Half Lease Terms?

[mdp9]

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 do hunter shows, some little jumper shows, CTs, 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.

[Bartleby]

I would not pay a percentage of value in a partial lease situation as you describe nor do I know any of my friends who partial lease who would be interested in such an arrangement. That is not the norm in my area and so would be a tough sell around here. We see that sort of arrangement more with full leases and horses of higher monetary value.

Partial leases around here do split routine maintenance and vet fees at 50%. So worming, wellness, farrier, vaccinations and maybe supplements, but not always unless they are necessary to keep the horse in work. Anything beyond routine care on a partial lease typically falls to the owner. Again this is what I have seen as typical arrangements in my area, obviously may not be indicative of the market in yours.

The people I have seen doing partial leases are those individuals/families who have a tighter budget and maybe need more fixed costs. Other times they already have a horse on layup with extensive medical bills, but still want to ride without the risk of incurring even more debt. Also those maybe needing more ride time on a more schooled horse when developing a new skill/interest. In those situations paying a percentage of value upfront and possibly being on the hook for large medical bills (especially a lameness or injury they might not even have caused since other(s) will be riding the horse too) would drive them to look elsewhere for a partial lease agreement.

[Scribbler]

For a three day lease of a lesson horse I would expect a set monthly fee that makes a profit for the owner and is still realistic for the rider.

You need to sit down with a calculator and figure the real annual cost for one of your horses factoring in shoes, worming, shots, feed, and facility costs including labor. All these are foreseeable.

Add in a margin for emergency vet bills savings account.

Divide by 12 for monthly base cost. Then divide that monthly cost in half for your half lease fee.

Regard this figure. Is it shockingly low? Add a bit for profit

Is it getting too high for your clientele?

In that case you might need to rethink your basic business model or decide the lease is a break even or loss leader.

Require lessons. Paid upfront.

Typically a half lease is about half the cost to board a horse there.

I would not get into billing beginners for vet and farriers. Better to build that into the monthly single fee.

[Bogie]

@Scribbler

For a three day lease of a lesson horse I would expect a set monthly fee that makes a profit for the owner and is still realistic for the rider.

You need to sit down with a calculator and figure the real annual cost for one of your horses factoring in shoes, worming, shots, feed, and facility costs including labor. All these are foreseeable.

Add in a margin for emergency vet bills savings account.

Divide by 12 for monthly base cost. Then divide that monthly cost in half for your half lease fee.

Regard this figure. Is it shockingly low? Add a bit for profit

Is it getting too high for your clientele?

In that case you might need to rethink your basic business model or decide the lease is a break even or loss leader.

Require lessons. Paid upfront.

Typically a half lease is about half the cost to board a horse there.

I would not get into billing beginners for vet and farriers. Better to build that into the monthly single fee.

This. You can cover your costs and make a small profit but I don’t know anyone who would pay a percentage of value. Many barns around me offer this kind of arrangement and it’s a flat fee.

[Jumping31]

I would make a list of must have requirements for you and a budget in terms of how much the horse is valued and what percentage the leasee would end up paying. For more specifics, I would look at programs at other barns in your area to get a competitive deal or contract.

[mdp9]

The % value is very low - 10% annually, 5% for a 6 month.

@Scribbler , this is the general idea of what the figures have been for the half lease program I’ve been running for the past year. The clients who have lease are anticipating getting their own horse, so I like doing line items so they see what it will be like when they have their own horse rather than a flat fee. But the result is pretty much the same.

Thanks for your input every body!

[Scribbler]

@Bogie

This. You can cover your costs and make a small profit but I don’t know anyone who would pay a percentage of value. Many barns around me offer this kind of arrangement and it’s a flat fee.

I understand the per cent of value lease happens in the high value hunters. At least I read this on COTH! A $100,000 horse goes out on full lease in a training program for 30 % of its value IE $30,000, for a year, rider to cover all upkeep. Lets rider compete at a higher level for a year.

I have never heard of anyone doing this on low value horses. A full lease on a low value horse is usually a free lease and a way to park a horse you can’t keep but don’t want to sell. Rider covers all costs.

[BigMick]

Whenever I’ve half-leased one of my horses, the terms were quite different but in context for my goals. Quite simply, I wanted 1) my horse to get exercised 2-3 days/week some of which would be under supervision and 2) a little financial reprieve.

Lessees paid the equivalent of half of the board and shoes and were required to take lessons from my trainer. I covered everything else.

I realize this is way more lax than most people would structure for their horses, but my goals were also different. However, I always had a contract that both parties signed.

[trubandloki]

Any time I have leased out my horse or the people I know who have leased a lesson horse it has been as described in Scribbler’s post above.

What a hassle chasing after the cost of half a tube of dewormer or half the cost of a vet bill.

I have never heard of a lesson horse lease giving a person a discount on their lessons either.

[Wonders12]

@Scribbler What Scribbler said. (My tag keeps getting moved to the top of my post on my phone.)

Yes, half leases can be an intro to horse ownership, but it should be an accessible one. Make it one fee and says “which covers half board, farrier, and annual vet costs.” The vet costs can include routine (dental, vaccinations, hock injections) and the average of your unexpected costs, but it shouldnt fluctuate from month to month. If they express interest in owning, break down the costs for them, which will likely be ~2x their current half lease.

IMO, half leasees should not be responsible for vet expenses, except for what is already included in their monthly fee. I assume you will keep 100% of the medical decision making for the horse. If so, the leasees should not be stuck with 50% of the bill.

Do make a policy on what happens if the horse is lame, throws a shoe, or is otherwise unridable for one day or many.

Also, IMO, half leasees don’t get “exclusive access” to a horse. Yes, that’s the intention, but if something happens and I need the horse for a morning walk trot lesson when the owner won’t come to hack for 20 minutes until 6, I don’t want to be in violation of my contract for that. That privilege is for full leasees/owners.

[amb]

@Scribbler

For a three day lease of a lesson horse I would expect a set monthly fee that makes a profit for the owner and is still realistic for the rider.

That, very much. Even with private lease deals where I’m making arrangements with a horse owner directly we’ve done it this way. The bookkeeping otherwise is such a pain.

As for the lesson discount, though, I thought that was pretty standard. If it’s my lease day and I have a lesson I pay the client-owned horse rate, not the school horse rate.

[rockonxox]

@amb

As for the lesson discount, though, I thought that was pretty standard. If it’s my lease day and I have a lesson I pay the client-owned horse rate, not the school horse rate.

That would depend on if the barn has a client v school horse rate. At 99% of the places I’ve ridden, the rate for a lesson is a flat rate regardless of what horse you ride.

[jonem004]

@rockonxox

That would depend on if the barn has a client v school horse rate. At 99% of the places I’ve ridden, the rate for a lesson is a flat rate regardless of what horse you ride.

All the barns I’ve worked at have had a fee for schoolhorse use. If the cost of the lesson is the same for the customer regardless of who’s horse they ride, a lesson horse use fee might come out of the trainers cut. More of a trainer renting the horses to teach lessons on than a rider renting the horse to take a lesson on.
The only barns I’ve seen that didn’t charge for lesson horse use were owned by the trainer, so there were no conflicting interests to keep separate. At one barn I had a couple of my own horses I and the other trainer used for lessons. The “school horse fee” would be taken off of their board until it covered the cost and beyond that was payed to me as part of my commission.

[rockonxox]

Different strokes for different folks

[trubandloki]

@rockonxox

That would depend on if the barn has a client v school horse rate. At 99% of the places I’ve ridden, the rate for a lesson is a flat rate regardless of what horse you ride.

You are not alone in this. I do not think I have ridden anywhere that the fee for a lesson on a lesson horse was different than the fee for a lesson on your own horse.