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What are the major expenses of boarding barn owner?

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  • What are the major expenses of boarding barn owner?

    We are very interested in a 10 stall boarding barn for sale near us that is in PRISTINE condition and already has boarders in place(don't know anything about them yet).

    Just a quick overview-
    indoor arena with rubber/sand footing and sprinkler system,
    outdoor arena with lights and jumps,
    smallish 3 bedroom house
    22 acres of fenced pastures
    boarding is about $450-550 mo now
    no BM or trainer


    What MAJOR monthly/yearly expenses should I ask the real estate agent/ present owner to see?
    electricity
    water, sewage
    landscaping
    hay
    barn manager salary(??)
    bedding
    feed
    insurance

    The place has been reduced twice and is now approaching us realistically being able to initially purchase it . However, my biggest worries (based on reading COTH!) are the monthly surprise expenses. Please let me know what direct questions I should be asking way up front before making any major decisions. Thanks!

  • #2
    How many people are currently employed at the stable? Are they full or part-time? What is the current payroll? What is the cost of Worker's Compensation in your state?

    After payroll, Worker's Comp is our Biggest expense. It is 18% in Vermont!
    \"I refuse to engage in a battle of wits with someone who is unarmed.\"--Pogo

    Comment


    • #3
      land taxes
      staff salary
      insurance
      hay purchases
      equipment rental/loan payments
      feed bills
      farrier services

      another thing is if you are buying the "staff" as well, find out how much vacation/sick time they are due and have the old owner pay that...
      Production Acres,Pro A Welsh Cobs
      I am one of the last 210,000 remaining full time farmers in America.We feed the others.

      Comment

      • Original Poster

        #4
        Apparently there is no permanant staff as of now. I will need to hire my own BM and staff.

        Comment


        • #5
          I'd be a heck of a lot more interested in the turnover and profit than I would in the expenditure.

          Comment


          • #6
            You do not give a region or location so some things that are costly here, may be non-existent in other areas...like mowing.

            maintenance items, fence painting and repairs, tractor (repairs or purchase/payments), pasture maintenance implements..all are quite pricey. Mowing, fuel for implements.

            As others said, taxes. Depending on where the property is located and how long the current owners have owned it, the taxes might be artificially low because the tax basis might still be way lower than the current market price.

            Salaries
            Hay/feed
            bedding
            The mortgage, or if no mortgage, the value of using your investment money to provide a pristine facility, that is not free. Calculate a fair interest rate, and what the cost is. I've figured that with principle and interest The dry-stall cost TO ME, is somewhere close to $300/month. Figure out that real cost, and then do not drain your accounts running at a financial loss.

            Do NOT confuse cash flow with profit.

            If you want to subsidize people who board horses, then go in with your eyes open that you are subsidizing someone else's hobby if you keep the prices artificially low to get cash flow.

            Comment


            • #7
              The BO of the last farm I boarded at said their biggest expense was the employees (pay, insurance, workers comp).
              There are friends and faces that may be forgotten, but there are horses that never will be. - Andy Adams

              Comment


              • #8
                Originally posted by whiskerkittens View Post
                Apparently there is no permanant staff as of now. I will need to hire my own BM and staff.

                when we were interested in buying a tractor dealership this summer (my sisters do not call Calvin "The Mogul" for no reason) our CPA (who rules with an iron fist) was VERY interested in the:

                accounts receivable
                accounts payable
                profit and loss
                customer base

                we declined the kind offer,as the sales were so dismal and the customer base so small (mostly to poor service for the last decade) that it was decided that it would be cheaper to start fresh than to convince people to return even under "new management"...

                if you are buying a turnkey business and perhaps keeping all things "in place" for now look closely at these records and not just think about "buying the farm"
                Production Acres,Pro A Welsh Cobs
                I am one of the last 210,000 remaining full time farmers in America.We feed the others.

                Comment


                • #9
                  Taxes and insurance. Followed by labor, pasture maintence, hay, feed, bedding yada, yada, yada.
                  Sarchasm: The gulf between the author of sarcastic wit and the person who doesn't get it.

                  Comment


                  • #10
                    Yep, while individual expenses like electricity, water, etc. are of interest, i'd be more concerned with the overall health of the business in terms of profit/loss, cash flow (accounts payable/accounts receivable) and customer base IF the stable has a good reputation (ie if they're known for skimping on hay the numbers are going to skew from what they should be).

                    Individual expenses? Taxes, insurance (don't forget care/custody/control and liability - especially if you're teaching lessons and not just boarding!), feed, payments (loans, rentals, etc.), bedding, utilities (electric for lights, water for obvious reasons).
                    ************
                    "Of course it's hard. It's supposed to be hard. It's the Hard that makes it great."

                    "Get up... Get out... Get Drunk. Repeat as needed." -- Spike

                    Comment


                    • #11
                      Insurance is my single biggest one-off expense each year.

                      We have a hay farm so although we make plenty of our hay which some think inaccurately is "free" to us, is in actual fact a loss of revenue, hence not free, so hay would be the biggest cost to keep each horse on my property.

                      Electricity is fairly high in my area.

                      Taxes are generally high in my area however we get farm rates which is significantly lower than residential.

                      Labour costs can run to whatever level you want them to depending on how many people you employ and under what conditions.

                      Maintenance for machinery/vehicles etc. is hit and miss, but we budget a good amount of thousands each year for this, and we normally always go over budget!

                      Comment


                      • #12
                        You have two broad categories of expenses: Fixed and Variable.

                        Fixed expenses include (but are not limited to):

                        Mortgage
                        Taxes
                        Fire and Extended loss insurance on structures
                        Basic maintenance on barns and related structures (painting, etc.)
                        Access maintenance (driveways, gates, etc.)
                        Etc.

                        Some Variable expenses:

                        Liability Insurance (varies with activities conducted)
                        Bedding
                        Forrage and Fodder
                        Fencing
                        Pasture upkeep
                        Etc.

                        There are some "mixed" expenses like depreciation, daily maintenance and repair of structures, etc.

                        Each of these items can also have a number of sub-items.

                        G.
                        Mangalarga Marchador: Uma Raça, Uma Paixão

                        Comment


                        • #13
                          I have no idea where you are, but is heating going to be a big expense for you?

                          I played with the numbers (several years ago) and in order to hire the full time staff I would want I recall needing something like 20+ stalls for break even, but we are probably no where near each other in location.

                          I decided not to do it at that point. Would have been different if I was a trainer--but I am not.

                          My impression from talking to many BO's is that BO's make their money from the lessons they teach, not the horse's they board (unless it is a training barn in upscale area). Now I do know of one 35+ stall barn (plus pasture boarders) where the BO makes a living, but he doesn't hire labor (boarders clean stalls/turnout for board) and the feed/bedding/hay situation is *shrug*. Perfect location drives the market in that barn's case.
                          DIY Journey of Remodeling the Farmette: http://weownblackacre.blogspot.com/

                          Comment


                          • #14
                            Here's mine, in order of price highest to lowest:
                            1. Mortgage
                            2. Hay
                            3. Salaries
                            4. Grain
                            5. Shavings
                            6. Water bill
                            7. Insurance
                            8. Electric Bill
                            9. Property Tax (it's low here)

                            Property maintenance is also a biggie - depends on the month/year, which is why I didn't include it in the monthly expense list, but I'd say this year it's been #2. I am full and have a waiting list, but I am NOT pulling a profit on the boarding end
                            Ristra Ranch Equestrian Jewelry

                            Comment


                            • #15
                              Originally posted by Vandy View Post
                              I am full and have a waiting list, but I am NOT pulling a profit on the boarding end
                              I hope you don't mind me asking, but why do you run a boarding stable which is not profitable? No judgement or anything like that , I'm just curious as to why there seems to be so many BOs on this BB who do not make a profit and yet continue trading. If my farm did not make the decent profits that it does then the doors would close. The income in my household comes exclusively from the farm and all its related businesses BTW so I'm confused about how so many survive when permanently running at a loss? Do you all work in other jobs away from the barn/farm?

                              Comment


                              • #16
                                Originally posted by Cloverbarley View Post
                                I hope you don't mind me asking, but why do you run a boarding stable which is not profitable? No judgement or anything like that , I'm just curious as to why there seems to be so many BOs on this BB who do not make a profit and yet continue trading. If my farm did not make the decent profits that it does then the doors would close. The income in my household comes exclusively from the farm and all its related businesses BTW so I'm confused about how so many survive when permanently running at a loss? Do you all work in other jobs away from the barn/farm?
                                Boarding simply inst a "profit earning" activity. I would have to charge SO MUCH to make a profit noone would board! However, the only real way to "make money" is lesson and sales. That is where I keep from just going under, not that I have made a "profit" yet! My husband holds down THREE jobs, one full time and two part time, or we would never survive! It is reality in this day and age.
                                www.shawneeacres.net

                                Comment


                                • #17
                                  Re: cloverbarley's question -- I think people often confuse "profit" with "getting paid". Profit is what is left over after all expenses are paid. I do not make a profit, but I do pay myself (I am the only employee). I am able to maintain our 200 acre farm really well -- trails are mowed and cleared, the ring is harrowed and stones picked, the pastures are mowed/harrowed and I improve the barns over time (adding an overhang right now). So, if I ever wanted to sell, my facility is a lot nicer than if I didn't have these improvements.

                                  But improvements/maintenance are not "profit". I have a nice farm, and I pay myself a little for my time and that -- if all goes well -- is a break-even proposition.
                                  https://www.facebook.com/SugarMapleFarm
                                  Follow us on Instagram: https://www.instagram.com/peonyvodka/
                                  www.PeonyVodka.com

                                  Comment


                                  • #18
                                    alcohol and bail money...

                                    Comment

                                    • Original Poster

                                      #19
                                      So does ANYONE make a profit of ANY KIND in this business? Is it just for the "love of horses" that people do this?

                                      Comment


                                      • #20
                                        Make sure you will not have to immediately sink thousands of dollars into repairs. Is the well good (good flow rates, no history of going dry in dry weather)? When was the well pump last replaced? What is the condition of the roof? What is the local zoning? Will you have any problem continuing the horse business because of zoning? What is the county master plan for the neighborhood? If a quarry is going in next door, you won't be able to run a horse business because of the noise. Is a new superhighway scheduled to go next to your property? Is the property in a flood plain?

                                        Check all of the county property and zoning records for the neighborhood. Look at the master plan. Talk with the neighbors.

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