Why Lease Online: Landowners guide to leasing online
In the evolution of digitized information and acquaintances and buying – Facebook, Tender, Carguru, ect, the idea of leasing farm land online is becoming more a part of this discussion. Historically, it was common practice for farmers and farm land owners to make a leasing agreement with a simple handshake and good faith. Just as social introductions have morphed into online social media phenomena’s, the market for leasing farmland is following the same transformation.
As a landowner, why lease your land in the first place? If as a landowner, you don’t intend on holding some or all of your land for personal use only, then leasing maybe a great option for you. Leasing is also great option for retiring farmers interested in supplementary income. It’s a win-win!
Negotiating the Deal
So then you ask, “now that I have decided to lease my land, how do I endeavor in the leasing and negotiation process?” In the lease negotiation process, the fear of leasing land to a potential renter without knowing much about the renter is common and warranted. Using CashRent.com as an online leasing market place can help to mitigate some of this fear by providing a secure online platform for landowners and renters to meet and quickly negotiate a deal. Also while in the negotiating process, landowners should remember to negotiate unforeseen events that may impact the property, which ultimately could impact the property value and the future rental value. Common issues around land improvements, from fencing upgrades in livestock operations to soil requirements for different commodities to land easements, should be thoroughly discussed in the negotiation phase of the lease contract. Also, determining who covers the cost in the event that one of the issues should arise will mitigate any confusion or potential legal actions that could transpire. For the renter, look at
conservation easements, for example; knowing the restrictions of the property being leased is very critical and could have severe consequences if violated. Therefore, landowners should be sure to disclose any conservation easements associated with the leased property. During this negotiation process, knowing the terms of the proper lease agreement that suites your needs is crucial. Whether a short term year-to-year lease, or a long term multi-year agreement, knowing the terms of the lease agreement are really critical. For example, if you own farm land and you also have a full time job, and your job requires that you move to a new country for five months; leasing terms that conclude on a yearly basis makes more sense than contracting a long term lease. Short term leases are a great option to offer new and beginning farmers. However, if the farmer is successful over time, a longer term option should be considered.
Land Rent Market Pricing
As a landowner you ask, “How should I price my land?” As landowner, knowing the market price per acre can be challenging given that the landowner typically wants the highest rental price while the renter wants the lowest price. Having an expedited platform for searching for similar property rental values, such as CashRent.com, allows landowners to better determine the true market rental price to propose to potential renters. Jim Ochtersk (2014) of Cornell University’s Cooperative Extension highlights some influencers of rental rates as such:
“In general, the farmland rental rate will depend on the quality of the soil, the value of the crop, the size of the parcel, the demand for farmland, and how long the land has been farmed. Farmland rental rates are variable (from free to more than $100/ac.), and before setting a firm price, landowners should first consider the benefits of renting land to farm operators”.
Other things that could influence the rental rate are: access to the property, existing tenant relations, equipment storage, and power supply. Just remember as a farm land landowner, farm land leasing rates tend to have some discrepancies which range from the region of the land to the commodity farmed on the land. According to the USDA, the highest rental rates are typically in the Corn Belt of the U.S. while the lowest rental rates tend to be in the mountain region.
Leasing online is becoming the new wave of procuring a lease agreement. As a landowner, being able to quickly engage with a potential landowner and discover the true land rental market price, are all benefits to online leasing. CashRent.com makes the process of leasing land online secure and flexible with the intent of helping you make the best leasing decision.
- Ochtersk, Jim. “How Much Should You Charge for Renting Farmland?” July 2014: 2. cceontario.org. Web. October, 2018