Am I Getting The Right Amount of Rent For My Farmland?

Cash Rent: The Third Rail of Farming

If there was ever a third rail in the farming business, it would be this: the amount of cash rent someone is getting for their farm.

Cash rent is an incredibly hot topic, and it is usually kept very quiet. There is no public database where you can look up exactly what every farm is renting for. Most tenants do not want to disclose what they are paying a landlord because they are afraid their other landlords will find out and raise their rent accordingly.

And understandably, most landlords do not want to disclose that information either. They may be afraid their rent is too low, and they do not want to find out that a landlord down the road is getting $50 more per acre.

So what is one to do in this situation?

I specialize in helping landlords determine the right amount of rent for their farm. You might ask, “What is the right amount of rent?”

The answer is not always simple.

Land value is driven by soil quality. Rental value works much the same way. Good, productive land sells well and rents well. Poor-quality land usually does not sell as well, and it does not rent for as much either.

Surprisingly, there are still a fair number of rental rates out there that have not been adjusted in the last 15 years.

The tenant may justify it by saying, “Well, they never asked for more money, so I never offered to pay more.”

The unsuspecting landlord may say, “If I raise the rent on my tenant, he may not farm my ground anymore. Then who will farm my land?”

Both of these scenarios can usually be avoided by relying on accurate, reliable information and, in some cases, hiring a farm manager to take the stress out of managing your farm assets.

If you own a farm and you are wondering, “Am I getting the right amount of cash rent?” my email address and phone number are below. Give me a call. The first call is always free.

Brad Neihouser
765-427-5052
bneihouser@shook.com