Fair return

[bucket]

Sometimes landlords look at their investment and say if they sold it all they wouldn't get much return....and if they have farmed they know it's up and down....sometimes the headache of change isn't worth it....

If I have a good outcome for a year there is nothing stopping me from topping up the rent with a bonus....have done that....but my rents are handshakes going on 15 years. ....

[sumdumguy]

During the nineties and early 2000, rents never got much higher than $25-30 per acre or 2/3 - 1/3 crop share. One land-lady we knew in Alberta took the first 10 bushels where they grew wheat, barley and oats.

Some cash landlords take half April first-rest Sept first or some variation that suits their tax situation. I think that when you goto full cash rent, the land owner loses his status as a farmer, also may lose his capital gains exemptions. Ideas?

[sofa.king]

I can't understand paying huge rent just to have more land why not just keep buying small parcels of land that you can afford to pay for then at least when you are done farming you will own something. If you don't pay for your equipment lease you lose it why should land be any different landlords aren't any different than case or John deere.

[fjlip]

Some cash landlords take half April first-rest Sept first or some variation that suits their tax situation. I think that when you goto full cash rent, the land owner loses his status as a farmer, also may lose his capital gains exemptions. Ideas?

Half the rent was all some landlords saw, best to get all of it before seeding.

The Capital Gains Exemption requires that you or a family member farmed it, think there was a year that it changed slightly, but a neighbor renting since 1985 is still okay. And he has been getting at least 20% of gross bushels for 32 years. Tenant doing fine, rents about 3000 acres like that.

[Hamloc]

Fair rent is what the market will bear. What is not fair is the fact that land speculators got enriched through government money printing of the last decade. Stop the printing press and rate will return to the 5.5 to 6% range. 4000 per acre dirt turns into 1000 per acre dirt. Then 4000*0.03=120 and 1000*0.06=60. Yes there has been 4000 per cultivated acre land in the Edmonton region. I think there will be lots of hoarders looking for 4000 this winter but that day has passed.

I agree 100%. The run up on land prices has been caused by years of low interest policies by government. The only thing that will slow the ever increasing price of land is a return to a prudent interest rate policy. Unfortunately governments have run up so much debt that they can't afford to do that. As for what is fair rent? Unfortunately you have to pay what the market is or lose the land, that simple.

[Horse]

I see it is more complicated than I thought, or so some of you think. Wouldn't it be simple to say 20% and that way both share some of the risk. Some that are addicted to new paint are caught both ways, they need low rent to be able to run new iron, but need acres to run it on. Most landlords around here are like me ,to old to bother getting new iron but have spent a lifetime getting what they have so don't want to sell as that's admitting they can't do it anymore, making them feel useless. Here they pay by the cultivated acre so I don't get it when some say they can only seed x many acres but the rent is so much ?

[farmaholic]

Horse. A percentage based rent requires a huge amount of trust on the landlords behalf.....if you don't trust your tennants....go cash.

[hobbyfrmr]

What about guys getting 30 bus wheat at $7 ?
Or 25 bus peas at $8
Or 25 bus canola at today's price ? Not some fukin fairy tail B/S

One landlord I have works for a conventional farmer. They just finished peas. Landlord says 50 bu/acre contracted for $10.00/bu. That is some good farming . He will make money

[newguy]

I believe if people are willing to pay 65 for canola seed the person who owns the land should get that.Around here 40 is a standard.Just think the canola seed companies got rental price on 20 million acres this year.that is a good return.and no land taxes.

[LEP]

Horse, I would never rent on a percentage and here is why.

I have 5 landlords and none of them provide bins. So I have to keep it all separate as well as my own for multiple crops. Too inefficient for bins.

You say you have $2,000 an acre (which I doubt). You probably paid much less. If you sold, after taxes you would have much less available to invest.

You talk about a 3% return, which implies you could get that for a risk free return , which you can't.

Anyway, I rent alot of land. At renewal we discuss which way rent will go. Which has been up every time. They are happy. In fact they all say they get more for rent than they ever made farming.

I don't think they are too hard done by.

[sk_wheatking]

I have never been able to completely understand why farmers expect to get land rented to them for less than the market is at. Why is it different than the farmer trying to get the most for his canola or wheat or you name it. The people who have land to rent have a commodity that you the farmer kind of require to run that over priced machinery over. Many of the landlords are retired farmers who have paid their dues and now are using the equity in their land to fund their retirement . Seems fair to me. Sorry but I dont understand all moaning and bitching about rent. I dont think there is a cartel of landlords forcing the rent up. Last time I checked it was farmers trying to grow larger that forced the rent higher. BTW I am not a landlord yet,I am the tenant,and probably will have to rent my land at a large discount to my intern.

I couldn't agree with you more!!!
I don't understand why farmers worry so much what other farmers are doing or paying what for rent or equipment. Your right on with the bitching....oh land is too expensive( except when I want to sell) ohhh ****ing high rent( except when I rent out I'd like a good dollar) so on and so on. If someone over pays for something does another farmer have to make up the difference? If someone gets a good rent for their land good on them. And your right Grefer it's another commodity really like anything else. Why do farmers Bitch about each other so much, I'll never understand it I guess.

[hobbyfrmr]

There is very strong competition to rent land for reasons described in above posts. New iron is one thing, but keep in mind many of these farms have purchased a lot of land. Renting 10,000 acres allows cash flow to cover fix costs and pay for the land they bought. Everyone is trying to build some kind of wealth in this industry. End game is property ownership. They are growing exponentially while others are growing modestly. By paying top remt you get to control (ie. canola winter canola rotation) more property and hopefully grow faster. I dont see that kind if rotation on the land they bought, only rent.