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Half Lease Terms? (Cross posted)

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  • Half Lease Terms? (Cross posted)

    I have a medium sized lesson program full of once a week recreational riders of all ages. Over the past year I've had a few students get their own horses and I now have a small group going to local shows. We mostly do hunters, but we also do some little jumper shows, combined tests, etc.

    As I get more into this venture (whereas I used to do 100% lessons only) I am looking for an opinion on HALF lease costs for a lesson type horse.

    The client gets:
    - 3 days a week exclusive access to horse. The horse is not used in any lessons on "their" day.
    - Slightly discounted lesson costs
    - Ability to go to shows or off-site XC schooling or trail rides (I do not offer shows to lesson only students)
    - Usage of my tack, grooming supplies, blankets, etc.

    The client pays for:
    - 50% stall board
    - 50% farrier
    - 50% dental
    - % of the horses value, annually (see below for my question on this!)

    Things I (stupidly? kindly?) have not been billing the client for and have been covering myself:
    - Supplements
    - Minor things like deworming, vaccines, coggins
    - I do not bill for holding fees or training rides (if needed), because it's my horse and I'd be doing it anyway
    - Unplanned vet bills (see below for explanation)

    Here are my questions:
    - What percentage of the horse's value would you expect for this type of arrangement? My horses are not rated show material, but super safe, average moving, "good eggs". To pick an average, the value might be $6,500.
    - What would you expect about vet bills? I actually include in the lease that they may be responsible for 50% of vet bills, but I'm afraid of scaring parents away. For most of them, just the standard costs of board and lessons and the occasional local show is an exorbitant cost. Adding a couple hundred dollars to their invoice when Horsey had an unexplained lameness that requires a vet visit and diagnostic is hard for them to swallow. One one hand it's my horse, and as the owner I bear the risk inherit with horse ownership. On the other hand, welcome to horses! They're expensive, get used to it.
    - I have been doing 6 month lease agreements. Part of me wants to do 1 year leases, and offer an option for 6 month at a higher rate. Thoughts?

    Thanks for reading.... I know it was long! Really interested in your opinions.

  • #2
    I've seen lots of these, and most of the barns present it as a package deal that rolls in whatever they need. I'm not aware of any that charge a percent of value on lesson horses though. Most don't explicitly add that to the equation until you're talking 2'6"+ show quality horses (whether barn owned or leased from an owner). I also haven't seen half leases include emergency vet bills. It's something like:

    For $800/month your child gets exclusive use of a beginner-specialist lesson horse 3 days each week, including two half hour private lessons and one practice ride, as well as the ability to to show this horse in flat classes such as leadline, walk-trot, and pleasure (as the rider demonstrates readiness) and attend show-team trips. All show expenses are in addition to the monthly fee.

    For $1000/month, your child gets exclusive use of a intermediate lesson horse 3 days each week, including two 1 hour group lessons (including learning to jump when ready) and one practice ride, as well as the ability to show this horse in flat and fences classes at shows, such as short stirrup and beginner hunter (as the rider demonstrates readiness). All show expenses are in addition to the monthly fee.

    For numbers:

    50% board + maintenance charge + cost of 8 lessons with 10% discount

    To figure out your maintenance charge - add up supplements/meds/farrier/routine vet for each horse in that category, then average.

    Comment


    • #3
      Originally posted by joiedevie99 View Post
      I've seen lots of these, and most of the barns present it as a package deal that rolls in whatever they need. I'm not aware of any that charge a percent of value on lesson horses though. Most don't explicitly add that to the equation until you're talking 2'6"+ show quality horses (whether barn owned or leased from an owner). I also haven't seen half leases include emergency vet bills. It's something like:

      For $800/month your child gets exclusive use of a beginner-specialist lesson horse 3 days each week, including two half hour private lessons and one practice ride, as well as the ability to to show this horse in flat classes such as leadline, walk-trot, and pleasure (as the rider demonstrates readiness) and attend show-team trips. All show expenses are in addition to the monthly fee.

      For $1000/month, your child gets exclusive use of a intermediate lesson horse 3 days each week, including two 1 hour group lessons (including learning to jump when ready) and one practice ride, as well as the ability to show this horse in flat and fences classes at shows, such as short stirrup and beginner hunter (as the rider demonstrates readiness). All show expenses are in addition to the monthly fee.

      For numbers:

      50% board + maintenance charge + cost of 8 lessons with 10% discount

      To figure out your maintenance charge - add up supplements/meds/farrier/routine vet for each horse in that category, then average.
      Very good advice! Otherwise the parents may balk feeling like they are being nickel and dimed

      Comment


      • #4
        I've never paid a % of the horse's value on a half lease, although it's been years since I leased, so maybe that's a thing now. I wouldn't pay more than about 7.5% (30% typical of a year-long lease divided in half for a six month lease divided in half again because it's a half lease).

        Vet bills on a 6 month half lease I would expect to be 1/4 of the yearly insurance fee + 1/2 the deductible (and that 1/2 only due if/when actual bills arose). I wouldn't lease an uninsured horse and if the owner wanted to do additional diagnostics/treatments not covered by insurance, I think that's on them.

        One of the things you may want to think about is how you see the half lease program developing. If this is a gateway towards getting students to full lease or buy their own horse, it may make sense to go whole hog on making the half lease a scaled-down version of a full lease, where all expenses are split evenly. You may get fewer people leasing, but it will help them really understand what horse ownership entails.

        But if half leasing is a way to get you steadier income on your lesson horses that might not otherwise be used as much and/or you find that the additional money you get from show expenses offsets some things like supplements, you may want to keep it much simpler/cheaper to encourage more of your students to half lease: half of board + set fee for routine vet/farrier + insurance costs. They get their feet wet about some of the realities of owning a horse and you get more/steadier income, but you don't scare some off who might not be able to swing all the extra costs like % of the horse's value, etc.

        FWIW, every lesson program I've ever leased through took the second approach. I've never done a half lease that actually fully broke out expenses and charged me half. But the expectation was also that half leasing was only ever a temporary step on to something bigger. It sounds like your program may have half leases a little bit more as the end/stopping point for some students.
        She Gets Lost

        Comment


        • #5
          At lesson barns where I've seen something like this, it's always been a flat monthly fee, which usually includes a weekly lesson in it. May also include the option to show at additional expense, as an incentive to move those lesson kids into more of a showing program.

          Comment


          • #6
            I've been half leasing for the past 10 or so years, and have never signed an agreement where I'd be responsible for vet bills - and honestly I don't think I would. The point, for me, of a part lease is that I can walk away from vet bills. All of mine have been 30 days notice to end, so I suppose technically they were month to month, although I informally committed to a certain length of time on a few sales horses, and one was supposed to be a year but came up catastrophically lame.

            This may be different since I generally was not leasing lesson horses but needed a step up from what was offered in the program, so were privately owned and it was mutually beneficial for me and the owner. I could see committing to one 'show year' or only for 'show season' or what have you, and having higher costs for the shorter term.

            For the majority of my horses, I've only ever paid half of everything, and it was a once a month predetermined fee (makes it way easier to budget). The only one that had a lease fee built in was a going 3' large pony hunter I was taking into the Low Adult jumper ring at A shows. To me, the value of the horse is generally not as important as what it can do - a baby green warmblood might be worth more than a going 2'6" TB, but what is the leaser getting out of both situations? I'd obviously pay more for something that would be more likely to win, or is jumping bigger fences, or whatever. But I'm not sure there's a monetary monthly payment correlation to actual horse worth, at least in that regard.

            Comment


            • #7
              My barn is not dissimilar from what you're describing, maybe more clients showing mostly rated but we're in a less expensive area. BO charges $550 a month flat fee for half lease, which includes 2 lessons and a hack per week and first dibs on the horse for clinics and shows. I half leased for a long time and I occasionally sprung for chiro work but otherwise that flat fee was it. That price is the normal monthly board rate at our barn. BO explained to me once that he charges that because it basically covers the horse's cost of living—stall, hay/grain, and shoeing—for the month, meaning the other 2-3 lessons a week the horse does are pure profit.

              The horses are all former A circuit show horses who have stepped down to the 2'6" and below, very nice quality but probably not worth much on the open market.

              Comment


              • #8
                I have half leased school horses for nearly my entire riding career - most have been long term, current one has been for 2 years now. For a half lease there has been anywhere from a $250-$400 monthly cost. This includes being able to ride leased horse in one lesson a week (lessons cost regular price, none are "included"), 2-5 other days of hacking (depending on the horse and how often they are used), first pick of horse at shows. Currently, there is one day a week where horse is used in a lesson in the morning and I ride in the evening... so exclusivity isn't always there. There are no extra maintenance costs (I have gotten permission to do massage/chiro/etc - but it has not been an enforced cost, just an optional one I choose to cover). I agree with silver_charm... the flat fee is the way to go. I have never been responsible for medical expenses.

                If you are doing higher level shows then for sure I'd expect to see a higher cost than what I pay and you'd see more of the % of value (on a full lease - not sure I've ever had that occur on a half lease). On the coast or a really active horse area, then that price will be higher. I'm in the Midwest in a decently horsey area, but for reference stalls out here are averaging $400-700/mo. If the horse is a consistent winner or is a 3'+ then the price would usually be higher.

                Comment


                • #9
                  We currently half lease a lesson horse for my daughter. It is a flat fee of $250 plus a discounted rate for lessons which she takes twice a week. She also rides on her own once a week. The total runs us about $530 a month. She does not show but we could if we worked it out I just know nothing about it. She gets the horse 3 days a week, priority of the horse for any shows, clinics, ect, we are not responsible for any vet or foot care and its month to month. Other local barns do it a little differently but the overall costs are similar for half leases.

                  I would not pay a % of the value of a lesson horse unless I was doing a full lease and I would not want to be responsible for vet bills with a half lease. What happens if the horse is injured with another rider? It depends what you want from the program. If you want more people to lease I'd stick with a flat fee for half leases unless they are competitive.

                  In practice, our lease is very flexible. My daughter sometimes changes days she rides, sometimes rides more than her 3 days, and sometime rides other horses. If her horse cant be ridden for some reason she can ride a different lesson horse. We love the lease arrangement and in turn we are also flexible and we dont mind if some one else rides the horse on "her" day (no one else jumps this horse other than my daughter anyways). But the atmosphere is pretty casual like that which we appreciate.

                  Comment


                  • #10
                    It is surprising to me to see other posters haven't paid lease fees for lesson horses, even a half lease - in my mind, a lease is a lease, regardless of who owns it. Someone owns the animal, so therefore someone should pay to lease said animal because you are taking a half of that animal's use from the owner. In this case, it's a lesson program. Perhaps, however, I have just been nickel and dimed my whole life If you aren't trying to make any money back, then sure, no lease fee makes sense. Totally up to you, as a business owner, to decide what is reasonable.

                    In many programs I've ridden/leased from, even a nice quality lesson horse has a lease fee + 50% board/vet bills/supplements. Vet bills are capped at a certain amount, but IMO a half lease of a lesson horse should be treated just like a half lease of a privately owned horse. You get half of the horse's use, therefore should pay half of the horse's bills.

                    For lesson programs, I would expect to get the horse half of his working days - if he gets one day off, lessee should get horse 3 days a week. As far as rates go, I have always had the 6mo option but a discount for a full year option, but it varies on the program!

                    Comment


                    • #11
                      Originally posted by blondewithchrome View Post
                      It is surprising to me to see other posters haven't paid lease fees for lesson horses, even a half lease - in my mind, a lease is a lease, regardless of who owns it. Someone owns the animal, so therefore someone should pay to lease said animal because you are taking a half of that animal's use from the owner. In this case, it's a lesson program. Perhaps, however, I have just been nickel and dimed my whole life If you aren't trying to make any money back, then sure, no lease fee makes sense. Totally up to you, as a business owner, to decide what is reasonable.
                      I think this depends on the end goal of the lease is - if all the half lease does it take out of the lesson pool on practice ride days, then yes, I'd understand a lease fee. But, if the goal is that the horse will now go to shows and theoretically earn the trainer more money that way, then not including the lease fee potentially makes showing more accessible and appealing. Especially as a stepping stone towards full leasing/purchasing. I understand not wanting to lose money, but it definitely depends on the client base and the theoretical purpose of providing the leases in the first place.

                      Comment


                      • #12
                        I have also never seen a lease fee for a half-lease, especially on a lesson type horse. I think a flat fee per month that covers half of the board, half of the shoes, and maybe half of the maintenance expenses plus the cost of lessons is fair. I would caution against requiring your leasors to pay half of the emergency vet bills. The horse is still your horse and most people who enter into half leases do so because they know with certainty that X amount is what they will be obligated to pay per month.

                        I would also do a month-to-moth deal to start, especially because the half leasing will be new to both you and your clients. You can smooth out of the wrinkles and if things don't work on either side each party can walk away with a 30 day notice instead of things getting messy with a one year or six month requirement.

                        Comment


                        • #13
                          My half leases are a flat fee. I calculated expenses (half board, half trimming, half of training, half of yearly average vet costs) and allow my students to do a month to month lease with 30 days notice.

                          I LOVE doing this. It creates a better culture in the barn and the kids adore their horses. I still get to use them twice a week for my other lessons and can do whatever I want with my horses on the weekend day the kids don't ride. All of my lesson horses are half leased to kids and my client horses are occasionally half leased as well.

                          Comment


                          • #14
                            Don't bill half of actual vet costs. Figure out the average total of yearly vet costs, divide it in half, and divide it in half again for a 6 month lease and just roll it into the cost. Round up a little if it makes you feel better.

                            So if board is $500, shoeing is $200, and pro rated average vet/supplements/supplies etc is $100 just charge $400/month to half lease. Don't try to charge half of actual costs. Too unpredictable for the parents. To tempting to quibble bills. Just figure out half of what that horse actually costs you and charge that.
                            ~Veronica
                            "The Son Dee Times" "Sustained" "Somerset" "Franklin Square"
                            http://photobucket.com/albums/y192/vxf111/

                            Comment


                            • #15
                              I’ve done a couple of partial leases, and I definitely would not have started if I was responsible for unexpected vet costs! I understand that unexpected vet costs are part and parcel of horse ownership, but when I was first getting involved with horses those kind of potential costs were so scary. My first partial lease (a tiny quarter lease!) felt like a huge unnecessary expense (exorbitant is the perfect word for how I felt), but within a few months of doing that, I was much more committed to sticking with lessons and moved to a half lease pretty quickly.

                              As far as charging a percentage of the horse’s value as a lease fee, that's also something I am not familiar with in a lesson type scenario. I have usually paid a flat rate with or without lessons included that nominally covers half of feed + board + maintenance (farrier, dental, supplements, etc) monthly, but I've never batted an eye at the suspiciously round numbers I pay. I've always assumed that my lease is based on the known total costs for each thing, or good estimates, and then rounded up and perhaps padded slightly to account for the unexpected, which, depending on how much rounding up you do, basically amounts to a lease fee.

                              How much difference would not discounting lessons and charging for the various incidentals (supplements, minor vet things) make? If you rounded that number up a bit how close would you be getting to the value % you were planning to charge for?
                              Another poster suggested working out partial payment of insurance coverage, rather than a fee based on value of the horse, and as a leaser I would find that more palatable than the value percentage, only because I would find it more understandable/transparent, though that system would also be novel for me.

                              Comment


                              • #16
                                Originally posted by mdp9 View Post
                                I have a medium sized lesson program full of once a week recreational riders of all ages. Over the past year I've had a few students get their own horses and I now have a small group going to local shows. We mostly do hunters, but we also do some little jumper shows, combined tests, etc.

                                As I get more into this venture (whereas I used to do 100% lessons only) I am looking for an opinion on HALF lease costs for a lesson type horse.

                                The client gets:
                                - 3 days a week exclusive access to horse. The horse is not used in any lessons on "their" day.
                                - Slightly discounted lesson costs
                                - Ability to go to shows or off-site XC schooling or trail rides (I do not offer shows to lesson only students)
                                - Usage of my tack, grooming supplies, blankets, etc.

                                The client pays for:
                                - 50% stall board
                                - 50% farrier
                                - 50% dental
                                - % of the horses value, annually (see below for my question on this!)

                                Things I (stupidly? kindly?) have not been billing the client for and have been covering myself:
                                - Supplements
                                - Minor things like deworming, vaccines, coggins
                                - I do not bill for holding fees or training rides (if needed), because it's my horse and I'd be doing it anyway
                                - Unplanned vet bills (see below for explanation)

                                Here are my questions:
                                - What percentage of the horse's value would you expect for this type of arrangement? My horses are not rated show material, but super safe, average moving, "good eggs". To pick an average, the value might be $6,500.
                                - What would you expect about vet bills? I actually include in the lease that they may be responsible for 50% of vet bills, but I'm afraid of scaring parents away. For most of them, just the standard costs of board and lessons and the occasional local show is an exorbitant cost. Adding a couple hundred dollars to their invoice when Horsey had an unexplained lameness that requires a vet visit and diagnostic is hard for them to swallow. One one hand it's my horse, and as the owner I bear the risk inherit with horse ownership. On the other hand, welcome to horses! They're expensive, get used to it.
                                - I have been doing 6 month lease agreements. Part of me wants to do 1 year leases, and offer an option for 6 month at a higher rate. Thoughts?

                                Thanks for reading.... I know it was long! Really interested in your opinions.
                                I think earlier posters were exactly right when they said to keep it simple. Calculate what you need to get for a half lease to make it worth your while and establish that as your lease fee. The parents you are likely to attract are accustomed to lessons and paying a set fee for a service. Telling these parents that leasing will cost them X plus the possibility of some unquantified cost for vet services is awkward and very unusual.

                                Build a rate sheet that is posted somewhere in the barn for all to see. State what it costs to half lease and list all the benefits of that lease; such as three rides per week on Dobbin, one lesson per week on Dobbin included (or not), right of first refusal to use Dobbin at horse shows, etc.

                                On the same rate sheet, list your board fees, the rates you charge to hold for farrier, for training rides, for worming, for mane pulling, for clipping, etc. Be transparent. It won't take long for a smart parent to see that leasing a horse can be a good deal when they realize all these services are included in the lease.

                                Half leasing a private horse is quite different than leasing a lesson pony and often is a situation where expenses are truly shared 50-50. But even in a private lease the lessee isn't charged a separate "percentage of the value" fee. I suspect the "percentage of the value" fee is another word for "depreciation". Best to work that expense into your lease fee like all the other costs.
                                Last edited by OneTwoMany; Dec. 8, 2017, 03:57 AM.

                                Comment

                                • Original Poster

                                  #17
                                  Thanks for your responses!

                                  The % of the horse's value is very low. 10% for an annual, 5% for 6 month. Really it's similar to the maintenance fee some of you mentioned, just in a different form. It sounds like the total amount each month for my program is very similar to the other programs others have described. Based on the ideas given I would maybe move to a maintenance type fee.

                                  I definitely do not intend to bill clients for vet bills; I was curious if others were thinking on the same lines.

                                  I really only offer the lease option for students who are either anticipating getting their own horse soon OR one of my super eager hard working students whose parents can't afford to get them a horse (and they are given lots of opportunities to work off as much as their bill as possible). So I like the idea of the parents getting an idea of what it will be like if/when they get their own horse.

                                  costco_muffins I totally agree- I've been doing this for the past year and love the way the kids have been bonding and creating a fun atmosphere. I also see such huge improvements in their riding.

                                  Comment


                                  • #18
                                    When I’ve done half-lease of lesson horses (two different stints, one almost 30 years ago in NM, one about ten years ago in MN), they were not necessarily held out of lessons three days a week, assuming that they were fit and sound enough to be used more than once in one day. I was expected to have a regular schedule of more or less when I was expected to be coming out (and couldn’t have both weekend days) so they could arrange the lesson schedule accordingly. I had to take at least one lesson a week and received no discount. I guess the lack of lesson discount could be perceived as in lieu of a maintenance fee in some respect? Fees were always half of board and average of normal maintenance vet (including dental/worming/maintenance meds)/and farrier costs. Same deal when I more recently had a half-lease on a non-lesson horse here in TX, but the schedule bit was less complicated.

                                    No expectation to cover unexpected vet fees, unless such fees were incurred by a result of some fault of mine. No percentage of the horses’ value. Knowing what I know about the size and unpredictability of unexpected vet fees in horses, I would have a really hard time putting that kind of commitment toward a horse that wasn’t mine, particularly one that I hadn’t “vetted out” to the same extent I would a purchased horse. Now that I have my own horse, if I ever find myself in a situation where I seek a half-lease to help relieve expenses, I wouldn’t feel right putting that kind of clause in there—would it really be OK to ask a family of a horse-crazy pre-teen just sticking their toe in the water of horse ownership to cough up 5 K for half a major colic surgery with complications, only to walk away with nothing because the horse dies? I don’t think so, for me. I’m the one silly enough to give my heart to this beast; it’s nice that a half-lease person is helping me out to get the bills paid, and that they’re getting something out of it, too, but they didn’t make the commitment I did. From a business standpoint, a half-lease like this is more like “lessons kicked up a notch” in my viewpoint. Unless you directly pass along unexpected vet expenses in lesson horses to students, I don’t think it “feels” right here; you should have those sorts of potential expenses factored in to your business plan and spread out evenly through the overall cost of your lessons. Obviously a full lease of a high-end sort of show horse to a show rider, or a breeding lease of a mare or something is an entirely different kettle of fish.

                                    If you have a fairly large lesson string and expect to have several of them in a half lease, I would probably come up with a set fee for a half lease that encompasses an average of typical maintenance sorts of fees among all the lesson horses. The Smith family shouldn’t necessarily have to pay more because “Dobbin” needs supplements, regular chiropractic, special shoes, allergy meds, and more involved dental care; as opposed to the Jones family who lease “Mac,” an easy keeper that’s fine barefoot.

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                                    • #19
                                      Have never encountered trainer owned school horses in the lesson program with a market value based fee on top of a flat fee roughly based on your routine monthly expenses. Even with private horses, never seen anything but routine vet expenses included. I mean, really, these people can’t afford to buy, full lease or even half lease a better quality private horse. You want to ding them for half a lameness exam with farm call, sedation and x ray/ultrasound and maybe joint injections?....surprise, you owe me another 350 this month? No. These arrangements allow these budget challenged riders to generate a decent amount of additional income for you won’t get from just a lesson or two a week.

                                      Particularly if you put two 3 day a week part leasers on each schoolie, 3 days a week each, they can alternate shows, they can make you some money without running clients off with a surprise vet bill. Give it some thought.
                                      When opportunity knocks it's wearing overalls and looks like work.

                                      The horse world. Two people. Three opinions.

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                                      • #20
                                        Originally posted by blondewithchrome View Post
                                        It is surprising to me to see other posters haven't paid lease fees for lesson horses, even a half lease - in my mind, a lease is a lease, regardless of who owns it. Someone owns the animal, so therefore someone should pay to lease said animal because you are taking a half of that animal's use from the owner. In this case, it's a lesson program. Perhaps, however, I have just been nickel and dimed my whole life If you aren't trying to make any money back, then sure, no lease fee makes sense. Totally up to you, as a business owner, to decide what is reasonable.

                                        In many programs I've ridden/leased from, even a nice quality lesson horse has a lease fee + 50% board/vet bills/supplements. Vet bills are capped at a certain amount, but IMO a half lease of a lesson horse should be treated just like a half lease of a privately owned horse. You get half of the horse's use, therefore should pay half of the horse's bills.
                                        It depends on how you look at it. At our barn the leases horses tend to be the more green horses so the lease is beneficial for both rider and owner because the horse gets more miles since it can't be used as consistently in the lesson program. The horses that are used a lot for lessons are not the horses they tend to lease.

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