lease farmland

How to Lease Your Farmland

Owning farmland doesn’t mean that you have to grow crops or raise animals to earn money. When you lease farmland, you give someone else the right to use the property while you retain ownership. Before you lease your farmland, though, you should learn about several factors that may affect your agreement.

Do Some Research to Set a Fair Price

You must set a fair price when leasing your farmland because it will attract reliable tenants and help you earn a strong return on your investment. You will need to consider several variables to set a fair price, though.

Learn About Your Farmland

The more you know about your farmland, the better you can market it to interested lessees. For example, you might get a higher price if you have excellent soil that will nourish crop. Then again, you might need to charge less if you discover that an industrial operation used to sit on your property.

You should also walk the land carefully and note existing water features, roads, hills, and buildings. All of these things will matter when you try to lease farmland. Plenty of ponds and access to a barn could drive up the price. Too many hills, though, you could mean that you need to lower the price or focus on lessees who don’t mind hilly land.

Know How Much the Taxes Will Cost

You may have to pay property and income taxes when you lease your farmland. Talk to your county’s tax office or property value assessor to determine your annual taxes. You may also want to talk to a CPA about how the income from leasing your land will affect your federal and state tax burden.

Make sure you consider these amounts when you set a fair price for your farmland lease.

lease farmland

Get Insurance That Protects You

As the owner of farmland, you have more responsibilities than the lessee. Get the right insurance policies that will protect you from liability, property damage, and vandalism. Without insurance, you could get stuck with expensive medical bills after someone gets injured on your land and needs to recover in a hospital. You could also lose money when an irresponsible person lets your infrastructure or buildings degrade. You won’t need crop insurance like the lessee, but you do need other forms of coverage that protect you from liability.

Always Check References

Get at least three references from your applicants. Ideally, the lessee will have farming experience, so you can talk to another landowner or farmer about the person’s reliability.

Meet Applicants in Person

It is always optimal to meet applicants in person so you can get to know them. However, often this can be a difficult one to make happen since many landowners are absentee. If you can arrange to meet them though and something feels off about an applicant, then it’s best to pass on their offer. If meeting in person is not in the cards, you can tell a lot from a phone conversation or video-conferencing call as well to get a better feel for the applicant. You don’t want to lease to someone who will misuse your land or not uphold their side of the agreement.

Talk About the Business of Farming

Finding a long-term tenant will save you the hassle of looking for more lessees in the future. Whether in-person or on the phone, talk to applicants about their business plans. If they understand the business of farming, then they’re more likely to earn a good living from the land. That makes them more likely to keep leasing from you.


Use a Land Professionals to Lease Farmland

Don’t rely on handshake deals when you lease farmland. Avoid getting lost in a corn maze, have a lawyer or farm manager write a legal contract that defines every aspect of your agreement. It should include, at a minimum, the following:

  • Beginning and ending dates.
  • Options to renew the farmland lease.
  • Any restrictions on what lessees can do with the land.
  • The monthly price of leasing the land.
  • Any fees that you will charge for late payments, returned checks, and similar situations.

“While you can use an attorney, a farm manager if possible is usually a better fit.  They are likely cheaper and will maintain contact with the tenant and land to ensure things are running smoothly,” says Accredited Land Consultant Luke Worrell, ALC, AFM, with Worrell Land Services, LLC. in Jacksonville, IL. He also suggests landowners seek to work with and ALC that is “a Farm Manager or an Accredited Farm Manager (AFM),” as it “would be extremely valuable and eliminate a lot of the extra work a landowner would need to otherwise take on themselves.”

If you need help evaluating your farmland or finding someone to lease it, Find Land Consultant in your market with specialized expertise, like an Accredited Land Consultant (ALC) for assistance. If possible, find an ALC in your area who is also an AFM to assist with this type of transaction. Accredited Land Consultants have years of experience and continuing education, so they can make the transaction easier for everyone involved.

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  1. […] most common is, of course, growing and selling your own crops. An alternative to this would be leasing the farmland, saving you a lot of the work while still allowing you to reap some of the […]

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