Posted by JD Seller on February 14, 2015 at 19:23:09 from (208.126.198.123):
There have been a few posts lately about cash rents. Here is another one to add to the pile. LOL
My sons picked up some land we had farmed for years but where out bid on rent 4-5 years ago. This was back in the early winter.
They just came over a few hours ago to talk to me about some additional land that they where just offered this afternoon. It seems like a couple of the larger high rent paying fellows got shut down by their banks already. They are having to drop any land over a certain price per acre or the banks will not lend them operating money.
The rental terms are similar to what we where paying the last time. They will work IF we lock in some prices right now and do not speculate on them rising. Which I think is not going to happen in the short term.
A comment to one of the other posters about how the tenant was under paying His Mother on cash rents. I had several rented farms that we have/had rented for long periods of time. If you looked at just the price per acre you could say we where under paying for the ground. Here is what I pointed out to some of the heirs of these places.
1) We maintain all the land just like we do our own. Meaning the soil is kept on the farm and the fertility is as good or better than when we started there.
2) Things are kept mowed and sprayed. Any fences are kept in repair. Any buildings are kept in general repair. Sometime a major repair will require the land owner to buy the material but we usually will provide the labor to complete the work.
3) This also includes keeping the drives clear in the winter if the owner is unable to do so. We keep a plow on one of the pickups and when it snows we clear them all out.
So if your a NEW heir/land owner make sure you are looking at the whole picture not just the payment per acre.
The one farm I talked about getting back this last spring took over $50K in fence and land repairs to get it back in the shape is was when we last farmed it. Then add in a few years of not the best crops until we can get the fertility back up. So watch out for seemly higher rental rates. You could be losing out in other ways.
I do agree that there are guys that will take advantage too. Just make sure that is the case.
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