Thought experiment - boarders....would you pay by the service?

[Virginia_Horse_Mom]

It seems like having a full time professional barn manager run everything for a barn owner is not a financially feasible way to run a boarding business these days… if the barn owner is the one who wants to have the business.

It seems like the more viable model for barn owners who are not actually interested in running their own operations is to lease their facility out to a professional who has their own llc. The professional can then take on the challenge of filling the barn with clients, and managing the related boarding, training and lessons. The challenge of labor costs is frequently addressed by finding one or two young people who are interested in being working students, and looking for housing, subsidized horse keeping expenses, and enough time to pursue their own riding goals.

This seems to be the most viable financial model these days when it comes to dealing with increasing labor costs. Of course, if the BO is themselves an accomplished rider/trainer/professional, and they can offer subsidized housing and board to a good BM candidate… that can work too. But treating the barn manager job like a more traditional position with a good salary, reasonable hours, and health insurance? That seems to be a rare thing across the whole industry.

[Quincy]

@beowulf

I would still be a BM if –
It paid a livable wage
It had health insurance coverage
It had reasonable expectations

I agree with this 100%.

[SaddleFitterVA]

@Virginia_Horse_Mom

Putting in an indoor is an investment in one’s own property. It will increase the property value. The property owner will have more equity in their property as a result. But almost all property owners will have to front the SUBSTANTIAL cost of that indoor themselves, and not see a payoff for that investment for many many years. Board may go up a small amount. But the real payoff comes from the increase in property value, and the equity the property owner accumulates.

From what I’ve observed, this is not true. An indoor is more than likely not going to increase the property value by the amount that was spent to build it. And, it makes the property even more niche from a sales perspective. Actually, barns don’t really pay back either, at least not once an area is developed.

But, capital improvements on a farm are ridiculously expensive.

[Virginia_Horse_Mom]

Oh, I definitely agree that a person is unlikely to get a $1 for $1 roi. Same with barns and other capital investments in a farm property.

My point was simply that they will get some increase in equity in the property. Take that increase in equity, add to it the personal enjoyment of using your own improved facilities, plus a marginal increase in monthly board… and then decide if it’s a good investment to put in an indoor. But expecting the increase in monthly board alone to cover the capital outlay? That math will never work.

[clanter]

@SaddleFitterVA

Actually, barns don’t really pay back either, at least not once an area is developed.

our barns which we built with the intent if desired they could easily be converted into garages

The appraiser valued the structures at nearly three times as a garage verses a purpose use horse barn

During this discussion I have seen “self care” mentioned several times. My question if the person responsible for that care fails to provide even the basic care what do you do?

[SusanO]

I agree the return on an investment in horse properties is pretty low, especially if you are expecting your profits from boarding to get the costs back. One way it is a little more favorable if you have a high income from your other job and you can get a tax advantage by depreciating improvements. But you have to set the boarding business up as a business for tax purposes, you can’t take deductions for personal horses (in most cases) and the IRS expects it to make a profit from time to time or they consider the whole thing to be a hobby loss. Depreciating that 800k indoor for 15 years (not sure of the tax lives) is going to throw you in a loss unless you have a pretty good profit before you take depreciation. I don’t know how anybody makes enough money off boarding to convince the IRS that kind of expenditure has a profit motive unless you bump up board a whole lot more. Sure would be a nice thing to have though!

[luvmyhackney]

@SusanO

Depreciating that 800k indoor for 15 years (not sure of the tax lives) is going to throw you in a loss unless you have a pretty good profit before you take depreciation. I don’t know how anybody makes enough money off boarding to convince the IRS that kind of expenditure has a profit motive unless you bump up board a whole lot more.

Not straight boarding but with lessons and clinics you could turn a profit. I work full time and kids, I don’t have the mental capacity to do either.

One idea I had was to buy a couple cute minis and do birthday party’s after work and on the weekends. I have a wide covered aisle way and plenty of parking space. Seems like it could cover some of my expenses, plus I love cake.

[SusanO]

And one stable here does weddings. It is a beautiful facility and very well maintained but I don’t see any way they are making a profit. Maybe weddings facilities pays really well.

[luvmyhackney]

The wedding facility down the road from me is an older barn, very rustic, beautiful but 15k for the day. They have space for 250 guests and stay booked from March - December.

[Virginia_Horse_Mom]

Wow. That’s some serious food for thought….

[SusanO]

WOW! That is a lot. Maybe I should have planned for that. HAHAHA! Maybe that is how you pay for the indoor. Put something like plywood down over the footing and use it for wedding/ reception. I have been to a pre-wedding party where tables were set up in the indoor.

[luvmyhackney]

Not going to lie … I thought about it but my property is too small and doesn’t have the views. Plus dealing with brides is tough. I did a short stint of wedding planning… big nope.
But I do have friendly goats, a cute pony, and some chickens coming in the spring and love planning birthday parties for kids. Plus cake!

[kpony]

I think its just too expensive. There has to be a benefit, as a horse person, to someone in that position. Or there is staff to manage who do most of the hard physical work.
I guess its harder to make it work on a smaller scale.

[Mouse_amp_Bay]

A realtor friend agreed that horse facilities are typically not a draw. An indoor would not necessary improve properly values, unless the purchaser is looking for horse facilities!

I did some rough math on the indoor arena build and the outcome is pretty terrifying! Presuming BO doesn’t have $800K burning a hole in their pocket, that would need to be financed much like a mortgage. So if you plug in $800K into your friendly mortgage calculator, at a deal of a rate (5% which is lower than most commercial rates currently), your 30 year amortization is an “arena mortgage” payment of $4,269 per month … for 30 years.

Let’s say you have 20 horses boarding - that would be $213 per month in board just for the arena. Not for the insurance, electric, hydro, property taxes, land/purchase cost of the premises etc. Just the arena.

I’m sure there are areas where this would be a small portion of board costs, but yikes that seems like a lot!

[Virginia_Horse_Mom]

@kpony

I think its just too expensive. There has to be a benefit, as a horse person, to someone in that position. Or there is staff to manage who do most of the hard physical work.
I guess its harder to make it work on a smaller scale.

Definitely.

It just seems to me that these days, a person must be offering full or partial training board packages, and have a mix of horses who are at their facility as sales projects in order to have a viable business. If all the horses on property are in full board, with owners who do one lesson or less per week? I don’t think the economics of that work in many places anymore, unless the barn business owner has their property completely paid off because they inherited it or something, and they have health Insurance and an additional income stream via a spouse.

Real estate, health insurance, property and liability insurance… it’s all increased so much. The fixed costs are so high, it’s hard/impossible to make a simple boarding business work.

[clanter]

@Mouse_amp_Bay

I did some rough math on the indoor arena build and the outcome is pretty terrifying! Presuming BO doesn’t have $800K burning a hole in their pocket, that would need to be financed much like a mortgage. So if you plug in $800K into your friendly mortgage calculator, at a deal of a rate (5% which is lower than most commercial rates currently), your 30 year amortization is an “arena mortgage” payment of $4,269 per month … for 30 years.

while I never built such a structure I did use the boarding aspect of our “farm” which was a real corporation that paid taxes to shield income form my primary business which was very profitable

The relationships between the businesses was maintained on a professional bases, it was not the fault of the Farm that their client was a fool to pay the amounts they were for the Farm to care for their livestock used in advertising

[sascha]

@clanter

During this discussion I have seen “self care” mentioned several times. My question if the person responsible for that care fails to provide even the basic care what do you do?

You make sure they are alive and not in hospital while you throw some of their hay in and water their horse. Once health and wellness are verified you give them minimal notice to vacate.

Depending on what services the barn provides, forcing full board is another option. I have seen that happen. It actually worked out well for both parties. That particular case was for a no show and ongoing stall not cleaned well enough issue.

Also, you weed out your potential customers ahead to be fairly certain you’re getting the 100% dedicated ones who are adult enough to get their ass out on the daily and to co$municate and problem solve if something comes up.

[trubandloki]

@sascha

Also, you weed out your potential customers ahead to be fairly certain you’re getting the 100% dedicated ones who are adult enough to get their ass out on the daily and to co$municate and problem solve if something comes up.

People sometimes do not tell the truth about their willingness to actually do stuff.

I will give you a silly example.
A young woman needed to move her horse ‘closer to home so she can more easily care for him’.
When we showed up to pick up her horse at the current boarding barn, it was like she had no clue where her things were and she just stood there while the barn owner and the people trucking loaded her stuff, including her horse.
Get the horse to the new boarding barn, she takes Dobbin inside. Never lifts a finger to get her stuff. Never says thank you for loading and unloading all her stuff.
Her Facebook feed is filled with her love for Dobbin and how everything is Dobbin.
Real life is she might show up at the barn one or two times a month, even if there are medical things going on that need care, she just does not show up (and it is not a place where all that stuff is included).
This horse owner did eventually move on to another ‘closer to home’ place. I doubt Dobbin is getting anymore attention than he ever did.

[clanter]

the primary reason I asked about self care was we are subject to at least annual inspections by animal control and zoning compliance to ensure the animals and the property is being maintained to expected standards for care and public health

yeah, most other places are not subject to such inspections, we are in a small city surrounded by a few million people, City is well funded and has the staffing to do all sorts of stuff to keep them busy

[sascha]

@trubandloki

Real life is she might show up at the barn one or two times a month

This can absolutely happen to anyone - self care or full board. IMO, it’s why boarding contracts should contain every little thing that barn owners don’t find tolerable in terms of care of horses and how X offences contradicting those rules will result in eviction in X days.

@clanter

the primary reason I asked about self care was we are subject to at least annual inspections by animal control and zoning compliance to ensure the animals and the property is being maintained to expected standards for care and public health

If it’s done right, and the right group of self care boarders are in place, nothing should be a worry with inspections assuming the property owner properly maintains stuff they’re responsible for. As long as the BO is on site and keeping an eye and maintaining infrastructure, has rules in place for everything from cleanliness of stalls and condition of horses, to cleanliness of common areas, it can work out really well.

That said, I know a lot of BOs shy away from having self care boarders because they’ve been ‘burnt’ by a moron or two. But, I think as much as anything that’s on the BO for not having strict rules up front and then not having the guts to kick subpar boarders out as soon as they cause an issue.