Buying A Home With Rentable Land
Have you seen a rural property listing that describes the amount of workable land and wondered what it meant and how it could benefit you?
Get cozy and continue reading because finding a home with rentable land can help you benefit a local farmer and also put money back into your wallet.
Let’s start with understanding what workable land is.
Working land means that the land can be or is actively being used by an agricultural owner or operation. Which simply means it’s being used to grow crops or livestock.
You’re not a farmer, nor have the first clue as to what to do with all that extra land your potential new home is surrounded by.
As there are many avenues you can take, the first and easiest step would be asking your buying agent who is currently renting the land if any. If there are any past land lease agreements in place you will want to know who they are, what the conditions are and what needs to be done moving forward with the purchase agreement.
For argument’s sake let’s start fresh as if no one is utilizing the land yet and you want to know what you should be informed of about your new workable land.
How Farmland Is Calculated
First off you will want to know how farmland is calculated.
One of the biggest determinants of your land’s value is how much it produces. More product, more money. Simple right
In the farming world you also have to think of it like supply and demand. If everyone is growing more corn, the price might go down.
As you determine a fair rental price, remember that its yield can have an impact on what’s fair.
Know The Condition Of Your Land
Know the condition of your land. You can think of it like this. When selling your car you know the make, model, and conditions. Well the same can go for your workable land.
The soil type, tilling, shape, topography and so on. Also researching the local rent rate around the area is a good starting point as well.
How To Take Care Of Your Land
Know how to take care of your land. Plants operate like us. When we feed it healthy nutrients it produces and grows better, just like us.
As this blog post isn’t about knowing how to farm your land. You don’t want to have a renter that never does anything to provide a healthy balance of nutrients to the soil. It will deplete the soil and get you less income from the land over time.
Ask your renter about their soil management plan to replenish nutrients crops leech from the soil. Your job isn’t to do it but to know the soil is being well cared for.
Finding A Farmer
Past and current rental agreements can make life easy if that farmer has been renting for a long time at your new property and all you need to do is get acquainted and negotiate any new terms if needed moving forward.
If you need to find a farmer to rent out your land, do your homework. The same principle of renting a home can apply. Interview multiple farmers, check references, and don’t equate the highest rental price with good value.
Knowing your land’s value comes in handy here because you want to choose a farmer that doesn’t skimp on fertilizing the land over giving you more in your pocket up front. You may earn more in the short term but it can decimate your land long term without proper care.
Know what you’re offering and who you’re offering it to.
Just like in homes and apartments, formal rental agreements are ideal.
Most farmland is rented without formal paperwork but just be aware that you can have more protection with a formal lease and input from an attorney.
If you’re bringing in money for farmland rental, you’re technically a business owner.
Talk to legal counsel about what your best course of action is for getting some general liability insurance to safeguard yourself from certain liability exposures.
Long Term Views
Farmland is an incredibly valuable asset.
As I have family who are cash crop farmers that own and rent out land from others. They all understand the main objective, which is to produce good and healthy crops for us to eat and utilize, as well as keeping the land healthy for years to come.
As a landowner, you’re also a steward of one of the most important resources for maintaining life on earth.
Renting your land and having a good relationship with the local farmer’s can be very rewarding in many ways other than extra cash.
Begin by introducing yourself to the farming community and negotiate terms that work best for the quality of the land for years to some, as well as taking some advice from the pro’s cropping the land.