How To Rent Out Farmland for Cash
You found that perfect piece of hunting property that has the right mix of tillable ground and timber to hold and attract a herd of whitetails. Problem is, you don’t have the equipment, knowledge or time to farm the land yourself. This is where renting to a local farmer will put a little money in your pocket and some food in a deer’s belly. It’s a win-win for you and the farmer. But, like any landlord/tenant relationship, you want to get the agreement in writing. Follow the steps below to ensure you and the farmer end up on the same page.
Make An Arrangement
Decide if you want to get cash up front or share in the cost and profits of the harvest. There are pros and cons to both arrangements. When farmland is rented out for cash up front, the farmer and owner negotiate a price-per-acre. Once you agree to the price and payment is made, the farmer has a relatively free hand in making management decisions.
When you share the crop, a landowner and farmer will split the cost and profits (typically, one-third of the cost and profits goes to the landowner, and two-thirds of the cost and profits goes to the tenant). Before you make a decision, take a look at this guide to determine what type of agreement is right for you.
Market The Land
There are several ways to market the land. There’s a good chance you may already know a farmer, find one at the local co-op, or meet someone through word of mouth. If not, you could post a classified ad online or in the local paper, or post flyers in stores and restaurants around town.
Be sure to give as much detail as possible. What structures on the property, if any, will the tenant be able to use? How easy is it for the farmer to access the tillable land? Can they use any onsite water sources? This is the kind of information a prospective tenant will want to know. Once you start receiving inquiries, it’s time to vet the applicants.
Meet in Person
Allow interested farmers to come out and look at the land. This meeting will give you a sense of their personal qualities. It’s also a good time to explain what will be in the lease, discuss farming practices, how long the lease term will be and negotiate price. If the farmer says he is interested in renting after seeing the land, tell him you will be in touch with next steps.
It’s always a good idea to ask around about anyone who may be using your land. Farming communities are typically small and everyone knows somebody. If the tenant passes your criteria, draw up a lease.
Get Everything in Writing
Once a lease is signed, a landlord can’t restrict how the land is farmed unless it’s written in the lease. If you want the farmer to leave some crops standing for late-season hunting, you need to get it in writing. You also want to spell out what will happen if you sell the land (in some states, if the buyer sells the rented land, the new buyer must honor any existing lease). And of course, be sure to note that you have permission to access and hunt on the rented land.
Here is an example of a farmland lease, but be sure to put any other terms in it that are not covered. Also, have an attorney look over the document to ensure your best interest is in mind.
Forecast Insurance and Tax Implications
Income and estate taxes are affected by farm rental agreements. Speak with tax consultant so you know the best way to handle these issues. Also, talk to your insurance agent to determine what type of coverage you will need to protect you from any liability while renting out the land.
Adhere to the Lease
After the lease is signed, stick to the terms. Keep lines of communication open and be reasonable. By being accountable from the beginning, hopefully this will set the tone for both parties going forward.
Renting out farmland can help your overall deer hunting management plan as well as help cover the costs of owning land and being a hunter. You may not get rich, but you can expect to see healthier deer on your property.