How to find a good tenant farmer
Farmland owners who don’t farm the land themselves need to know how to find a good tenant farmer if they want to see any sort of return on their investment.
Nobody in the landlord-tenant relationship wins if the tenant farmer is not working as hard as possible to keep the land performing well, hopefully turning a good profit, and caring for the land, as well.
That’s why farmland owners have to know how to identify tenants that may be good fits and those who may not be the best choice. At the end of the day, this decision sits up there as one of the most important - if not the most important - decisions a farmland owner can make.
So, here’s how to go about identifying and selecting tenants that can help lead to better returns on your land investment.
Why you may consider leasing farmland
Leasing farmland is very common, especially in Iowa. More than two-thirds of farmland in the state is rented to tenant operators. This trend is being driven by a few very real benefits to both parties involved.
Many owners of farmland in the state, according to Iowa State University Extension and Outreach, are either retired farmers or people who have inherited the farmland from their families. Either way, there’s a desire to keep the land as a valuable investment or simply keep it in the family.
For these landowners, they can provide farmland, which is a very expensive and valuable resource, to tenants who want to farm but may not have the capital resources needed to buy their own land. Some farmers begin as tenants, building equity so they can purchase their own farmland down the road. There are also tenants who own their own land and rent other properties.
But the most common reasons why a property owner rents farmland is because they want to see the most return on investment possible and continue to see the land be productive. It may not be that the farmland owners are out of farming themselves, but they simply want to make the most out of their own resources.
Leasing farmland can also help landowners establish a revenue stream from their land and increase local food production.
Match your goals with the tenant’s goals
One of the first steps a landowner must take before beginning a search for a tenant farmer is to examine their own goals. This can include personal goals, land use goals and financial goals. There may also be specific preferences you have for the land that you would like any tenant to agree to or respect.
Take all that information and organize it in a way that is shareable with any potential tenant. That way, both parties know what’s expected from the landowner’s end.
To determine what these goals should look like, landowners must ask themselves several questions. These questions to consider include whether the land needs to become an income source, who the ideal tenants would be (new farmers, experienced farmers, etc.) and how important conservation and environmental matters are to the landowners.
Having a sound knowledge of your goals will help you find a tenant whose goals align with your own.
Be prepared to answer prospective tenant questions
Land for Good has developed an excellent document that walks through some of the factors that may influence whether a tenant will want to enter a lease agreement with a particular farmland owner. It is a useful guide in preparing to answer any questions prospective tenants may have.
A prospective tenant must do their research, too, and a good tenant will likely come with questions that landowners should be ready to answer. Those questions pertain to:
- Access: Make sure to let tenant farmers know how the land can be accessed and whether it is generally accessible or if there are any challenges that must be overcome.
- Proximity to services: Are there repair shops, hardware stores, feed suppliers, veterinarians and other farm-related services nearby or easy to reach? Having amenities like this close will only help attract quality tenants.
- What’s included: Tenants will want to know what all is included with the land lease agreement. Is there equipment that’s available for use? What about housing or storage buildings? Who is responsible for upkeep, upgrades or repairs on any of that housing or equipment?
- Property boundaries: This one’s pretty basic, but an obvious detail to include in any conversation. Know the exact boundaries of the property. On a related note, be sure to explain any restricted areas, such as wetlands or other protected areas, that can’t be used for farming.
- Water resources: What are the water sources on the property? Are there sources that could be developed in the future?
Set expectations for open lines of communication
One of the main concerns many landlords and their tenant farmers share is how communication between both parties could be better. Good communication does not come easily for everybody, but if you want to find a good tenant for your farmland, then you need to be prepared to set expectations for how communication will play a role in your professional relationship.
As you begin your search for a tenant, we’ve collected a few tips about how you can do better with communication and the benefits it can lead to.
Tenant selection is one aspect of farm management
A good farm management that you know has your back can be invaluable, especially for farmland owners who do not farm all or any of the land they own. Tenant selection is just one of the many farm management services that Cotton Grave offers.
When selecting a farm tenant, we handle negotiations - from crop share to cash rent lease. We pride ourselves on helping landowners by building trusting relationships between our team and their tenants. By being fair with tenants in all our business dealings with them, we are able to provide many benefits to landowners, including retaining tenants over the years.
Contact Cotton Grave today to learn more about our farm management services.
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