Pricing on Leasing out a Horse

[annairb]

Alright, so I decided to lease my horse, but am unsure what exactly his price should be either per month or per year. We did lease him before at a rate of $250/month but realize now that is was too low to ask for the skill level that he is.

[edit] My previous trainer said he’s worth $20-40K (can’t remember the price exactly, I am thinking it was $30K).

So, what should I ask for him per month or per year? I heard from somewhere that you’re supposed to get 1/2 the horse’s value in a year of lease, is that true?

Any input appreciated!

[paw]

The general rule I’ve heard for pricing is 1/3 the market value per year. Whether you want to lease month-by-month or yearly is up to you. Factors to consider include:

• are you leasing him out of the barn?
• how much control do you want to have over how he’s used?
• what do you want to have happen should he get hurt while leased out?

I’ve leased a horse out for a year on an out-of-the-barn lease, but only to a program I trusted. I’ve leased (the same) horse out month-by-month in-barn, as well. They each have pros and cons - yearly, you get the fee up front but often have less say in the day-to-day life of the horse; monthly, you always have a chance to get the horse back if you’re not happy with the arrangement (and, of course, the lessee can drop the lease more easily).

In any event, make sure you have your entire agreement in writing: who pays normal bills (vet, farrier, etc), whether the lessee has to carry insurance on the horse, what happens should the horse suffer a severe injury during the lease period, if there are limits on how much the horse can work/how high they can jump it/whether anyone else can ride it, and so on. You may also want to specify it needs to stay in a certain trainer’s program.

Be careful - the experience can be fine for everyone (and your horse gets another fan!), but it can go badly wrong if you lease to the wrong person.

Good luck.

[OneTwoMany]

Yes, general rule of thumb is a year lease is 1/3 the market value of the horse, but 1/2 the market value isn’t unusual and sometimes it can even be higher. There are many, many variables. The higher lease fees (as a percent of sale price) often reflects the fact that the owner prefers to sell, but will lease if the terms are attractive enough. 1/3 the market value is probably a good starting point. Best thing to do is get an honest assessment of the value of the horse. Then evaluate the market around you for horses with similar abilities and experience and understand what their lease fees might be. Are you offering a lease to buy with the full lease fee applied toward purchase? If not, the fee might be a bit less. Is the market flooded with horse that sound similar to yours? If so, the lease fee might be a bit less. Etc.

Like paw said, be sure to have a well thought out lease agreement. It is worth paying a few bucks to get a good one if you don’t have one already. Equine Legal Solutions is a resource to consider.

Finally, there are lots of threads on here about leases gone horribly wrong and leases that have gone very well. Good idea to read a few and understand what works and what doesn’t.

Best of luck!!

[findeight]

Does he have any results in the Nationally rated divisions or just in the unrated Hunters below 3’? That does effect his market value, it would be the
difference between closer to 20 or closer to 40k+. There are many Nationally unrated divisions at A and AA rated shows these days. The shows nicer, competition may be stiffer but a horse with a record in a Nationally rated division is going to price up over one with only non rated results.

where are you located? Horses price higher in large metropolitan areas with high cost of living and higher salaries, lower in less densely populated, lower cost areas. Same horse could be 30k in the East coast and under 20k in the Midwest. Trainers reputation for producing good horses and attracting buyers and those looking for a lease in that price range also factors in.

Regardless of what the horse you are leasing is “worth”, you need to value it for your area. For instance, if you decide to value at 40k and ask 15k for a 1 year lease? And the majority of similar horses in your area generally sell under 20k? That would be overpriced and you’d be unlikely to find anybody. And you need to price according to the price people with your trainer in your barn and the buyers the trainer attracts typically are willing to pay. I mean, you price at 40k and the most expensive horse trainer has in the barn or has handles as agent is 20k? Probably not going to attract anybody looking at 40k.

Pricing is kind of complicated unless you are talking WEF or Indoor levels. Very locally dependent. Age, breed/type, size and color can also factor in. This one is Appendix so considered less desireable then a WB, that effects price. So can number of similar horses out there for sale or lease and what they actually sell or lease for as opposed to the advertised or barn gossip price.

Just to throw something out there, In my mid priced area, similar horse successfully showing local and at rated venues in 2’6" to 2’9" unrated Hunters would price in the 12500-20k range, probably lease about 3-5k a year. More in an expensive area. If it had a rated 3’ division record, that could easily double, if the record was at prestige shows, talking some real money.

You have to be careful to understand you need to present what buyer/those wanting to lease, are looking to get the highest price-16.2 WB with rated record. And not to assume any horse leased or sold at the advertise or barn gossip price…some tend to inflate the actual amounts on those checks to enhance their reputation.

[findeight]

Does he have any results in the Nationally rated divisions or just in the unrated Hunters below 3’? That does effect his market value, it would be the difference between closer to 20 or closer to 40k+. There are many Nationally unrated divisions at A and AA rated shows these days. The shows nicer, competition may be stiffer but a horse with a record in a Nationally rated division is going to price up over one with only non rated division results.

where are you located? Horses price higher in large metropolitan areas with high cost of living and higher salaries, lower in less densely populated, lower cost areas. Same horse could be 30k in the East coast and under 20k in the Midwest. Trainers reputation for producing good horses and attracting buyers and those looking for a lease in that price range also factors in.

Regardless of what the horse you are leasing is “worth”, you need to price it for your area. For instance, if you decide to value at 40k and ask 15k for a 1 year lease? And the majority of similar horses in your area generally sell under 20k? That would be overpriced and you’d be unlikely to find anybody. And you need to price according to the price people with your trainer in your barn typically are willing to pay.

Pricing is kind of complicated unless you are talking WEF or Indoor levels. Very locally dependent. Age, breed/type, size, PPE results and color can also factor in. So can number of similar horses out there for sale or lease and what they actually sell or lease for as opposed to the advertised or barn gossip price.

Just to throw something out there, In my mid priced area, similar horse successfully showing local and at rated venues in 2’6" to 2’9" unrated Hunters would price in the 12500-20k range, probably lease about 3-5k a year. Some regions, as noted, might be higher.

[mroades]

Every single lease I have seen in the last year has been half market value per year. I was raised on the 1/3 rule, but 1/2 seems to be the norm now.

[annairb]

Thank you all so much for the responses! I really appreciate the feedback and have a better understanding of value.

[OneTwoMany]

@mroades

Every single lease I have seen in the last year has been half market value per year. I was raised on the 1/3 rule, but 1/2 seems to be the norm now.

Out of curiosity, for the horses that are being leased out at half their sales price, what ages are they? Experience level? Price range?

For us, we see more of the 1/3 rule, with leases that tend to run in the mid to high five figures.

[Madison]

@mroades

Every single lease I have seen in the last year has been half market value per year. I was raised on the 1/3 rule, but 1/2 seems to be the norm now.

I’ve been pricing them out recently and still see a lot close to the 1/3 number, but what I’m seeing more than anything is that people like to just pick a round number somewhere in that range! I did see some $40k to buy, $20k to lease types, and in those situations I just assumed it meant they really wanted to sell, but $20k was enough to make them willing to lease.

[findeight]

@OneTwoMany

Out of curiosity, for the horses that are being leased out at half their sales price, what ages are they? Experience level? Price range?

For us, we see more of the 1/3 rule, with leases that tend to run in the mid to high five figures.

Pretty finished AA show horses for Juniors and some Big Eq horses. Superstar Eq horses might be even higher for shorter lease periods. Once in awhile a 3’ Adult horse somebody just has to have but the owner won’t sell. That’s always been true with the more elite level horses you find at WEF, Indoors and HOTY, zone champion lists and/or out of elite level barns.

Ones I have any real details on aren’t at that AA elite level, more average A and lesser AAs so still generally 1/3 of the higher end of the market price range.