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Questions about leasing out a farm

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  • Questions about leasing out a farm

    So I have accepted an out of state job and we have to move. Instead of selling the farm we have decided to lease it out. I have a few questions, though - hopefully some of you have leased a farm and can help.

    How do you find good tentant - what questions do you ask (legally) that help you select a renter?

    My farm is 17+ acres - do most tenants who rent a farm have a tractor, bushog, spreader, etc?

    Fence repair - who is responsible? I have 7 hoses on the land and have no issues whatsoever. If their horses go through the fence are they responsible for fixing it?

    Indoor pets - is this usually expected in a farm situation? I have a small fenced backyard for my dog and a nice big doghouse that will stay, as I did not want indoor pets myself. I would absolutely have a pet deposit if I allowed them in the house - how much? Do you charge an additional fee per month as well (I had to do this in grad school for my apartment - I think my cat was $100/month extra)

    Is the deposit usually much higher than just a house, given that there is so much more to trash? (I have an outdoor arena, 2 barns and tack barn, etc)

    I would also appreciate any comments or suggestions on how to do this and/or pitfalls. Thanks!
    Last edited by tmo0hul; Feb. 12, 2010, 12:51 PM. Reason: added question

  • #2
    I have rented many farms so of it good some not so good.

    Always rented the house, barn, arena and fields.

    I always looked after the farm like it was my own place. cut grass, sprayed weeds, fixed fence and stalls, any type of wear and tear. put any water/plumbing, heating problems the owners fixed or paid to have fixed.

    The rental cost covered everything and the DD was the same amount. So to be on the safe side work out what your payments are and then add $100-300 extra a montha nd put that in a different account for any fix ups that will have to be done to the place after the boarder moves out.

    Just remember that when you rent your home out it is no longer your home but now a rental property and most everyone you rent to will treat it that way.

    Make sure everything is in writing.

    Forgot, I never had a tractor, but had a riding lawn mower, and rented any other equipment that was needed, or paid someone to come and do what needed doing.
    My life motto now is "You can't fix stupid!"

    Are you going to cowboy up, or lie there and bleed

    Comment


    • #3
      We've rented an 11 acre place for the last 3.5 years. We did not have a tractor, bushhog, spreader, etc. Our landlord does have a nice new JD tractor they allow us to use, as needed. We maintain it and fix it if anything happens, and it's a lot better to use it than let it sit for 5 years. I bought a Newer Spreader for my own use. If you do let them use the equipment, make sure they know how to use it! And, I would make sure to have a written agreement for what it can be used for (clearing driveway, moving manure pile... not for any other extraneous use) and have the service schedule for the equipment agreed to and emailed or sent to you when done. It's your investment.

      Fence repair and payment should be the tenant's responsibility if they are at fault, ie. their horse plows through it. If it's an act of nature, snow, wind, trees down on it, then perhaps the homeowner's or renter's insurance would cover the cost. I would decide before hand who is responsible and put it in the lease though. Don't forget too, it is really hard to fix something from a distance. The tenants will have to be self reliant, or you'll need to have a fence repair or maintenance company available to help out.

      The deposit usually isn't that much higher. It's usually the equivalent of one month's rent for the whole property.

      To avoid pitfalls, get everything in writing, signed and initialed and notarized! You may maintain the property differently than your renter too, so be prepared for that possibility. Make sure you outline the usage of the property too-- if you don't want them to have boarders, or do lessons, make sure it's in the lease. Liability is the big issue there.

      Depending on how long you lease for, build in maintenance costs too. Will your fence need painting or staining soon? Schedule it in now. How will the pastures be managed? Arena maintenance? Who does it, what needs to be done?

      If you go into the lease knowing your place might not be the same as when you left (for better OR worse) then you'll be more prepared. Try to think of every crazy situation you've already been in as the farm owner, and try to outline that in the lease agreement. You don't want to overly constrict the renter, but you really do want to protect your property too.

      The homeowners we rent from also have a home warranty, so if there is something that needs repair in the house (washer, furnace, hot water heater, etc.) we just call directly and have it repaired, then deduct the cost from the next month's rent. Not sure if there is anything like that available for a farm, but wouldn't that be nice???

      Comment


      • #4
        I think you should consider your motivations for hanging on to the farm very carefully. DH got a job offer in SoCal three years ago and we decided to keep our farm in PA and rent it out because I couldn't bear to part with it and we thought we'd be back some day (meaing within a few years). Now three years on, there's no date in sight where we might even be thinking of moving back and if fact we are house-shopping out here.

        We had a pretty bad experience with our first set of renters that left a very bitter taste in our mouth. Our new renters are better but after some recent expensive maintenance issues (it's a 200yr old house and things just wear out... septic... well... $$$$$$), my connection to the place has waned considerably and now it feels like a big financial burden and a stress to wonder what the next phone call might be about what broke or did the snow cause a tree to come down on the house or ???. We have never made enough in rent to cover the mortgage let alone anything that breaks, so every month we are pumping money into the place and we have no idea if we will be back, ever. It is overall a lot of time, money, and energy spent managing it from a distance, if we could go back to three years ago we'd have sold it then... before the market crashed...

        I would ask yourself... Are you keeping it because you can't bear to sell it? Do you think you'll be back some day? Are you just renting now because if you sell you'll lose a lot of money due to current market conditions?

        Plan on spending a lot of time screening prospective renters, arranging for showings, hoping that they will take care of the place like you yourself do. Are you going to manage it yourself or get a company to do it? Be warned, it is a LOT of time and energy managing a property from out-of-state. If you manage it yourself, plan on having to deal with emergencies over the phone, trying to get contractors out to fix things that may or may not kill you to do because it's something easy you could have done yourself and you'l be paying $200 because you arent there to do it. That's the kind of stuff that drags on us, knowing that we are already losing money and then random dumb repairs- a few hundred here, a few hundred there- further eroding any kind of possible justification that hanging on to the farm was anything other than an emotional decision rather than a financial one.

        Sorry to be so negative, but I really wish I had considered this more carefully three years ago beyond just a gut decision of "we are keeping this place no matter what".
        ~Living the life I imagined~

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        • Original Poster

          #5
          We are looking to rent it out because I really don't think we will get what it is worth. We put a lot of $ into improvements out of our own pocket (additional barn, outdoor arena, etc) and don't want to toss that down the drain.

          DH is a farrier and plans are that he will keep his clientele here for probably a year or so until he can build a new base elsewhere. We are thinking that he will make the trip monthly (a 6 hour drive) and will be able to check up on things when he comes into town. Plus we have really good friends that are also farm owners that we will be able to lean on to help fix things in a pinch. Current neighbor is a plumber, so we can make arrangements with him as well.

          I don't plan on leaving any equipment, as I will need it where I am going - which is why I ask. I don't want DH to show up and there be a manure pile the size of the barn because they have no way to dispose of it...

          Keep the comments coming - I need to know what I am getting into!

          Comment


          • #6
            You can basically make the rules whatever you want them to be as long as you spell it out in the lease and tenants agree to them.

            I have a 1920s farmhouse on 5 acres I have been leasing for the last 7 years. I owned it before I got married and did not want to sell it when I got married and we bought a larger farm.

            I also make a fair amount of profit on it - much more than is needed for upkeep - and that makes it easier. It is in an area that is actually increasing in value, which was one of my reasons to keep it.

            My tenants are responsible for everything related to barn/fencing/yard/pasture upkeep. You really do not want a tenant calling you anytime one board comes down. Be prepared, however, as someone else noted, for quite a bit of maintenance in-between tenants - to put up those boards that fell down and previous tenant never fixed. However, I then take that out of their deposit. I always hand over farm to new tenants with everything fixed and in working order.

            I would not want to provide equipment - I would not want any potential liability that would come if someone got injured on 'my' equipment.

            Be sure to include how many animals are allowed on the place, your state's equine limited liability verbiage (if you have one), that no commercial ventures (teaching, giving riding lessons, boarding horses, etc.) are allowed, etc. Spell out costs for removal of personal property left behind (they will always leave junk in the barn), for mowing pastures/spreading manure piles, disposing of 'hazardous' materials (paint, motor oil, etc.).
            Have a good lease that's legal in your state. You can go online and buy 'form' leases specific to your state. I then have about a page of 'special provisions' related to the above.

            Do a walk through a 'condition' report with new tenant, noting any existing damage/issues.

            Do criminal background check and check out their landlord references thoroughly. Credit checks are ok, but I've discovered most renters do not have great credit, so you can't really go by that alone.

            I only live a few miles from my farm - it definitely would be harder to manage a property like this long distance - but having good neighbors who are friends would help.

            I have had good luck so far - being picky about the renters pays off.
            Donerail Farm
            www.donerailfarm.com
            http://donerailfarm.wordpress.com/

            Comment


            • #7
              Originally posted by tmo0hul View Post
              We are looking to rent it out because I really don't think we will get what it is worth. We put a lot of $ into improvements out of our own pocket (additional barn, outdoor arena, etc) and don't want to toss that down the drain.
              Believe me, I hear you loud and clear. We held on to it three years ago because of an emotional attachment, and now we are hanging on to it because we are in the same position as you. Not only would we not get what we paid for it, but we would lose the fortune we've put into it. if you think you can get enough rent to cover your mortgage and a maybe some extra for a maintenance budget, it's probably a good idea to hang on until market conditions improve- but that may take years. If you are going to be losing money every month like we are, you might run some numbers as to how long you are willing to wait for the market to improve, hope there is no major maintenance issue at your place, and decide whether it might be better to cut your losses now. Three years ago we would have MADE a fortune on the place and saved ourselves three years of headaches, besides. Shoulda coulda woulda, I guess.
              ~Living the life I imagined~

              Comment


              • #8
                If you are renting the farm out make sure that you change the insurance from "homowners" coverage to "rental dwelling" coverage. They are completely different policies and your homeowners will not provide coverage if the home is occupied by a tenant. Also make sure your tenants have a renters policy with a high liability limit and names you as an additional insured and make sure thier policy covers the liability for thier animals.

                Comment


                • #9
                  We leased our farm (which we live on) three times and it's unlikely we'd do it again. The first person was wonderful. She took better care of the place than we do. Very conscientious dressage person who stayed 4 years until she bought her own farm. The second was so-so. Brought more horses than she said she would and added from there. Much wear and tear and generally didn't take great care of everything. The last was a disaster. First check bounced, did several unsafe things, didn't get required insurance, didn't take basic care of facilities . . . Told her to leave for breach of contract after 1 1/2 months. Never have gotten paid all she owes us. We are happily running the barn again.

                  And all this was while we lived on the farm and could keep an eye on what was going on. Imagine trying to do it remotely. If you were to do it, I'd hire a property management company/person to keep an eye on your farm.
                  www.hollyrunstables.com

                  Comment


                  • #10
                    Did it once....NEVER again!! Let a "friend" keep his race 2 horses and 1 lead pony in a 30 stall/indoor track/indoor arena barn we had built in upstate NY. (Not using the house.) We had moved to NC and felt it would be better to have some activity there. Within two months we were getting calls from irate "boarders" with complaints about the care/conditions at the farm. WTF??? Seems our freebie friend had rented/boarded horses to fill the whole barn - NO MONEY paid to us who were still paying the utilities and mortgage!! I drove back to NY and spent two weeks repairing, what I could, of the disaster and wreckage they left behind. "Almost" NO ONE will take care of your place as you would like it kept and the carnage is devastating!! The next one I rent a horse farm to will be the "Almighty"!!
                    www.crosscreeksporthorses.com
                    Breeders of Painted Thoroughbreds and Uniquely Painted Irish Sport Horses in Northeast Oklahoma

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                    • #11
                      Make sure in the contract you spell out EVERYTHNG that belongs to you. I had a friend who rented out there place and the renters cleaned out the property; doors, gates, metal panals, ect. They couldn't press charges because the renters said that they had bought those items, not the owners of the property.

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                      • #12
                        Unfortunately, Im on the negative side.
                        My farm sits empty, and will until I get home to set it up for sale. Im only an hour north but still too far to think of managing it...didnt do well when I was only a 1/2hr away,.
                        I had a lawyer to oversee payments, security to make weekly checks on it..and still, things went wrong ... not on my part, but it was the renters (bad renters) and sometimes you never know until they are IN...
                        So, I pay the mortgage and am waiting for the market to rebound a bit...then its on the sale block.
                        Im with the one poster, that if I had known...I would have sold 4yrs ago...but, I too, thought maybe we'd be returning *someday* and it was a safety blanket to know we could always return.
                        Now, its a monthly bill ....but at least its safe.
                        IN GOD WE TRUST
                        OTTB's ready to show/event/jumpers. Track ponies for perfect trail partners.
                        http://www.horseville.com/php/search...=1&ssid=057680

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