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Thoughts on leasing all/part of horse facility to trainers

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  • Thoughts on leasing all/part of horse facility to trainers

    My wife and I are considering the possible purchase of a horse facility in Southern California. She's been riding for almost 30 years and has been on the leasing end of the arrangement before (she leased 20 or so stalls to train her students). However, I have no experience at all with this so I wanted to throw a few questions out there about the positives and negatives of this transaction.

    - The facility has very close freeway access to a major freeway in a nice area, 30 stalls (2 barns), lighted covered arena, roundpen, large round uncovered turnout/arena, dressage-ish size turnout (possible arena), 3 small outdoor turnouts with shades, hot walker, hay storage, tack rooms. The property also has a home on it in the back of the property that we would live in.
    - Our intent would not be to run a boarding operation ourselves (we want to be pretty hands-off), but to lease the entire facility to one or two trainers (different disciplines). The thought is that we could cover most of the mortgage (we're not looking to make money, just to cover the mortgage and cost of the maintenance - I have a full time job that provides stable income).
    - Ideally we'd lease say, half the stalls (15 stalls) for something like $1,500/month ($100/stall) and that the trainer would be responsible for paying that to us each month whether they have one horse or 15 (possibly allowing them to start stall by stall with the max rent kicking in after a few months). The trainer would handle filling the barn, collection of board from boarders, handling calls from his clients about their concerns, etc. We don't want to be chasing down boarders for payment, fielding calls from them about stalls that weren't cleaned properly, etc. We basically want to get a single check from the trainer and let him/her run their operation as they see fit. We're more than happy to keep an eye on things at night, call vets if need be, and help out when we can.
    - We would take care of maintenance on the property itself (fencing, providing water/electric, arena grooming, etc) but ask that trainers split electric/water bills (minus the house's consumption), etc.

    Bottom line is that we'd have a property with all of the above mentioned horse amenities and I'm curious about how feasible it is to expect to rent either all (to one trainer) or a half of the facility (to two trainers) and be relatively hands off. My experience with horses is limited to trail riding and I've never boarded a horse so this is new territory for me although my wife is very experienced with them.

    Are there pitfalls here I'm not aware of? We know we need to carry insurance and require our trainers to as well, that's a given. Just hoping to start a conversation on this and learn a bit from people who have more experience at this than I do.

    Thanks!

  • #2
    How many of your own horses do you have?

    Comment


    • #3
      I don't think you would have any problem renting out stalls at that price. BUT good luck trying to stay hands off. Especially in Socal?

      Are you going to live on the property? Then forgedaboudit.

      Comment


      • #4
        Originally posted by Scott927 View Post
        My wife and I are considering the possible purchase of a horse facility in Southern California. She's been riding for almost 30 years and has been on the leasing end of the arrangement before (she leased 20 or so stalls to train her students). However, I have no experience at all with this so I wanted to throw a few questions out there about the positives and negatives of this transaction.

        - The facility has very close freeway access to a major freeway in a nice area, 30 stalls (2 barns), lighted covered arena, roundpen, large round uncovered turnout/arena, dressage-ish size turnout (possible arena), 3 small outdoor turnouts with shades, hot walker, hay storage, tack rooms. The property also has a home on it in the back of the property that we would live in.
        - Our intent would not be to run a boarding operation ourselves (we want to be pretty hands-off), but to lease the entire facility to one or two trainers (different disciplines). The thought is that we could cover most of the mortgage (we're not looking to make money, just to cover the mortgage and cost of the maintenance - I have a full time job that provides stable income).
        - Ideally we'd lease say, half the stalls (15 stalls) for something like $1,500/month ($100/stall) and that the trainer would be responsible for paying that to us each month whether they have one horse or 15 (possibly allowing them to start stall by stall with the max rent kicking in after a few months). The trainer would handle filling the barn, collection of board from boarders, handling calls from his clients about their concerns, etc. We don't want to be chasing down boarders for payment, fielding calls from them about stalls that weren't cleaned properly, etc. We basically want to get a single check from the trainer and let him/her run their operation as they see fit. We're more than happy to keep an eye on things at night, call vets if need be, and help out when we can.
        - We would take care of maintenance on the property itself (fencing, providing water/electric, arena grooming, etc) but ask that trainers split electric/water bills (minus the house's consumption), etc.

        Bottom line is that we'd have a property with all of the above mentioned horse amenities and I'm curious about how feasible it is to expect to rent either all (to one trainer) or a half of the facility (to two trainers) and be relatively hands off. My experience with horses is limited to trail riding and I've never boarded a horse so this is new territory for me although my wife is very experienced with them.

        Are there pitfalls here I'm not aware of? We know we need to carry insurance and require our trainers to as well, that's a given. Just hoping to start a conversation on this and learn a bit from people who have more experience at this than I do.

        Thanks!
        The water and utility issue is tricky. On the one hand, a fixed price for utilities is really desirable to a tenant. On the other hand, the trainer needs to be vested in the use of those utilities in order to keep the price down and avoid waste. In addition, there is the issue of equity/fairness. The current owner could probably let you know those costs. How do you know the actual split between the house and the facilities? Do you have separate electric and water meters? Will you qualify for agricultural rates for water? I see a problem if either fluctuates wildly; if the bill is usually $300 and jumps up to $1500, the tenant might not be able to pay and you would get stuck with the bill.

        I called around a few years ago to check on liability insurance for a leasing barn and it was cheaper than I thought it would be, I think around $1,500 per year -- hmmm, maybe it was less. A few phone calls will solve that. You might ask your insurer about anything to look for which could prevent getting insurance, (and ask the seller who their insurance is, to make sure it wasn't cancelled for any reason having to do with the facilites). I'm thinking of problems like shake roofs, exposed eaves in a fire area, that kind of thing that the insurance company might prohibit or require.

        The other thing that jumps out at me is to be financially prepared if for any reason a trainer pulls out with her fifteen horses. Did your wife ever do that? If so, what happened at the lease barn? How long would it take to replace a trainer in such a situation?
        "Random capitAlization really Makes my day." -- AndNirina

        Comment

        • Original Poster

          #5
          In response to a few of the prior messages:

          We only have one of our own horses right now so we won't be taking up many of the stalls.

          In terms of water/electric fairness, we're open to options on this. If we can't determine a fair, equitable split that everyone is happy with, we may be willing to go the fixed price per month route and just install auto-shutoff timers on the arena lights, etc.

          In terms of being totally hands-off, we don't expect to NEVER have anything to do with the facility, we just want the lion's share of the responsibility for daily cleaning, operation and customer service to be with the tenants. We fully expect to lend a hand where we can, get involved with any problems that might arise if we're needed, etc. We just don't want to operate the boarding business ourselves and be responsible for servicing 30 different customers.

          Also, regarding affordability, we can afford the payments without any tenants in place. We wouldn't want to have to do it for extended periods of time, but we could if we had to. Also, (I think I mentioned this), we're not looking to profit from this or generate any kind of salary. We'd just be happy if the money generated from allowing one or two to use the facility would cover our mortgage payments and MAYBE a little maintenance.

          To me (who approaches things like this with a bit of caution), it just seems too "easy" to buy this place and say we'll just rent it out to a couple of trainers and essentially live mortgage-free or close to it.

          I just didn't know if leasing stalls out to a trainer for a minimal cost per stall and saying everything else (except facility maintenance) is their responsibility (feed, cleaning, filling the barn with boarders, collection of payment, customer service, etc) is a common arrangement. Like I said, just seems too easy so I'm trying to poke holes in it to find the unexpected.

          So far the extra costs I'm factoring in are: liability insurance, maintenance (fencing, waterers, etc), farm equipment (tractor, harrow, wheelbarrows, etc), porta-potty rental as there is no plumbed bathroom outside of the main residence, and advertising costs to find trainers. Besides that and the adjustment to having people come and go, management of trainers expectations of us, etc, am I missing anything glaring?

          Comment


          • #6
            I find your project very interesting. I hope you will keep us posted about how it goes and what you learn. Because you are not under capitalized, it sounds like a really good situation. And the thing is, you can try it for a few years and if you don't like it, nothing is tying you in.

            In the meantime, I will follow your story and feed my own barn owner fantasy.
            "Random capitAlization really Makes my day." -- AndNirina

            Comment


            • #7
              Some of your costs could be affected by the nature of the farm. For example, are the fences all wood versus pipe or vinyl? Is the soil black dirt versus sandy where the horses will tear up the fields unless they stay instead for long periods of time during rainy periods? Are the roads paved or will all the extra traffic have you constantly filling potholes?

              I think my biggest concern would be the liability issues which hopefully good insurance would solve.

              Comment


              • #8
                Originally posted by Scott927 View Post
                I just didn't know if leasing stalls out to a trainer for a minimal cost per stall and saying everything else (except facility maintenance) is their responsibility (feed, cleaning, filling the barn with boarders, collection of payment, customer service, etc) is a common arrangement. Like I said, just seems too easy so I'm trying to poke holes in it to find the unexpected.
                I do think that this is a fairly common arrangement. Or at least, it is not uncommon. There are many trainers out there who do not have their own facilities and need to lease them.

                I think your plan makes sense. Charge a flat rate for lease of the barn, and I would probably build all costs you want to pass along into that rate (utilities, maintenance), so maybe $2k-$2500/month for a 15 stall barn.

                I would just ensure you have a clear lease that explains exactly what you are responsible for. Such as:

                Owner will provide:
                - Repairs due to normal wear and tear
                - Watering and dragging of the 3 arenas once per day at a time chosen by owner
                - Access to storage area of LxW for storage of hay, shavings
                - Place to dump manure
                - Weekly manure removal

                Owner will not provide:
                - Supplies of any kind
                - Handling of horse
                - Manual labor towards caring for horses
                - Feed of any kind

                Leasee will be responsible for:
                - Purchase of all barn supplies (buckets, wheelbarrows, pitchforks)
                - All feed and shavings
                - Daily clean-up of the barn area to include sweeping/raking barn and barn area after chores as well as throughout the day as messes are made and cleaned up.

                Leasee will be responsible for ensuring basic care of all horses including:
                - Water available at all times
                - Feed
                - Stalls/paddocks cleaned at least 1x daily

                Leasee may offer partial or self care options to their clients at their own discretion, however, leasee is responsible for ensuring that care is completed and will be contacted by owner if care is not being provided. Leasee will be expected to correct the situation.

                Leasee will have shared access to riding areans (describe them). Leasee is not guaranteed exclusive access and is not permitted to exclude others from the arena for reasons other than dangerous situations. Longing is only permitted in x arena. Turn-out is forbidden in arenas X, Y, Z.

                On and on and on.

                You get the idea! Those are some of the things to think about. Really, if you get the right person it could be pretty simple. You take care of the property and they run their business. You get the wrong person and it could be a nightmare. You want to set expectations that they are expected to ensure the horses are cared for and the barn is cleaned and cared for.

                Comment


                • #9
                  Originally posted by Scott927 View Post
                  In response to a few of the prior messages:

                  We only have one of our own horses right now so we won't be taking up many of the stalls.

                  In terms of water/electric fairness, we're open to options on this. If we can't determine a fair, equitable split that everyone is happy with, we may be willing to go the fixed price per month route and just install auto-shutoff timers on the arena lights, etc.

                  In terms of being totally hands-off, we don't expect to NEVER have anything to do with the facility, we just want the lion's share of the responsibility for daily cleaning, operation and customer service to be with the tenants. We fully expect to lend a hand where we can, get involved with any problems that might arise if we're needed, etc. We just don't want to operate the boarding business ourselves and be responsible for servicing 30 different customers.

                  Also, regarding affordability, we can afford the payments without any tenants in place. We wouldn't want to have to do it for extended periods of time, but we could if we had to. Also, (I think I mentioned this), we're not looking to profit from this or generate any kind of salary. We'd just be happy if the money generated from allowing one or two to use the facility would cover our mortgage payments and MAYBE a little maintenance.

                  To me (who approaches things like this with a bit of caution), it just seems too "easy" to buy this place and say we'll just rent it out to a couple of trainers and essentially live mortgage-free or close to it.

                  I just didn't know if leasing stalls out to a trainer for a minimal cost per stall and saying everything else (except facility maintenance) is their responsibility (feed, cleaning, filling the barn with boarders, collection of payment, customer service, etc) is a common arrangement. Like I said, just seems too easy so I'm trying to poke holes in it to find the unexpected.

                  So far the extra costs I'm factoring in are: liability insurance, maintenance (fencing, waterers, etc), farm equipment (tractor, harrow, wheelbarrows, etc), porta-potty rental as there is no plumbed bathroom outside of the main residence, and advertising costs to find trainers. Besides that and the adjustment to having people come and go, management of trainers expectations of us, etc, am I missing anything glaring?
                  I know you're going to be on the property but I would still take the time to read through this thread:
                  http://chronofhorse.com/forum/showthread.php?t=363872

                  Also as a boarder myself, I would not want to board or lesson somewhere that had porta potties. How expensive would it be to put in a real bathroom?

                  Comment


                  • #10
                    Would you, or your wife ever think about taking responsibility of the farm in the future?

                    If it were me, I'd rather invest in a truck/trailer and a small farmette and have my own few horses. If you live and/or pay the mortgage there, it seems way more than it's worth having your many boarders going through your property.

                    People who can afford horses (which is from welfare to very rich) pay the most they can afford for their horses... which is why they are always a PITA to deal with.. they pay what they can and expect the best from it.

                    It sounds like you have a solid income... make it for pleasure, and not for covering your expenses, form which you may not profit from.

                    I may be bitter, but you don't want to deal with "a trainer covering" your expenses.. trainers are after all, some of the most broke of all.

                    Comment


                    • #11
                      You can really get a place in California with those emenities at 1500.00 a month for a mortage and it is in livible condition? Are you sure about those calculations?

                      Comment


                      • #12
                        I know of a barn not far from here ... 40 stalls, 2 arenas, small turnouts...house, rented for $8,500!! Be careful with several trainers... they should pay you directly, not one trainer to the other, then to you! Also make sure there is no poaching of students/boarders by having a contract requiring boarders/students leave the property for a certain amount of time before switching trainers... You would be amazed at what some people do!!

                        Comment


                        • #13
                          Victory Haven Training Center in Lexington is a racehorse facility that leases out stalls and provides the appropriate facilities to train racehorses - a nice groomed and maintained track, mini starting gate, several round pens, fenced paddocks, paved interior road system, manure disposal, hot and cold running water, electric, trash dumpsters, trailer parking and available secure tack rooms and feed/hay storage rooms.

                          They rent individual stalls or blocks of stalls to trainers who are responsible for the care of their own horses. No hay, no grain, no mucking. no feeding is provided by VH. Each stall is a basic 12x12x 8 foot tall 2x6" material with no gaps, with clay floor and either a full chain link door or no door at all. You bring all your own stuff down to the light bulbs. Snaps, screw eyes, stall barriers, mats, you bring it.

                          It's sort of like a cross between a hotel and an apartment complex. Note that all the maintenance of the common areas is done by the property owner, who also makes money by composting the manure and rebaling the waste straw for lanscaping, growing crops etc. It IS a business. Has legal representation, contracts, tax accountants, billing department. Stalls are $200 a month as of 2008, (possible discount for blocks) power and water are cheaper here.

                          Now, when I first came back to riding my trainer sublet half a small facility and pretty much ran it herself as she saw fit. She did the repairs, brought in new footing etc etc and it was serviceable if not pretty. That ended when the property owners got into a financial bind and decided to go into the boarding business and make the profit from providing the hay and grain and taking care of mucking stalls etc. They discovered there is no profit in boarding.

                          I think you would be best off to raise the price and choose the option that allows you to control how your property is kept up even if it is more work for you. There are landscaping and maintenance services that can be engaged and if you do it you'll be ahead of the ball - horse trainers after all train horses and riders, they don't necessarily mow, drag the arena, paint and fix fences. A horse trainer may not have a tractor, a necessary tool to maintain a facility.

                          Anyway, think of this as the purchase of rental property and consult your tax advisor - as well you will need to think about having a legal representative to handle the contractual issues and in addition you'll have the additional issue of innkeeper's liens and how you want the horses cared for - are you prepared to step in and call AC on your own tenant if their care becomes less than acceptable to you or care for(feed$$) horses abandoned by your tenant while you wait for the statutory period before you are able to sell them to recoup back rent.
                          This WILL be a business, possibly successful, possibly a headache.

                          ETA Just re-read your OP. Yes, it is a business model that can be successful, see VH. All the trainers' clients deal with them directly and VH is not involved. There might be problems if your trainer were to flake out and you were to try to invoke the stableman's lien on the individual clients - consult your legal representative.
                          Courageous Weenie Eventer Wannabe
                          Incredible Invisible

                          Comment


                          • #14
                            My friend has leased a barn from 2 different people, the lessor has been in charge of maintenance (broken fences, dragging ring etc), at current barn my friend has invested in some of the upgrades around the barn, but never paying all for something. One barn she paid by the horse/stall (some horses were pasture boarded) and where she is now she just leases the facility as a whole for a set price. I think it worked out if she was full it was cheaper than by the stall/horse, and took the chance she would be full versus by the horse. It has worked out well for her. At both barns she has been responsible for hiring help for stalls/feeding/turnout. Now I am at a barn where there are multiple trainers, 3 barns (3 main trainers each rent?/lease? a barn) and then there are a few banks of outdoor stalls. I am unsure of the arrangment other than I know the barn owner provides stall cleaners/feeders for basic care, but he also runs his own boarding business as well so it is more complicated. I know back east (where I am from) it is very common for trainers to lease the whole facility where it is set up like my friends place. Now it seems like out here (I am in AZ now) that it is common for trainers to rent a barn, and there be several trainers at once facility plus random boarders.

                            Things as an owner that have been good and bad for her:
                            If you say you will fix/do something do it! Nothing more frustrating for her than the owner saying they will drag the ring and then it takes a week to get done.
                            Where she is the owner is responsible for putting out round bales and it can be frustrating when it doesn't get done in a timely manner and my friend doesn't have a way to get it done herself (owner has the tractor).
                            http://community.webshots.com/user/jenn52318

                            Comment


                            • #15
                              Originally posted by FalseImpression View Post
                              Also make sure there is no poaching of students/boarders by having a contract requiring boarders/students leave the property for a certain amount of time before switching trainers... You would be amazed at what some people do!!
                              Why would the property owner care about something like that? The property owner would have no contract with the boarders. It would be up to the trainer to require 30 days notice, etc.

                              The only thing I can think is to not create friction between the two trainers. The easier way to do that is to lease to trainers of different types. One dressage and one h/j trainer, or one reining and one western pleasure.

                              Comment


                              • #16
                                Or, one of an english discipline and the other of a western discipline.

                                Just from a purely boarder point of view, and I would feel this way as a trainer too, I wouldn't consider a place without indoor bathroom facilitiy - private, clean, sink, and preferably a shower, hot and cold running water. I'm boarding at a place without those things now, and although I won't leave because of it, I would not choose a place without those in the future.
                                My warmbloods have actually drunk mulled wine in the past. Not today though. A drunk warmblood is a surly warmblood. - WildandWickedWarmbloods

                                Comment


                                • #17
                                  It's not a bad idea, but your suspicions are correct: You won't get "money for nothing and your chicks for free" from a horse farm, no matter what.

                                  So why do you want it? For the real estate investment? To have a nicer facility for your personal horses than you could otherwise finance and control? Because you guys already know what it is to live on a farm and want that lifestyle?

                                  Those are all good reasons.

                                  Making money easily or keeping in "turnkey" to you, or *not having to do customer service*.... those are not good reasons to do this. You will have to do farm maintenance and customer service with the leasing trainers and (in some form or another) with their clients.

                                  Also, I think $100/stall is a bit low unless you will add utilities and water to that. On both coasts and not near major cities like LA proper, dry stalls are around $150-175.

                                  From your description, it seems to me that there's not enough TO. I know 1 paddock for 10 horses may work by SoCal standards, but remember that it's very, very hard on your facility to do that. (Its hard on the horses, too.) How many acres is it? IMO, farms that are too small for the number of animals are them take more work.

                                  Before you leap in, look around and see if anyone else is advertising dry stalls. That could be a great or minimalist facility-- it doesn't matter. You want to see if there are fewer training businesses out there than there are stalls. I think dry stall advertisement took a leap up around 2010. The contracting horse training economy might not be over yet.

                                  Also, I would not think anything like "build it and they will come" or that you'll fill your barn while others stay empty because your facility is nicer or better maintained. IMO, that's a rich man's business plan. All but the trainers at the very, very top are deciding to compromise with their facilities, mainly because BOs (barn owners) are as well.

                                  Again, let me underscore the fact that there's a huge customer service component to this and it will be in your backyard where there will be no escape for you guys. It's not anything like boarding horses or enjoying your farm.... that more than 30 other people happen to come to each week.

                                  I do hope you'll let us know what you decide to do and why. There's lots to learn!
                                  The armchair saddler
                                  Politically Pro-Cat

                                  Comment


                                  • #18
                                    I have leased my large barn, 18 stalls, for several years to different trainers.

                                    SO far, I haven't seen it work out so good. With a few trainers, they kept the property clean and neat, took good care of the horses, were very friendly and nice, but never paid their bills on time.

                                    I had a trainer who, by the time I got them out of here, owed me 3 months worth of rent. They left a horrible mess and by the time I was through repairing the damage to house and barn, I took them to court for over $12,000. Which, by the way, I never collected.

                                    I had a trainer come back in the middle of the night after I gave them notice and took out stalls and support beams in one of the barns. Court did no justice there either, with the exception that I didn't need to return the deposit.

                                    These trainers didn't care about judgements. You may find that a lot of them don't have any credit to begin with. A lot of trainers are good with horses, but lousy with money management.

                                    Please don't think I am generalizing the trainer population, as I am sure there are great business men and women out there in this business. I just haven't had the luck in finding them.

                                    I have since given up and won't go that route again. My husband says i need to write a book!

                                    By the way, you aren't charging nearly enough and do NOT include utilities. They need to pay for their usage. Get a separate meter installed and have them set up their own account. Take it from someone who knows!

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                                    • #19
                                      hPilot has some good thoughts.

                                      I have a ringside seat to a similar situation: owner rents out what in this are are called "dry stalls". The trainer pays a fee per stall or block of stalls and is responsible for everything else. The barns are on separate meters (fairly easy to install), though there is a common well system. Several trainers share the facility.

                                      In a good month, the dry stall rent covers the basic property costs. In a bad month (trainers not paying /skipping out) the owner is in the hole several thousand dollars. All the usual landlord-tenant issues arise: property not cared for, repair issues, payment issues. If you want to be a landlord, go for it.

                                      I would do some research to determine what a good "dry stall" rate is in your area. In central Maryland, a large facility with rings, arena, and some trails charges more than what you are proposing.

                                      *star*
                                      "Avoid loud and aggressive persons, they are vexations to the spirit."
                                      - Desiderata, (c) Max Ehrman, 1926

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                                      • #20
                                        Did the OP do this, and how did it work out?

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