Leasing your land for agricultural purposes

[Texarkana]

My husband and I may be potentially moving to a different area of the country.

One difficulty with our real estate search is that the area is a heavy agricultural area. You’d think that would make finding a farmette easy, but not so. Most of the land parcels offered for sale are HUGE, and currently in crops, putting them well outside our budget. We don’t need 100 acres, nor can we afford it.

A few large farms have come up recently that are feasibly above our budget. We have no interest in farming large acreage ourselves, however, I’m wondering if some of the cost of the property could be recouped by leasing the tillable land out to local farmers? I know folks do this, I just don’t know anything about it.

Would we be able to offset the hefty mortgage by leasing the land? If this is a viable option, how does one even find interested parties?

Another option we have considered is to try to parcel the land, but who knows if it would sell in a timely fashion…

[skyy]

Farmers around here (SE PA) lease land all of the time. I think it’s a word of mouth kind of thing though and unfortunately, the ones that I know that do lease land don’t pay much for it.

[SMF11]

Around us the farmers don’t pay anything to lease the land.

The landowners get lowered property taxes and their land maintained for free.

I suspect this is very location-dependent.

[pAin_t_Misbehavin]

I don’t know about Tennessee, but around here I think it’s about $50/acre for a year. So if you buy 100 acres, and lease out 90, you’re only going to get $4500.00. Although it’s paid annually, I guess this will work out to about $375/month. Don’t know if that’s enough help on your mortgage.

Also of course you get someone else maintaining your land at their expense, which is very nice if you get a conscientious manager. Mine is great! Keeps my ditch banks cleared twice a year and is always willing to help out when heavy equipment is needed. She sent her son over to bury my horse and wouldn’t accept a dime from me.

[mmeqcenter]

In most of the land-leases I’ve known about, the farmer only paid the land owner the equivalent of the real-estate taxes (which of course are lowered significantly with an agricultural exemption).

[fordtraktor]

If you do this you also want to include in the agreement specifics on fertilizing, liming, etc. What you don’t want to do is lease out a farm, have a farmer abuse it by leaching out all the nutrients heavily farming without putting the good stuff back in, then disappear.

[downen]

My husband and I bought our 80-acre farm in 1993. We’ve leased out 60 acres from the get go, to a the farmer who was leasing from the previous owners. This is Illinois, so there always seems to be demand for acreage to lease. I would investigate lease prices on the property you are looking at. This area is average, I would say. It doesn’t help with the mortgage, but does cover our tax bill every year.

Best of luck to you!

[My_Two_Cents]

Wow. Here in Iowa farmers are paying $300 to $500 an acre. It’s cut throat between neighbors! Check the extension office of the area you are looking to move to for what land in that area rents for. Many of the livestock producers need the land to spread manure on so be aware that there could be farm-y smells from time to time.

[poltroon]

I would suspect leasing is not a practical way to finance your property purchase for people without cash flow, because if it was, everyone would be doing it.

Local knowledge is everything on this kind of situation, though.

[goldenrow]

In the Upper Midwest, tillable acres are at a premium. The corn, soybean and hay markets are crap, but there is always someone looking for more ground to rent.

If you are headed up this way, send me a PM. I am an agronomist and can give you some tips for connecting with the right person.

[Guilherme]

[QUOTE=Texarkana;9014086]
My husband and I may be potentially moving to a different area of the country.

One difficulty with our real estate search is that the area is a heavy agricultural area. You’d think that would make finding a farmette easy, but not so. Most of the land parcels offered for sale are HUGE, and currently in crops, putting them well outside our budget. We don’t need 100 acres, nor can we afford it.

A few large farms have come up recently that are feasibly above our budget. We have no interest in farming large acreage ourselves, however, I’m wondering if some of the cost of the property could be recouped by leasing the tillable land out to local farmers? I know folks do this, I just don’t know anything about it.

Would we be able to offset the hefty mortgage by leasing the land? If this is a viable option, how does one even find interested parties?

Another option we have considered is to try to parcel the land, but who knows if it would sell in a timely fashion…[/QUOTE]

This varies wildly with location and type of property.

For row cropping, $50/acre as a target price might be a “ball park” starting number. For grazing land, maybe half that. But these are WAGS for land east of the Big Muddy, not even SWAGs. You’d get a better number from a local County Extension Agent or Farm Service Office.

G.

[Timex]

Around here, the actual lease prices are pretty low, but the tax breaks given to land owners makes it worth it to them.

[trubandloki]

In my part of the world land leases for what appears to barely or not quite cover the lowered property tax rate when it gets converted to a ag exemption because it is leased by a farmer.

In other words, it is not a huge money maker but it saves some money because even with the ag exemption taxes are not cheap.

Best to contact someone that knows how things work in the area you are looking to buy.

[moving_to_dc]

Definitely talk to the local extension agency.

You can cash rent, or share crop. One of our parcels in KS is 80 acres, and we net ~$10K per year in share cropping. This means we are responsible for some of the “costs” during the years - on this piece of land, we pay a portion of the fertilizer and herbicide, but nothing for seed or working the ground/harvesting.

[Texarkana]

Thanks everyone! This is all very helpful to know!

[astrohip]

I suspect every area is different. Here in Texas, leases are dirt cheap (unless it’s an oil lease). For example, in our part of the state, leases are around $25/acre/yr. People don’t do it for income, they do it to get the ag exemption. Land goes for $10,000+ an acre, so the ROI is… well, it ain’t there.

 		 			:no:

[horsetales]

We lease out part of our land. The rate you will get varies by region. Ask you agent of have them get the info from the property owner’s agent. We put a sign out by the road when we purchased the land and had multiple calls. Is the land currently farmed? If so, ask the owner for names of area farmers who might be interested or if already leased, be sure to get contact info. If you go under contract the owner might also put out the word for you.

[cutter99]

The USDA tracks land lease rates. They are generally a good resource.

https://www.nass.usda.gov/Publications/Highlights/2015_LandValues_CashRents/2015LandValuesCashRents_FINAL.pdf

https://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Cash_Rents_by_County/

[csaper58]

If you lease the land will you have any control over what crops are planted and how or what chemicals are used on those crops?

Here, crop dusting planes are used on large tracts. I would not want to live next to that.

I would also check the water quality of any water well.

[goldenrow]

Hi - Aerial Applicator Consultant here.

Did you know that the majority of the products we spray, are the same active ingredients - in lower potencies! - as the fly spray you use on your horse?

When we are spraying soybeans and corn, our most common mix is 1 gallon per acre - looks like a lot more, doesn’t it? Crazy!

In the 1 gallon per acre, we are applying 122 oz of WATER, and 6 oz of an insecticide - only 6 fluid ounces on 43,560 square feet!!! We often use insecticide called ‘Hero.’ It is a pyrethroid - like the Pyranha fly spray. It is labelled for use corn, soybeans, lettuce, peas, tomatoes, peppers, tree nuts, and a whole list of other edibles.

Other times, we are spraying important micro-nutrients that are most effective when sprayed foliarly, rather than soil applied. Things like Boron, Zinc, and Manganese. We also spray a few fungicides, which are also labelled for your garden.

We always have drift control agents in the tank, and we have all taken multiple licensing exams. Every field is scouted by an agronomist to diagnose insect and disease problems, and we don’t spray unless the field has reached an economic threshold.

So although those ‘crop-dusting’ places can seem a bit scary, and it is ok to be concerned, please don’t jump to conclusions about them being dangerous.

The most dangerous part about them, is going out on the town with those ex-Navy pilots. Dang, they can hold their liquor.