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Old 09-18-2020, 11:29 AM
 
Location: Franklin County PA
724 posts, read 499,064 times
Reputation: 346

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As a total newbie to this field , I'm simply looking for some pointers regarding this subject .


In short are there any essential principles that apply to this specific field of real estate and not others that must be looked into by a newbie ? Also are there any good books and/or articles that deal with this subject in depth that are must reads for newbies ?

If it helps then I'm looking at this issue from the perspective of a ( hopefully soon to be ) owner of agricultural land looking to lease to farmers .
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Old 09-18-2020, 11:47 AM
 
Location: Portland, Oregon
10,988 posts, read 20,504,064 times
Reputation: 8261
My FIL's family had agricultural land in Kansas that they leased to an adjacent farmer for many years. You need to determine if nearby farmers are interested in leasing the land and the going rate. All things real estate need to be in writing.

After the last family member died they sold the land to the farmer who had been leasing it.
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Old 09-19-2020, 06:40 AM
 
Location: Houston/Brenham
5,819 posts, read 7,201,782 times
Reputation: 12310
As someone who owns rural land, and leases part of it to a neighbor (cattle), the only thing I can tell you is every situation is local. Some land has significant value, some doesn't. You need to do research into the area you're thinking about buying, and see what others are doing. Size matters, location is paramount, past leasing history... there is so much that affects this on a local basis, that any info you get here is extremely limited in value.

Except what Nell Plotts said... it needs to be in writing. There are no handshake deals in real estate.
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Old 09-19-2020, 09:42 AM
 
Location: Franklin County PA
724 posts, read 499,064 times
Reputation: 346
Thanks for the answers guys !
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Old 09-19-2020, 05:46 PM
 
8,560 posts, read 12,330,854 times
Reputation: 16468
Before you take title to any farm land you should check with the Natural Resources Conservation Service--part of the U.S. Department of Agriculture--in the County where the land is located. They should have a file on the particular farm--which should be assigned a farm number in their records. They may be able to give you some of the history of farm usage and may also have information on what local farm properties are renting for on a per-acre basis. I've rented land to local farmers but I've never tried to maximize the rental rate. Having a good relationship with the farmer if probably the best thing to work towards. You'll want to make sure that they agree to take care of any drainage or other issues and to return the property to the condition it was in when first rented. Although it's permissible to have handshake agreements for rentals, it's best to have everything in writing. The farmers will likely insist on it as they may need to show their contracts in order to participate in any federal assistance programs.

Before you buy any large acreage, however, you should review the possibility that it might be contaminated. Try to get a history of usage and you may even prefer to pay for a Phase I Environmental Assessment. Most farm land is contaminated to some degree, but usually not to the point where it would trigger the need for responsive action. Especially check about the history of farm dumps on the property--and the possibility of buried drums or underground storage tanks. A number of farms had fuel or oil storage tanks so you'll want to make sure to avoid those problems. That's where a Phase I would help. In my area, I can get a Phase I done for around $2,000 (although I have done some investigations myself).

Farm land rental agreements are usually on a yearly or multi-year lease basis. If you rent the farm land using a yearly rental agreement, you'll just need to understand that some crops, such as winter wheat, are planted one year but harvested the next. If you continue to rent to the same farmer that won't be a problem. Just realize that renting farm land is not a get rich quick scheme. In my area, it's lucky if the amount received in farm land rent is enough to cover the property taxes.


EDIT: Depending on your sensitivity about chemical usage, some farm land rental agreements limit what a farmer may apply to the land. If you buy an organic farm, or transition a traditional farm to organic, you may be able to charge a higher rent if there happen to be organic farmers in the area.

Last edited by jackmichigan; 09-19-2020 at 05:57 PM..
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