Cash Renting Farmland in Hendricks County

[Kcustom45]

My wife and I are in the process of buying some farmland on the west side of Hendricks County, with the intent of building a house sometime down the road. I figure while we are waiting to build on the the land at least someone could get some use out of it, so I was going to look into cash renting the land to a farmer.

The problem is I have never done anything like this in the past. I am looking for advise from anyone with experience in this area to help push me in the right direction. My main questions are how much should I charge for the land and how do I get in touch with someone who would be interested in farming it. Also, is there typically a formal contract that is signed between the landowner and farmer?

Any help/advice would be greatly appreciated.

 

[DownByTheTracks]

We sign a lease with our farmers. The value is going to depend on how good the dirt is for producing crops. Does it have drainage issues that drown out several acres, compaction, depleted nutrients, etc. will all drop the value of the land.

Purdue is a great resource to use. Farmland leasing, Crop-Share, Cash Rent resources and links

If you can, do your homework on every farmer that bids to you, and beware the farmer that offers $100+ more than everybody else in the area as they usually rape the ground for a few years and move on to the next sucker.
http://www3.ag.purdue.edu/counties/howard/Pages/CashRentLeases.aspx

 

[Kcustom45]

Thanks for the that site. It seems like there is a lot of good information there.

I am wondering how do you typically find someone to farm it? Should I drive around to the area farmers and ask them, or put a big sign on the property, or maybe an INGO classified?

 

[88GT]

Also, is there typically a formal contract that is signed between the landowner and farmer?

Any help/advice would be greatly appreciated.

I can't speak to the specifics of your question, but you're asking for trouble if you don't put it in writing.

 

[wagyu52]

You need to give more specifics, how many acres, was it farmed last year, do you have access to it this year? Most cash rent ground is leased no later than January to allow farmers to buy seed and fertilizer.

 

[Bucky623]

The first thing I would do is go to the Farm Service Agency for your county.

USDA Service Center Locator

Bring proof that you own or are purchasing the land you want information on. They won’t give out info unless you are the owner or have permission from the owner.

One thing you will want to ask for is a map (aerial photograph) of your farm with the tillable acreages listed on it. A 640 acre farm won’t have 640 tillable acres. Of course building lots and wood lots aren’t included but also road right-of-ways and fencerows are excluded from the tillable acres. The tillable acreage is the amount you will use when talking to a prospective tenet farmer.

Around here the farmer will tell you what he is paying his landlords. Sometimes it varies from farm to farm depending on how good the soil is or in some cases how gullible a landlord is (ask me how I know) and some will average it out and pay the same to everyone.

While you’re at Farm Service, ask how much rent is being paid for other farms in your area. That will give you an idea of what is fair price is.

This is the contract that we use.

----------------------------------------------------------

Cash Rent Agreement​

Bucky623 agrees to cash rent farm # ABC123 to Farmer Jones for crop year(s) 2013. Contract to be changed or cancelled by 9/1/13 for 2014.

The above named landowner does not receive a share of the crops, nor are they at risk in the production of said crops.

Operator is responsible for accidental and liability insurance of the operation.

The operator relinquishes to the landowner any and all recreational and
non-farm use privileges. These privileges include but are not limited to hunting, trapping, collecting, gathering, camping, riding and site seeing.

Crop 68 acres X $0.02 = $1,000,000 Apr. 1 - $5.00 and Nov. 1 - $5.00

Pasture 14 acres X $0.02 = $1,000,000 Apr. 1 - $5.00 and Nov. 1 - $5.00


______________________________ __________________
Operator signature - Farmer Jones Date


______________________________ __________________
Landowner signature - Bucky623 Date



--------------------------------------------------------------

 

[sinnful]

I am a farmer so will do my best to help you. But you need to provide me with more information to head you in the right direction. Feel free to PM me if you like.

 

[SMiller]

Farmworld magazine and craigslist, start taking bids.

 

[Kcustom45]

You need to give more specifics, how many acres, was it farmed last year, do you have access to it this year? Most cash rent ground is leased no later than January to allow farmers to buy seed and fertilizer.

It is only maybe 7.5acres that is farmed and it was farmed last year. We will hopefully be closing on the land in a few weeks. I know it isn't a big piece of land, and I'm not looking to get rich renting it. It just seems a waste to have the land sit unused while we save up to start building on it.

Thanks for sample contact I will definitely use that if I can find anyone who wants to rent it on short notice.

 

[wolfman]

Unless it is the seller that farmed it, who ever did last year, may be interested in it this year?

 

[CountryBoy19]

You need to find out asap if it's already rented out this year. It may already be rented this year. If its not, find out from the farmer that farmed it last year if he still wants to do it this year. 7.5 acres isn't much so most farmers won't have a problem scrounging up enough seed to plant that even if they hadn't planned for it. It's also a detriment in the fact that you aren't going to get premium cash-rent prices. Think about it this way. The farmer still has to drive to the field, unfold the equipment etc, do all the end-rows and such no matter what the field size is. Coming from the perspective of a farmer, you still have to do all the hassle/PITA work no matter if the field is 5 acres or 50 acres.

Just to give you a perspective, my dad cash-rents a small 8 acre field that is a huge pain in his back-side, but he does it as a favor. The guy is a good friend and treats us right, but it would really be easier for dad to not have to mess with it. He's tried to get it in the CRP program several times but its hard to do it now. You have to have all your ducks in a row and check weekly to see if there is any open acreage for the program. Either way, that 8 acre farm gets almost half the cash-rent price as some of the good farms. So take that into account on your asking price for cash rent.

 

[Ericpwp]

Find out who farms the land around it. We do a 50/50 cost profit split with our farmer. He farmed the land for the previous owner, and also farms the land around ours. We pay half the cost of the seed and chemicals, the farmer pays the other half. We split the profits down the middle.