buying land to cash rent out (what do I need to know) - The Firearms Forum

strozt · 11-12-2012, 07:22 PM

My apologies if this inappropriate...this is my second thread since joining and I'm ignorant of board etiquette.

I'm looking to buy some farm land that is being cash rented for the next three years. Before I decide to purchase, I want to make sure I'm learning something about what I should consider. Note: I have no farming experience and am buying the land for investment

.

I figure before I make an offer, I'd like to see the current contract for the rental agreement and probably meet with the tenant to get a feel for their present and future plans on using the property. (I've been told the agreement is for 40 acres at $175/acre; for 3 years)

Frankly, thats all I can think of. Surely there is something else I should watch for or consider. Would any of you out there be able to advise me on what I should know before I buy the property.

woolleyworm · 11-12-2012, 07:26 PM

Welcome to TFF and your question is just fine for the GenDiscussion board; this is just fine to post here. I'm not knowledgeable on your question, so I can't give a good answer. There are a few folks here that may be able to give you some pointers though; just give'em a little time to check your post and reply.

Semper Fi,
Woolley

SmallCaliberGuy · 11-12-2012, 07:35 PM

For starters, go to your local county or city treasurers office and research the land.
Make sure the taxes are paid up.
Make sure there are no leins on the property. Especially IRS leins, if it has an IRS lein then you become liable for what is owed.

Jody

jjmitchell60 · 11-12-2012, 07:49 PM

THere is lots of questions to be ask in you question.
What is teh land being rented for as to use, livestock or crops?
What rights do you retain as land owner?
What all is in the rental agreement as to what rights renter has?
And many more.
Here in KY when we rent or lease a farm we spell out the exact rights as to owner retains and renter/leasee has. An example is 186 acres beside me rents for $5000 a year + it has to be mowed each year (bush hogged). The renter has the right to crop it as they see fit or run/feed livestock on it. IF cropped then when renter ends lease and no longer wants to rent it, they must plant the crop land they cropped back into what ever the owner and they agree on. Renter has the right to fix any and all fence as well as build new fence BUT owner has the right to also build new fence as they see fit to "enhance or increase value" of the property BUT in doing so cannot take away the right of the renter to use of the land. Then there is general upkeep. Renter must make sure the land it always in a state of upkeep so as to not decrease the value. Bascially that means no dumping of trash, no logging, or other things that can decrease current value. Also there can be different prices of rent depending on use. If livestock, then a per head lease can be done or a lump ssum lease. As to crops it can be a lump sum per acre or a percentage of profit from the crop/s.
I lease out the crop land on one farm and the man who leases it raises soybeans. He pays me a set fee per acre and once he decides to not renew or I decide to not renew, he has to sow the ground down in a forage crop (clover and/or other forage crops), he has no hunting rights, he has no rights to any ground other than the crop land (we are good friends and he bush hogs the rest for me as a favor), and he cannot tell others to use the land other than the acres he leases. He can sub-lease the crop land with my permission.

So not to avoid answering your question, there are many varibles as to a rental/lease agreement that you need to decide on and in part is decided on what the renter plans to do with the land. There is no one fits all rental/lease agreement or at least here in my area. n I know that $175 per acre here would be avery high price to rent/leqase a farm but that is here. Other areas of the US I know do draw higher price as to rent/leases.

Sorry I can be of no more help.

strozt · 11-12-2012, 09:21 PM

thanks for replies so far. Just to be clear, there is already a contract for lease on it, which I assume, will be transferred to me. I'm pretty much ok keeping the current contract, but I would like to see it and talk to the tenant.

I hope the contract isn't lopsided and I get burned somehow....that's what I want to watch out for.

For most rental contracts for apartments and such, I don't think a lawyer is used....but what about for this...Is it common to get a lawyer to check the contract? I'm sure it wouldn't hurt; but is it 'normal' and expected to involve a lawyer in this case?

aandabooks · 11-12-2012, 09:39 PM

jj covered it pretty well. Generally no lawyers but make sure everything is put in writing. The tillable I rent out gives me two payments per year. I have no obligations for fertilizer, drainage, seed or any other costs. My farmer gets access to the tillable acreage only and can't sublease without consulting me. Generally these agreements can be done on a single sheet of paper.

rosierita · 11-12-2012, 11:29 PM

get a lawyer well versed in agriculture.

Blackhawk Dave · 11-13-2012, 09:51 AM

Be sure to get a title search. You want to look at reserved rights, especially gas, oil and coal. If the oil and gas rights are reserved, but are reserved by the current owner, try to get a percentage of the rights in the transfer. If it is a prior owner, just be aware that a well can be placed on the site. If it is coal, be aware that they can surface mine right across your property, no matter the improvements on the site.

Be sure you can get fee title, with no outstanding heirs, etc. Be sure to get a title policy at closing.

As to the lease, trash is always the biggie. Be sure you get a deposit forwarded to you if there is an existing deposit on the lease being held by the seller. Read the existing lease. IF it is a "handshake" lease, the lease is not binding on you and will allow you to renegotiate (formal lease with all the protections mentioned above).

Finally, get an hour's time with a local real estate attorney. A little money spent now can save you a bundle in the future.

carver · 11-13-2012, 10:00 AM

A title search, while a good idea, sometimes won't show everything. I now buy Title Insurance. I've been burned, and I hired a lawyer to do a title search. And I would suggest that you don't sign, or pay out anything with out the advice of a good, and trusted lawyer.

Double D · 11-13-2012, 10:24 AM

Quote:

Originally Posted by carver

A title search, while a good idea, sometimes won't show everything. I now buy Title Insurance. I've been burned, and I hired a lawyer to do a title search. And I would suggest that you don't sign, or pay out anything with out the advice of a good, and trusted lawyer.

You wont get title insurance without a title search first.

11-12-2012, 07:22 PM	#1
strozt Member Join Date: Oct 2012 Posts: 6	buying land to cash rent out (what do I need to know) My apologies if this inappropriate...this is my second thread since joining and I'm ignorant of board etiquette. I'm looking to buy some farm land that is being cash rented for the next three years. Before I decide to purchase, I want to make sure I'm learning something about what I should consider. Note: I have no farming experience and am buying the land for investment . I figure before I make an offer, I'd like to see the current contract for the rental agreement and probably meet with the tenant to get a feel for their present and future plans on using the property. (I've been told the agreement is for 40 acres at $175/acre; for 3 years) Frankly, thats all I can think of. Surely there is something else I should watch for or consider. Would any of you out there be able to advise me on what I should know before I buy the property. -->

11-12-2012, 07:26 PM	#2
woolleyworm TFF Moderator/Host Join Date: Feb 2009 Location: SW Fort Worth Contributor Posts: 4,887	Re: buying land to cash rent out (what do I need to know) Welcome to TFF and your question is just fine for the GenDiscussion board; this is just fine to post here. I'm not knowledgeable on your question, so I can't give a good answer. There are a few folks here that may be able to give you some pointers though; just give'em a little time to check your post and reply. Semper Fi, Woolley __________________ . What are you gonna do, talk the alien to death? -- (on Sigourney Weaver's worry about Guns in Aliens) "Safety is something that happens between your ears, not something you hold in your hands." "I carry a small gun to compensate for my huge Blue press." .

11-12-2012, 07:35 PM	#3
SmallCaliberGuy V.I.P. Member Join Date: Oct 2012 Location: Tulsa, OK Posts: 97	Re: buying land to cash rent out (what do I need to know) For starters, go to your local county or city treasurers office and research the land. Make sure the taxes are paid up. Make sure there are no leins on the property. Especially IRS leins, if it has an IRS lein then you become liable for what is owed. Jody

11-12-2012, 07:49 PM	#4
jjmitchell60 Advanced Senior Member Join Date: May 2004 Location: Raised in Buzzard Roost near Frog Town in hillls of Kentucky Contributor Posts: 1,474	Re: buying land to cash rent out (what do I need to know) THere is lots of questions to be ask in you question. What is teh land being rented for as to use, livestock or crops? What rights do you retain as land owner? What all is in the rental agreement as to what rights renter has? And many more. Here in KY when we rent or lease a farm we spell out the exact rights as to owner retains and renter/leasee has. An example is 186 acres beside me rents for $5000 a year + it has to be mowed each year (bush hogged). The renter has the right to crop it as they see fit or run/feed livestock on it. IF cropped then when renter ends lease and no longer wants to rent it, they must plant the crop land they cropped back into what ever the owner and they agree on. Renter has the right to fix any and all fence as well as build new fence BUT owner has the right to also build new fence as they see fit to "enhance or increase value" of the property BUT in doing so cannot take away the right of the renter to use of the land. Then there is general upkeep. Renter must make sure the land it always in a state of upkeep so as to not decrease the value. Bascially that means no dumping of trash, no logging, or other things that can decrease current value. Also there can be different prices of rent depending on use. If livestock, then a per head lease can be done or a lump ssum lease. As to crops it can be a lump sum per acre or a percentage of profit from the crop/s. I lease out the crop land on one farm and the man who leases it raises soybeans. He pays me a set fee per acre and once he decides to not renew or I decide to not renew, he has to sow the ground down in a forage crop (clover and/or other forage crops), he has no hunting rights, he has no rights to any ground other than the crop land (we are good friends and he bush hogs the rest for me as a favor), and he cannot tell others to use the land other than the acres he leases. He can sub-lease the crop land with my permission. So not to avoid answering your question, there are many varibles as to a rental/lease agreement that you need to decide on and in part is decided on what the renter plans to do with the land. There is no one fits all rental/lease agreement or at least here in my area. n I know that $175 per acre here would be avery high price to rent/leqase a farm but that is here. Other areas of the US I know do draw higher price as to rent/leases. Sorry I can be of no more help. __________________ Oath Keepers NOT ON OUR WATCH www.oathkeepers.org 2nd Amendment to the US Constitution: A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed. "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin When injustice becomes law, resistance becomes Duty... Thomas Jefferson

11-12-2012, 09:21 PM	#5
strozt Member Join Date: Oct 2012 Posts: 6	Re: buying land to cash rent out (what do I need to know) thanks for replies so far. Just to be clear, there is already a contract for lease on it, which I assume, will be transferred to me. I'm pretty much ok keeping the current contract, but I would like to see it and talk to the tenant. I hope the contract isn't lopsided and I get burned somehow....that's what I want to watch out for. For most rental contracts for apartments and such, I don't think a lawyer is used....but what about for this...Is it common to get a lawyer to check the contract? I'm sure it wouldn't hurt; but is it 'normal' and expected to involve a lawyer in this case?

11-12-2012, 09:39 PM	#6
aandabooks V.I.P. Member Join Date: Aug 2010 Posts: 196	Re: buying land to cash rent out (what do I need to know) jj covered it pretty well. Generally no lawyers but make sure everything is put in writing. The tillable I rent out gives me two payments per year. I have no obligations for fertilizer, drainage, seed or any other costs. My farmer gets access to the tillable acreage only and can't sublease without consulting me. Generally these agreements can be done on a single sheet of paper.

11-12-2012, 11:29 PM	#7
rosierita Advanced Senior Member Join Date: Mar 2004 Location: South Carolina Posts: 5,218	Re: buying land to cash rent out (what do I need to know) get a lawyer well versed in agriculture. __________________

11-13-2012, 09:51 AM	#8
Blackhawk Dave Senior Member Join Date: Nov 2008 Location: Denton, TX Posts: 600	Re: buying land to cash rent out (what do I need to know) Be sure to get a title search. You want to look at reserved rights, especially gas, oil and coal. If the oil and gas rights are reserved, but are reserved by the current owner, try to get a percentage of the rights in the transfer. If it is a prior owner, just be aware that a well can be placed on the site. If it is coal, be aware that they can surface mine right across your property, no matter the improvements on the site. Be sure you can get fee title, with no outstanding heirs, etc. Be sure to get a title policy at closing. As to the lease, trash is always the biggie. Be sure you get a deposit forwarded to you if there is an existing deposit on the lease being held by the seller. Read the existing lease. IF it is a "handshake" lease, the lease is not binding on you and will allow you to renegotiate (formal lease with all the protections mentioned above). Finally, get an hour's time with a local real estate attorney. A little money spent now can save you a bundle in the future.

11-13-2012, 10:00 AM	#9
carver TFF Moderator/Host Join Date: Jul 2008 Location: DAV, Deep in the Pineywoods of East Texas, just west of Shreveport, LA Contributor Posts: 11,538	Re: buying land to cash rent out (what do I need to know) A title search, while a good idea, sometimes won't show everything. I now buy Title Insurance. I've been burned, and I hired a lawyer to do a title search. And I would suggest that you don't sign, or pay out anything with out the advice of a good, and trusted lawyer. __________________ Y'all be safe now, ya hear! Lamentations Chapter 5: 1. Remember, O LORD, what is come upon us: consider, and behold our reproach. 2. Our inheritance is turned to strangers, our houses to aliens. 3. We are orphans and fatherless, our mothers [are] as widows. 5. Our necks [are] under persecution: we labour, [and] have no rest. 16. The crown is fallen [from] our head: woe unto us, that we have sinned! 21. Turn thou us unto thee, O LORD, and we shall be turned; renew our days as of old.