Leasing my Land

[EddieWalker]

I have 40 acres that's 65 miles from where I live. It's mixed land with open pasture, 3 ponds, and a lot of mesquite trees. The fencing is in poor condition. It has an old house that isn't livable, a shed that's pretty new, and a 30x40 shop that is full of junk that I haven't gotten around to cleaning out.

A neighbor has a very big cattle ranch. He just bought all my cows and he is wanting to lease the land too. He offered $15 an acre. Since I've never leased land before, I don't know anything about this. He would be responsible for the fencing, and he said that he would work on improving the land.

Another neighbor works for him, and he has already been mowing and improving it for me, so I'm confident that this will continue doing this. With the fence being as bad as it has been, he has had a few of his cows on my land for awhile now, and mine have been going onto his land already.

My goal for the land is to hold onto it until it's worth stupid money. It's an hour out of the Dallas area, and the area is still very rural, but there is a lot of building going on there. The land has city water and power to it, but it's not turned on at this time. My hope is that it will continue to increase in value, and that would only be better with somebody taking care of the land. I have no interest in going there, or messing with it, it's just an investment that's sitting there.

Another concern is in keeping it Ag with his cattle on it. My taxes are very low because of the cattle that I just sold that were on the land. Keeping it in Ag should be easier with his cows using that land.

Does this make sense? Is $15 an acre fair? I'm not very motivated to make this a big legal issue. I would really just keep it informal and let him do what he wants to the land to make it better to feed his cows. The way it is now, there really isn't any way to make the land worse, the mesquite trees or really bad there, and if he removes some of them, it's a win for me!!!! Just mowing it once or twice a year would be a huge savings for me and an improvement to the land.

 

[hayden]

Just to show how little I know, is that $15 per acre per year? Or per month?

Regardless, it sounds like all upside for you unless some sort of sh$t show develops. I’d still put something in writing, even if very simple. Lease rate, how long, who can terminate, why, and with what notice. Responsibilities of each party. No lawyers required, just look at it as documenting what the two of you are agreeing to so there aren’t any misunderstandings.

I’m not a fan of dilapidated houses. They are a potential hazard, attract curious people, and could become a flop house depending on where it is. I would tear it down. A day with an excavator and a few dumpsters and it will be gone.

 

[part-time-Farmer-NC]

Seems low to me. Here (NC) ag farming leases go for $50 an acre minimum.

Also I would separate out hunting from that agreement and lease that to bow hunters. Hunting land here leases for about $15 an acre for deer hunting rights, if you have turkey you could get more or split that as another lease.

 

[Hay Dude]

Having someone else's eyes on your land if you aren’t there daily is worth money. Especially if you are storing stuff there.
I’d get in writing your expectations and make sure you can terminate if he doesn’t meet them.

 

[NorTracNY]

I'm in agreement with hayden on most of his points. The only concern would be liability of the lease. The lease makes it clear that it's your land, but it likely would put you in the seat for potential liability. If the courts weren't screwed up in this country, I would think a handshake would be all that's needed. Otherwise, it should all be upside for you.

 

[jyoutz]

I have 40 acres that's 65 miles from where I live. It's mixed land with open pasture, 3 ponds, and a lot of mesquite trees. The fencing is in poor condition. It has an old house that isn't livable, a shed that's pretty new, and a 30x40 shop that is full of junk that I haven't gotten around to cleaning out.

A neighbor has a very big cattle ranch. He just bought all my cows and he is wanting to lease the land too. He offered $15 an acre. Since I've never leased land before, I don't know anything about this. He would be responsible for the fencing, and he said that he would work on improving the land.

Another neighbor works for him, and he has already been mowing and improving it for me, so I'm confident that this will continue doing this. With the fence being as bad as it has been, he has had a few of his cows on my land for awhile now, and mine have been going onto his land already.

My goal for the land is to hold onto it until it's worth stupid money. It's an hour out of the Dallas area, and the area is still very rural, but there is a lot of building going on there. The land has city water and power to it, but it's not turned on at this time. My hope is that it will continue to increase in value, and that would only be better with somebody taking care of the land. I have no interest in going there, or messing with it, it's just an investment that's sitting there.

Another concern is in keeping it Ag with his cattle on it. My taxes are very low because of the cattle that I just sold that were on the land. Keeping it in Ag should be easier with his cows using that land.

Does this make sense? Is $15 an acre fair? I'm not very motivated to make this a big legal issue. I would really just keep it informal and let him do what he wants to the land to make it better to feed his cows. The way it is now, there really isn't any way to make the land worse, the mesquite trees or really bad there, and if he removes some of them, it's a win for me!!!! Just mowing it once or twice a year would be a huge savings for me and an improvement to the land.

Usually grazing land is leased per animal unit month (AUM). One animal or cow/calf pair per month of grazing. I would check with your cooperative extension service to see what local AUMs fees are average. Also, there’s usually a big price difference between a situation where the landowner provides fencing, water, and any other improvements and the situation you describe where the lessee provides the improvements.

 

[MMC]

Usually grazing land is leased per animal unit month (AUM). One animal or cow/calf pair per month of grazing. I would check with your cooperative extension service to see what local AUMs fees are average. Also, there’s usually a big price difference between a situation where the landowner provides fencing, water, and any other improvements and the situation you describe where the lessee provides the improvements.

Eddie, your question is a difficult one to answer as others note above. The USDA provides some baseline date on rents by county. You can find information and links on their site:

USDA - National Agricultural Statistics Service - Surveys - Cash Rents

USDA National Agricultural Statistics Service Information. NASS publications cover a wide range of subjects, from traditional crops, such as corn and wheat, to specialties, such as mushrooms and flowers; from calves born to hogs slaughtered; from agricultural prices to land in farms. The agency...

www.nass.usda.gov

But...that's just a starting point. Yes, maybe $15/ac is a little low, but having someone responsible for animals present and available is important. And for property as well.

Put it another way. If you sold your cattle, you now have some idea of how much per head a farmer might make (be realistic). Now, how many head can he run on your property? Be conservative in your estimate on animals per acre because in a bad year (drought) that will really cut down on his profit. So will a sudden market drop...

The profit is probably not as much as people think. Then consider how much you would have to pay to have the improvements done that you might receive on your land from the farmer. Comparing the rent and value received might give you a good starting point for an honest discussion. And write up the final agreement, if for no other reason than to forestall any future confusion on individual responsibilities.

But frankly, having someone around to watch your property is worth a lot (or it would be to me). And managed well, grazing of cattle helps to actually improve land.

Best of luck.

 

[ponytug]

+1 on the value of having someone around and improving the fencing.

+1 on letting the local fire department burn the house, or demolishing it.

I would formalize the lease, but accept the offer. Might you do better? Possibly, even probably, but there would be no guarantee that the other person would be a good steward or reliable. BTDT. You know this person meets your expectations and needs, and he has been a great neighbor so far, which means this is, in my view, a great offer.

All the best,

Peter

 

[ultrarunner]

Any negative to removing an existing structure?

Our family dentist bought an old homestead and built a very nice home.

There was an old barn near the creek that had seen better days and the cost to repair was close to replacing so he had it removed.

The shock came when he went to build he was told no way as the old barn was grandfathered but the area was no build due to proximity of the creek.

 

[txdon]

The ag exemption make it worth it. Otherwise your taxes could be 10x.
Be sure to add no hunting to the lease and get liability insurance for the property. You might have to tear down any dilapidated buildings before you can be insured.