Hello
I was wondering if anyone had any insight on a client buying a farm for a professional to run. In this case, the clients have a horse with me but are in no way horse people. I would love to hear everyone’s arrangements, experiences, advice, etc.
Get everything in writing.
Have a clear list of who is responsible for what. (insurance, taxes and fees, water and electric, etc.) and how the money will be handled, staff hired and fired, hours of operation.
Have a detailed exit plan drawn up for how to leave peacefully if it doesn’t work out. (i.e. timeline, clients, equipment, etc.)
Also discuss w/ owners how things will work vis-a-vis their presence.
I was an asst. manager, in charge of the smaller/fancier barn (of 3) where full board and training horses and sale horses lived, and owner’s wife kept her horses there. She’d come in while I was mucking in the AM and get her horse out, groom and tack and leave the place an absolute disaster, then come back from her lesson and bitch about how the place was a mess and how it didn’t reflect well on the business…
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I (personally, without knowing any of the backstory, obviously) would only feel comfortable doing this if it was clear that the property was not purchased for me. You may want to leave in ten years and you don’t want to be roped into anything. I would want an arrangement where the other party is acting as landlord and client as separately as possible in case one of the relationships go south.
Think of every scenario. Of course the owners will be getting some sort of free or reduced services. Make an agreement that will work for both parties should they end up with more or less animals than they currently have.
You can’t tell them they can’t have a horse on their own property, so what’s your plan if they get something that is unsuitable for your program? Or unsafe for you and your staff? Make a plan for this now.
Since they aren’t horse people it may be up to you to think of all the details. Are the facilities and fencing up to par (or will be built up to par) with your standards and that of your other clients? Who will pay for facility maintenance? I’m not just talking fencing repairs, I mean the little stuff like new hoses and broken jump poles. Who’s acting as barn manager? Are they knowledgeable enough to be up at 2AM with an emergency or will they expect you to come?
Many new horse people do not think about the tractor. Do not let them forget to budget for the tractor! Similarly, make sure they know how much footing, jumps, and fencing costs. These things are sneaky expensive.
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I don’t have much to add as I am in neither position, but my barn just exited a similar situation. owners were great, lived on the property, and decided to downsize. It was rather like an amicable divorce. They spent months working out the details of splitting things. This was an involved, horsey family.
It can definitely work (this was a good, 10-some year situation) but it definitely can make things harder, not easier when the lines are blurred.
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Why? If this is to be operated as a business then all clients are the same.
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This just goes to show you, OP, get it all out up front, so everyone understands the same things.
Clanter, I agree it could work like that, or it could not. Both parties need to agree on whether or not the land owner pays the same boarding cost as other clients. It may depend on how much the owner does, and what they want. I can see the argument for both sides.
Also, how do you get paid? do you have to be a rainmaker, or is there a salary? This will change a lot of the other issues that may come up. If you have to hustle for your income, it will be a very different arrangement than if you’re pulling a salary…
Because a portion of board money would be to pay rent for the facility. It would be odd to charge them full board and then give their own money back to them every month. It depends how OP is paying to use the facility. If she’s paying per horse or per stall it’s very easy to waive that facility fee for the property owner. If she’s paying a flat rate to rent the facility than it may make sense to do it your way.
Cut & Paste post because there was a system problem that logged me in as someone else this morning when I originally replied - 
To the OP: It is very important to identify and manage expectations about this kind of arrangement - in advance and in writing.
What is your client’s motivation for this project? If it is, for example, the notion that they are paying a fortune for all this board and training and think it would be so much better to “pay themselves,” so to speak - this is going to be a very challenging arrangement. What are YOUR expectations about this arrangement? If it is to have a customer provide you with a nice facility out of the goodness of their hearts … again this is likely to be very challenging. Not saying that is the case for you, but frankly it’s not uncommon and it rarely if ever ends well.
I have seen these situations quite a few times over the years and can only think of one arrangement that worked out without hard feelings over the long term (and that one didn’t last either, but at least was resolved amicably.) All the others ended, often quite badly, when the owners figured out that they were not in fact making any money, had made in some cases substantial investments, and blamed the professional for saddling them with a farm and program that became a money pit.
In one case the professional in question had used lots of personal contacts to obtain products and services for the farm, getting lots of equipment and supplies at cost, and creating a really lovely, high end facility… intending to use the facility to run their business and creating the kind of high end show program their clients expected. Shortly after the facility was completed, and before that pro moved their horses and clients in… the owner decided she preferred to ride with another pro… and turned the facility over to the new trainer. There were lots of ugly accusations about who did what for whom and how the money had been managed and so on and it cost a fortune just in the legal expenses - something the wealthy owner could easily afford, and the pro could not.
If you do decide to go forward, set the entire situation up in a business like fashion and have it vetted by the appropriate professionals (legal, accounting etc) to ensure that the rights and obligations of both parties are abundantly clear, that there are identified remedies for any possible breach, and that there is a clear exit path for both parties that is understood and agreed to by all.
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There is nothing Odd about charging them the board then the business paying them rent or lease payments.
The IRS would expect you to either charge them or issue a 1099 for the compensation …the Business is independent of the personal agreements
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Is it really fraudulent? (Asking as a real question :)). If I pay $100 for a dry stall and charge $1000 for board and training, is it really a tax problem to charge the property owners $900 for labor and training and be done with it? Because that’s really what the business exchange is (labor and training) instead of labor, stall/facility use and training for the rest of the clients.
Requiring that extra $100 to be on the books doesn’t quite make sense. It’s not a business expense for me - I’m not truly renting that stall, the property owners are using it for themselves. And it’s not a business expense for them, they wouldn’t charge themselves a dry stall fee for their own horses.
If the person running the program is going to also manage the property owner’s horse’s care and such, I would still do a regular board bill.
Reason being you want it crystal clear who is doing what. It’s much cleaner to say, you charge me x for renting the facility and I charge you y for board than trying to split out different costs and such.
I was in a program with similar circumstances and the owner ended up taking huge advantage of the trainer. Also argued every item in the monthly bill, such as quantity of hay and feed, labor, etc.
Get everything about the arrangements IN WRITING. And keep in mind that what sounds like an awesome opportunity can turn into a living nightmare in an instant.
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The big question: does trainer pay a set rent or does trainer pay a per cent of income?
If set rent, how will property owner feel if trainer makes a good living off her business and owner doesn’t get a cut?
If per cent, the problems are endless.
Obviously you can have any setup you want for the owner. Trainer rents stalls 1 through 18, owner retains stalls 19 and 20 and does self care.
Does owner really understand what it means to have a training barn in her own backyard, and that all the privacy and freedom of being on your own land will disappear? That trainer will be busy with other clients most of the time?
Also, is the horsey wife or the real estate investor husband buying this place, and if the latter, how long until he builds condos on it? 
I did this very successfully for 12 years. Client bought property and built a farm to my specifications. I paid rent. The business was mine. He was the landlord. As landlord, he had a limit to the number of horses I could have on the property. My rent was fairly high, but the landlord took care of all the pasture and farm maintenance so that the property always looked beautiful.
My advice to you: Have a contract with more than a 1 year term so that you have security.
Treat it like a business- pay your rent religiously on time!
Keep records and save your pennies for a down payment on your own property. Having paid rent, you can show that your business will be sustainable when that is converted to a mortgage. After paying almost 1 million in rent over 12 years, I bought my own place.
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Thank you everyone for the constructive discussion. Please keep your ideas, experiences, and concerns coming. My client wants me to put together a business plan and I’m scrambling.
Maybe go talk to an accountant that does this kind of advising? Might be really useful to get you started on a business plan
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Why does the client want to do this, and why do you? I will echo a previous poster who said that they’ve seen many variations of this arrangement, and that almost all of them ended badly. Client-trainer relationships can be tricky to balance in the best of times, and adding that layer of financial entanglement and ownership dynamic is tough. In my experiences, the clients who purchased land did so because they wanted a type of riding experience and horse care that they didn’t feel they had access to unless they owned it themselves. The trainers did so because it gave them an opportunity to work with nice stock out of a nicer facility than they would otherwise afford and several were offered a good level of financial stability. In almost every case, the owner ended up resentful of the costs, watching boarder horses chew up their property, lack of actual control, etc (because remember, they did this so they could have what they wanted). And the trainers ended up resentful of the client/owner oversight and perceived lack of independence. This was especially when the trainer was a direct employee of the client/owner.
If you cannot imagine entertaining “suggestions” from these particular clients about how you run your business, think long and hard about this. If you have any sense that they are doing this because they believe it will be easier or cheaper, beware that you’ll be the easy scapegoat for that frustration. And if you really think you have the unicorn client here and would like to work with them in this capacity, take all of the great advice you’ve been given so far about consulting lawyers and accountants and writing everything into a contract very seriously so that you (and they) don’t get surprised a year in.
There are quite a few older threads about this topic. Now that the search function is working better, you might be able to find some of them that go into details about pay structures, pitfalls, etc.
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