post, thread or user has violated the Forums� policies. Moderators do not regularly independently monitor the Forums for such violations.

Profanity, outright vulgarity, blatant personal insults or otherwise inappropriate statements will not be tolerated and will be dealt with at the discretion of the moderators.

Users may provide their positive or negative experiences with or opinions of companies, products, individuals, etc.; however, accounts involving allegations of criminal behavior against named individuals or companies MUST be first-hand accounts and may NOT be made anonymously.

If a situation has been reported upon by a reputable news source or addressed by law enforcement or the legal system it is open for discussion, but if an individual wants to make their own claims of criminal behavior against a named party in the course of that discussion, they too must identify themselves by first and last name and the account must be first-person.

Criminal allegations that do not satisfy these requirements, when brought to our attention, may be removed pending satisfaction of these criteria, and we reserve the right to err on the side of caution when making these determinations.

Credible threats of suicide will be reported to the police along with identifying user information at our disposal, in addition to referring the user to suicide helpline resources such as 1-800-SUICIDE or 1-800-273-TALK.

2. Conversations in horse-related forums should be horse-related.
The forums are a wonderful source of information and support for members of the horse community. While it�s understandably tempting to share information or search for input on other topics upon which members might have a similar level of knowledge, members must maintain the focus on horses.

3. Keep conversations productive, on topic and civil.
Discussion and disagreement are inevitable and encouraged; personal insults, diatribes and sniping comments are unproductive and unacceptable. Whether a subject is light-hearted or serious, keep posts focused on the current topic and of general interest to other participants of that thread. Utilize the private message feature or personal email where appropriate to address side topics or personal issues not related to the topic at large.

4. No advertising in the discussion forums.
Posts in the discussion forums directly or indirectly advertising horses, jobs, items or services for sale or wanted will be removed at the discretion of the moderators. Use of the private messaging feature or email addresses obtained through users� profiles for unsolicited advertising is not permitted.

Company representatives may participate in discussions and answer questions about their products or services, or suggest their products on recent threads if they fulfill the criteria of a query. False "testimonials" provided by company affiliates posing as general consumers are not appropriate, and self-promotion of sales, ad campaigns, etc. through the discussion forums is not allowed.

Paid advertising is available on our classifieds site and through the purchase of banner ads. The tightly monitored Giveaways forum permits free listings of genuinely free horses and items available or wanted (on a limited basis). Items offered for trade are not allowed.

Advertising Policy Specifics
When in doubt of whether something you want to post constitutes advertising, please contact a moderator privately in advance for further clarification. Refer to the following points for general guidelines:

Horses � Only general discussion about the buying, leasing, selling and pricing of horses is permitted. If the post contains, or links to, the type of specific information typically found in a sales or wanted ad, and it�s related to a horse for sale, regardless of who�s selling it, it doesn�t belong in the discussion forums.

Stallions � Board members may ask for suggestions on breeding stallion recommendations. Stallion owners may reply to such queries by suggesting their own stallions, only if their horse fits the specific criteria of the original poster. Excessive promotion of a stallion by its owner or related parties is not permitted and will be addressed at the discretion of the moderators.

Services � Members may use the forums to ask for general recommendations of trainers, barns, shippers, farriers, etc., and other members may answer those requests by suggesting themselves or their company, if their services fulfill the specific criteria of the original post. Members may not solicit other members for business if it is not in response to a direct, genuine query.

Products � While members may ask for general opinions and suggestions on equipment, trailers, trucks, etc., they may not list the specific attributes for which they are in the market, as such posts serve as wanted ads.

Event Announcements � Members may post one notification of an upcoming event that may be of interest to fellow members, if the original poster does not benefit financially from the event. Such threads may not be �bumped� excessively. Premium members may post their own notices in the Event Announcements forum.

Charities/Rescues � Announcements for charitable or fundraising events can only be made for 501(c)(3) tax-exempt organizations. Special exceptions may be made, at the moderators� discretion and direction, for board-related events or fundraising activities in extraordinary circumstances.

Occasional posts regarding horses available for adoption through IRS-registered horse rescue or placement programs are permitted in the appropriate forums, but these threads may be limited at the discretion of the moderators. Individuals may not advertise or make announcements for horses in need of rescue, placement or adoption unless the horse is available through a recognized rescue or placement agency or government-run entity or the thread fits the criteria for and is located in the Giveaways forum.

5. Do not post copyrighted photographs unless you have purchased that photo and have permission to do so.

6. Respect other members.
As members are often passionate about their beliefs and intentions can easily be misinterpreted in this type of environment, try to explore or resolve the inevitable disagreements that arise in the course of threads calmly and rationally.

If you see a post that you feel violates the rules of the board, please click the �alert� button (exclamation point inside of a triangle) in the bottom left corner of the post, which will alert ONLY the moderators to the post in question. They will then take whatever action, or no action, as deemed appropriate for the situation at their discretion. Do not air grievances regarding other posters or the moderators in the discussion forums.

Please be advised that adding another user to your �Ignore� list via your User Control Panel can be a useful tactic, which blocks posts and private messages by members whose commentary you�d rather avoid reading.

7. We have the right to reproduce statements made in the forums.
The Chronicle of the Horse may copy, quote, link to or otherwise reproduce posts, or portions of posts, in print or online for advertising or editorial purposes, if attributed to their original authors, and by posting in this forum, you hereby grant to The Chronicle of the Horse a perpetual, non-exclusive license under copyright and other rights, to do so.

8. We reserve the right to enforce and amend the rules.
The moderators may delete, edit, move or close any post or thread at any time, or refrain from doing any of the foregoing, in their discretion, and may suspend or revoke a user�s membership privileges at any time to maintain adherence to the rules and the general spirit of the forum. These rules may be amended at any time to address the current needs of the board.

Please see our full Terms of Service and Privacy Policy for more information.

Thanks for being a part of the COTH forums!

(Revised 5/9/18)
See more
See less

Buying a farm with an existing business

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Buying a farm with an existing business

    Does anyone have experience buying a farm with an existing business (trainer who would stay, boarders, etc.)? We're just in the beginning process of thinking about it, but I wasn't sure if it was like taking over another type of commercial business where you got a loan based on what the business was currently making, or how that worked. Haven't approached financiers yet - we're really just thinking about it at this juncture.

    Experience-wise, I've managed barns before, owned a small farm, and taught, but would plan on leaving the teaching to the trainer with her current clientele. I would mostly deal with board/facility maintenance, and also work on things like booking clinics etc. to attract and maintain additional clients. Facility is lovely, well maintained, and close enough to an urban area to be a reasonable buy.

    Both my husband and I have decent relatively flexible jobs (mine is work from home, which could easily be work-from-barn-office) that would be hard to replace the income from so I'm not looking for it to replace my income, more to get to the point where the business will break even (which it may be doing now - I'm not sure, again, in the beginning phases).

    Things I am concerned about? Well, boarding is a hard business and horse people tend to be a bit nutty. I get that. I am one. The economy? Yes, also concerned about that, but this barn does cater to the higher end clientele, who usually makes it through dips relatively unscathed. Losing the trainer? Could happen. I'm a relatively easygoing person, so I'd hope it wouldn't, but I also hope that the opportunity with the facility would be good enough to attract and keep good trainer(s).

    If the books seem to be good, what else should I be looking for?

  • #2
    the existing business ..get a copy of their lease

    I'm not looking for it to replace my income, more to get to the point where the business will break even
    this always makes me go What?

    Comment


    • #3
      Before we bought our farm 17 years ago, what you are contemplating is exactly what I wanted to do. Did all the research for months, made an awesome business plan, had two different farms with existing boarding/training operations that I was looking at. Sadly, my dreams ended up being a little too grand. LOL So we ended up with a very rural 40 acre property, with just our horses. And its all good. I love my place.

      If I were thinking of taking on that venture again, I'd call my Home Owners Insurance agent and find out what the property would cost to insure, making sure that everything is fully covered, including the activity on the property - the whole shebang (riding, jumping, farm equipment, buildings, fencing, etc.).

      The next call would be my accountant. I haven't done my own taxes since the 1980's, and a good accountant is a valuable resource and worth their weight in gold! If you were able to get hold of the businesses books (if the sale gets to that point), I'd pay the accountant to review them.

      To get a loan to purchase a business such as this, some lenders may require you to have business plan. There are software programs nowadays that make that a breeze to organize, so worth the investment.

      Good luck to you! I remember how fun it was planning and visiting properties and everything... my bubble got burst, but hopefully that won't happen to you!
      ~~ How do you catch a loose horse? Make a noise like a carrot! - British Cavalry joke ~~

      Comment


      • #4
        I would want to know how the relationship with the trainer is structured. What would be grounds for evicting her, how much notice he/she would have to give you if you left?

        I would spend a fair amount of time with the trainer, your dynamic is what will make or break this for you. Ask her what upgrades she would like to see, what she liked or didn't like about the former owner. I would try to watch her teach and see the condition her horses are in. If she's really meticulous about her lessons and care, she is probably going to take reasonable care about your facility. If she has very specific complaints that tells you she is probably observant and will notify you of small things before they become big things. If you think she's good and she has a big ask, like new footing, see if she will consider chipping in for it. That investment will make her more engaged and probably make her that much less likely to leave.

        I also wouldn't underestimate the impact of a recession even on the wealthy. I ride at a barn that is in one of the most upscale communities in Los Angeles, I would say average income is mid-six figures. While the rider count dropped slightly in the recession, the horse count dropped 25%. I would assume that much vacancy for 2 years in any forecasts to be safe.

        Comment


        • #5
          What are you looking to gain by doing this, additional income, facilities for your own horses? I'd be certain you could afford all the costs if the trainer up and pulled out with all or most of her clients. If you are buying it for the purposes of having a nice facility for your own use paid from the income generated from the trainer/clients then need to look carefully at costs of everything like insurance, maintenance etc. and weigh against the cost of just owning a property for your own personal use.

          Comment


          • #6
            I'd be concerned about how to proceed with the existing trainer. First, you have to decide what kind of relationship you want between the two of you. Do you want to just be a facility owner who is largely hands off, or do you want to be heavily involved or in charge of the daily care? I would find out what the current relationship is between BO and trainer - who is currently in charge of horse care outside of training/lessons: schedules, feeding plans, turnout, stall cleaning, etc? If the trainer is currently in charge of all that in addition to training, and you want to be, that may start the relationship out strained, as the trainer may feel like you're stepping on their toes.

            I'd also interview with the trainer to get an idea of their management style. This is important to know no matter who is in control of the daily activities, because even if the line is clear that "the BO does this and trainer does that," people with very different horse management philosophies may build up resentment if they don't like what they see the other doing, and eventually butt heads severely. For instance, for me personally, turnout is imperative to the physical and mental health of the horse, and I want the horses out as much as possible, even the "fancy show horses." If I were looking at buying a property, and the existing trainer were in charge of turnout schedules and wanted the horses inside all but 2 hours per day, well that's a problem, and can indicate that we won't agree on many other facets of horse care. In that scenario, I would require trainer to step back to just training and leaving everything else to me (in which case they'd have to be on board with my decisions), or I would expect the trainer to leave upon my taking over, or perhaps I wouldn't buy the place if it seemed like too much of a headache.

            I'd also ask to watch some lessons and training sessions. You want to make sure the trainer is one you're proud to say works out of your facility.
            Custom tack racks!
            www.mmeqcenter.com/tacklove.html

            Comment


            • #7
              I have seen this happen a few times locally: barn sells when an ongoing training program still in place.

              One other consideration is that the trainer (and boarders) are probably already looking for an alternative location, and might not be comfortable remaining with a first time barn owner just in case you aren't what they want.

              What seems to happen here, is that the resident trainer does stay for a bit, but not usually for long as they, or one of their clients has already put the wheels in motion to go somewhere else/or build their own facility.

              I would ONLY buy a facility with an existing trainer if the trainer already knew and trusted/respected you, or if you would be ok financially if they pulled out all their clients.
              Freeing worms from cans everywhere!

              Comment

              • Original Poster

                #8
                Originally posted by clanter View Post
                the existing business ..get a copy of their lease



                this always makes me go What?
                Ha! Currently I spend all my available hours on someone else’s farm. I would still be teaching and training if my income weren’t lucrative enough to make that a stupid idea and if my body could handle being a crash test dummy (I can still work hard but I don’t hit the dirt as gracefully as I used to).

                So I don’t necessarily want to lose money, but I harbor no dreams of becoming a millionaire on the property. I’d be happy to have the business pay for itself, and yes, give my own horse a place to live. A small enough profit to do that would be just fine.

                I’ve thought about buying a facility just for my own use, but I get lonely, and I would like to have the trainer’s help. I already work from home so the barn is the only place I talk to people.

                Current owner was very hands on but moved out of state awhile ago. Definitely an interesting thing and we would need to find out more about it for sure. The area doesn’t have a lot of barns to move into and I know local trainers are always jockeying to find good locations. This is an urban area and land is at a premium.

                All good things to think about. I’m no stranger to writing business plans, as I’ve done so for two other businesses, but I’ve never done it for an agri-business so that’s new territory.

                Could we afford it if all the boarders left? Yes. It is nice enough to be a show facility as well, which would be a potential avenue if the trainer relationships didn’t go well.

                We may find the whole thing is silly and not do it, but again - in the consideration stage so looking for our own potential blind spots is useful!

                Comment


                • #9
                  I wouldn’t buy a farm in this situation just for companionship of a trainer. You can bring in a trainer for yourself without such a huge investment in a business. Maybe rethink your intentions for this farm. You need to be financially comfortable to make the mortgage without the business as the trainer and boarders could pull out at any time.

                  Comment

                  • Original Poster

                    #10
                    Originally posted by js View Post
                    I wouldn’t buy a farm in this situation just for companionship of a trainer. You can bring in a trainer for yourself without such a huge investment in a business. Maybe rethink your intentions for this farm. You need to be financially comfortable to make the mortgage without the business as the trainer and boarders could pull out at any time.
                    Sorry - that’s not the why. I currently board with a trainer and a barn full of folks. I’d miss the camaraderie just buying my own facility without boarders - I had a small farmette and found that lonely going. I wouldn’t ride out on the trails alone, and i like having people around. My kids never rode, so it was just me and my green horses. I loved having the horses there, but it was lonely with no one to share it with.

                    There are a few things I want out of the facility. One, I have a breed that I want to support and I have a few “equine aims” that would be better facilitated by a facility. Two, I would already be doing this (and did) before I developed a better income doing something else. When I was teaching and training I had a young family, and they took priority.

                    My kids are grown, and my horse is my child now. I literally spend all of my free time at someone else’s barn, tinkering, helping her with horses, and fixing things. I drive an hour each way to assist someone else with their business and I pay a significant amount for the privilege. I already volunteer on our show circuit, and have organized show series’. I’m thinking of this more of an “active retirement” if you will, though I can’t officially retire yet.

                    Comment


                    • #11
                      You seem pretty realistic about jumping into a break-even business.

                      Take a piece of paper, draw a vertical line down the center and make a a good old-fangled PRO/CON list. See what you come up with.

                      The most important underlying/long-range aspect of a boarding business is, in my experience, land appreciation. None of us buy a barn intending to sell it to developers in the future but that's often the realistic exit plan.

                      Make sure you factor some kind of 10/15/20 year exit plan into your calculations, based on either an ongoing horse facility or (more likely in many areas) development potential, and see what your gut and intelligent guessing shows to be your options in the future.

                      Having a boarding stable is generally not profitable but if you can pay for the place as the land appreciates and you enjoy the idea of having a nice barn and having horse people around to play with... it can make sense.

                      Good luck, your instincts (based on your comments and questions) seem on target.

                      Comment


                      • #12
                        You seem pretty realistic about jumping into a break-even business.
                        which is a hobby

                        Question
                        How do you distinguish between a business and a hobby?
                        Answer

                        In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. A hobby activity is done mainly for recreation or pleasure. No one factor alone is decisive. You must generally consider these factors in determining whether an activity is a business engaged in making a profit:
                        • Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
                        • Whether the time and effort you put into the activity indicate you intend to make it profitable.
                        • Whether you depend on income from the activity for your livelihood.
                        • Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
                        • Whether you change your methods of operation in an attempt to improve profitability.
                        • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
                        • Whether you were successful in making a profit in similar activities in the past.
                        • Whether the activity makes a profit in some years and how much profit it makes.
                        • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.
                        https://www.irs.gov/faqs/small-busin...ncome-expenses


                        If declared a Hobby....the real point becomes the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. Prior years you can deduct expenses as an itemized deduction subject to 2% of your adjusted gross income.

                        So this view point of Oh I just want to break even is loaded with repercussions.

                        Comment

                        • Original Poster

                          #13
                          Originally posted by clanter View Post

                          which is a hobby



                          https://www.irs.gov/faqs/small-busin...ncome-expenses


                          If declared a Hobby....the real point becomes the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. Prior years you can deduct expenses as an itemized deduction subject to 2% of your adjusted gross income.

                          So this view point of Oh I just want to break even is loaded with repercussions.
                          Thanks clanter, I’m aware of tax law. I should have phrased that differently. Let me say it this way - I do not expect to make a living on the farm. Supplemental income would be terrific. I intend to run it in such a way that if I get there, that would be awesome. I have other businesses and a job that make the main part of my income.

                          Comment


                          • #14
                            Originally posted by Alterration View Post

                            Thanks clanter, I’m aware of tax law. I should have phrased that differently. Let me say it this way - I do not expect to make a living on the farm. Supplemental income would be terrific. I intend to run it in such a way that if I get there, that would be awesome. I have other businesses and a job that make the main part of my income.
                            We were in a similar position. the farm was up as separate corporation which then leased the property from us. This was done for multiple reasons but primarily as a firewall separation between the farm's activities and personal assets.
                            Last edited by clanter; Sep. 21, 2019, 06:38 PM.

                            Comment


                            • #15
                              I'll be the lone one out: if I had the money to do this, I totally would. Sure it'll have the negatives and drawbacks of running a business AND a horse business, and lets face it, horse people have the crazy, but if I had the funds.... heck yeah.
                              COTH's official mini-donk enabler

                              "I am all for reaching out, but in some situations it needs to be done with a rolled up news paper." Alagirl

                              Comment


                              • #16
                                It really is a lifestyle choice. All of us old farming buddies laugh about being land rich and money poor, and a lot of money goes through our hands but it doesn't stay there. So people ask why in the heck you would do such a thing. Well like I said its a lifestyle choice. So I am with The Jenners Yeah I can say I would do it.

                                If living on this farm is your dream and you can make it pay for itself that sounds like a decent dream to have. For me I didn't need to get rich, I just needed to do what I want. Which I do. So as long as it is not hurting anyone, I don't see the problem. So get your affairs in order and go for it if this is what you want.

                                Just like our eyes, our hearts have a way of adjusting to the dark.--Adam Stanley

                                Comment

                                • Original Poster

                                  #17
                                  Originally posted by Hulk View Post
                                  It really is a lifestyle choice. All of us old farming buddies laugh about being land rich and money poor, and a lot of money goes through our hands but it doesn't stay there. So people ask why in the heck you would do such a thing. Well like I said its a lifestyle choice. So I am with The Jenners Yeah I can say I would do it.

                                  If living on this farm is your dream and you can make it pay for itself that sounds like a decent dream to have. For me I didn't need to get rich, I just needed to do what I want. Which I do. So as long as it is not hurting anyone, I don't see the problem. So get your affairs in order and go for it if this is what you want.
                                  I think you 100% get what I mean. It’s been a dream since I was a kid. I’m no longer a kid I just hope I fully have a handle on “my affairs in order”. Always looking for what I have missed.

                                  Comment


                                  • #18
                                    Originally posted by Alterration View Post

                                    I think you 100% get what I mean. It’s been a dream since I was a kid. I’m no longer a kid I just hope I fully have a handle on “my affairs in order”. Always looking for what I have missed.
                                    I really hope your dream comes true. Then we want to hear all about it, and see pictures. I can live vicariously through you... until I win the lottery that is. I still look at properties (online) from time to time and let my mind wander a bit, just for fun.
                                    ~~ How do you catch a loose horse? Make a noise like a carrot! - British Cavalry joke ~~

                                    Comment


                                    • #19
                                      If you are looking at a boarding/training barn with an existing business, then there are sure to be financials if it is run as a business. If it is not or financials are unavailable, you should walk away.
                                      Where Norwegian Fjords Rule
                                      http://www.ironwood-farm.com

                                      Comment


                                      • #20
                                        Originally posted by clanter View Post
                                        https://www.irs.gov/faqs/small-busin...ncome-expenses

                                        If declared a Hobby....the real point becomes the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. Prior years you can deduct expenses as an itemized deduction subject to 2% of your adjusted gross income.

                                        So this view point of Oh I just want to break even is loaded with repercussions.
                                        The hobby law applies if you are running a dba or sole proprietorship and reporting the income on your personal taxes (1040, etc.). Losses will reduce your personal income taxes in any given year, that is why there is the hobby law test; to ensure individuals aren't engaging in a loss-making venture and trying to write those losses off.

                                        If OP plans to have boarders she would be well advised to have the enterprise set up as a C-corp or some other legal entity that would protect her personal assets from liability.

                                        C-corps and other similar legal entities aren't subject to "the hobby rule". If they never turn a profit, they simply accumulate NOLs (net operating losses).

                                        As mentioned earlier, OP may want to consider owning the facilities in her name and leasing them to the legal entity that is the business. Definitely talk to a CPA about the plusses and minuses.

                                        Comment

                                        Working...
                                        X