Leasing out entire barn

[soloudinhere]

@Scribbler

Yes, but in this case the snowbird is renting from a trainer who is renting from property owner. This is not the price that trainers are paying to rent the whole property.

No, the prices in wellington and environs for a winter season start at $500 for a dry stall (the price the trainer pays) and go way way up from there.

My parents own a place where the dry stall rate is $1500/mo in season and it is reliably rented by the same people every year. That’s why I have to pay to board somewhere else - the whole things gets leased and they don’t live there. This is typical and the # of stalls at whatever the rate is, is how the season leases are priced. $4500/stall for the season is not unheard of at all.

However, a distance of less than half a mile can drastically affect what you can get for a stall.

[carman_liz]

@2DogsFarm

😱 Drinking & driving?
You are setting a BAD example for OP :no:
And think of the children! :disillusionment:

My son is 18 and not home and my 7yr old daughter is at grammas because me and dad are considered “essential” plus any fence I break, I fix hehehe. I am done now though mom! 😂😂😘😘😂

[SharonA]

Oh, be nice, people. Let’s try to be welcoming.

OP, I am totally jealous of having the resources to buy such a wonderful-sounding place! And I apologize for thinking you sounded young. Regardless, now that there’s alittle more information, I’m so glad you took this leap. If you have financial resources, there is alot less risk involved and you have time to figure things out if you don’t get the formula/people/management perfect, right way. It could work out to be a great decision for your daughter and your overall quality of life with less driving every day, and maybe even alot of fun.

COTH can be rather circular in how it addresses the actual questions posed by posters, but forgive our drawing bad or irrelevant conclusions, and it seems like you have gotten your question answered. Let us know how it goes!

[happilyretired]

Just sent you a PM. I own a facility in Central Florida that I lease to my trainer and his wife so have some potentially relevant input for you.

[Guilherme]

@wesley11

Ok lets clarify everything here… I purchased the property and yes it has a house on the property that we will be living in. Im not trying to run the barn or anything like that. I simply want to rent out the barn and the facilities to a trainer so they can run their business out of. The place has been a training facility for the last 30 years by the previous owner. We got approached by a trainer that wants to run his business out of there and I was simply trying to see what was a fair price. They would be in charge of everything. The only thing I would need is 3 stalls for my daughters horse and maybe a horse we would want to get in the future.

I understand this, but my question and approach are still valid. It might not be the ONLY way. One alternative would be to become a “ghost shopper” and call around for rates in places like yours, one step up, and one step down. Then make an offer to the trainer and see what they say. You could even look for FB groups around you and ask what people are paying and what they get for it in terms of service, facility, etc.

Remember, too, that if you enter into a rental agreement you just became “commercial” for a whole bunch of purposes (taxation, insurance, regulation, etc.). Account for those costs, too.

The “yellow pad” (or Excel spreadheet) is another friend, here, so that you can see the sums and work them to see how you’ll come out at the end of the year. If you want to be treated as a business (with it’s tax structure) you must have profit motive. You then have a period of time to achieve that goal. If you don’t make it within that time you are not, necessarily, in tax trouble. You might be able to show that events beyond your control prevented you from achieving you profitability goals. Pandemics, hurricanes, etc. will buy you some additional time.

The answer to your question is complex calculation, not a simple number.

G.

[clanter]

@carman_liz

My son is 18 and not home and my 7yr old daughter is at grammas because me and dad are considered “essential” plus any fence I break, I fix hehehe. I am done now though mom! 😂😂😘😘😂

well my oldest son was killed by a drunk driver so I hope you really were not driving on the highway with an open bottle.

But OP’s idea is similar to what I did back in the day. I set up a farm corporation that leased the property/barns from me and my other company boarded its horses who were used in advertising.

The reasons for the layered corporations was to shield my personal assets from any liability claim as horses can cause a lot of problems (we never had an issue). The S Corp boarded its horses at the farm (a C Corp), the farm leased the grounds/barns from us personally. Horses were assets of S Corp.

We selected C Corp as the form for the farm so it could provide scholarships, which it did to my kids. Also board meeting were held at most of the out of town shows so those expenses were borne by the farm …there were a lot of legal ways to shield income.

We never ever had any problems with the IRS as the companies made money, paid their taxes and everyone was happy We had a CPA and an Attorney both knew ranch/farm taxation and laws.

[carman_liz]

@clanter

well my oldest son was killed by a drunk driver so I hope you really were not driving on the highway with an open bottle.

But OP’s idea is similar to what I did back in the day. I set up a farm corporation that leased the property/barns from me and my other company boarded its horses who were used in advertising.

The reasons for the layered corporations was to shield my personal assets from any liability claim as horses can cause a lot of problems (we never had an issue). The S Corp boarded its horses at the farm (a C Corp), the farm leased the grounds/barns from us personally. Horses were assets of S Corp.

We selected C Corp as the form for the farm so it could provide scholarships, which it did to my kids. Also board meeting were held at most of the out of town shows so those expenses were borne by the farm …there were a lot of legal ways to shield income.

We never ever had any problems with the IRS as the companies made money, paid their taxes and everyone was happy We had a CPA and an Attorney both knew ranch/farm taxation and laws.

Nooo and I am so sorry for your loss, I don’t sleep at night until my son is home or lets me know he is wherever he is going to!! I know nothing can make it better and I’m sorry my comment upset you, rightly so. 😔😔

I would never ever drink and drive on any road. I was dragging my spreader around the field and mowing by my creek with my little john deere 42in deck.

[clanter]

@carman_liz

Nooo and I am so sorry for your loss, I don’t sleep at night until my son is home or lets me know he is wherever he is going to!! I know nothing can make it better and I’m sorry my comment upset you, rightly so. 😔😔.

no the comment did not upset me as it was not intended to cause harm, just be careful , thanks for the follow up

But OP, they appear to have some knowledge of what they are doing, I just think they need to set down and look at just what protections they will need…they should read in the Dressage form about that the problems in with the high level barn in New Jersey as they to could end up in a similar mess …is the risk worth it is the question.

this is the follow up thread not the first one

https://www.chronofhorse.com/forum/forum/discussion-forums/dressage/10606994-barisone-kanarek-legal-filings-public-record

[GraceLikeRain]

I think my math is right but LMK if I’m off.

You want full care for 4 horses, which is valued at $1,200 per horse in your area (for easy math). You also want the trainer to pay you $250/stall for the remaining 12 stalls.

Let’s say trainer typically makes $300/horse off of full board after accounting for material and labor. Those remaining 12 stalls will bring in $3,600 per month.

The trainer isn’t going to profit off of your 4 stalls but won’t be paying a dry stall fee. However, he still have the base labor and materials cost ($650/horse). Since you are not paying him for those stalls, there is no $300 profit, only expenses. So each month your 4 stalls will cost him $2,600 out of pocket.

If you charge him $250/stall * 12 stalls he is paying $3,000/month + $2,600 for your 4 horses but only bringing in $3,600 after accounting for his expenses. Each month he is losing $2,000 on board.

Are you expecting full training at no cost as well? If that’s the case, the trainer loses another $4,000/month providing free full training to four horses or however much full training runs in addition to board.

Those 12 stalls seem to be split between full training show clients and a therapy program. That is going to be a whole lot of lessons going on if the trainer is going to come out ahead after starting the month $6,000 in the hole.

It actually seems like a detailed contract of full care and training for 4 horses in exchange for the property and other 12 stalls is a pretty fair bargain. Yes, your mortgage probably just went through the roof but the farm is building equity and your daughter’s horses get care and training at a flat rate.

When she goes off to school or moves, then you renegotiate for a flat rate for the full property.

[clanter]

However, he still have the base labor and materials cost ($650/horse). Since you are not paying him for those stalls, there is no $300 profit, only expenses.

OP better run that by their tax advisor as it is very slippery and could entangle any separated corporation into a mess of is it a business or a hobby