Selling Farmland vs. Renting Out Farmland
July 4, 2022
Want to sell or rent your farmland? There are options for you whether you don't want to put in long hours of farming yourself or simply want to earn monthly income from your property without farming it yourself. The decision of whether to sell or rent out your land can be a little tricky. This blog compares the benefits of renting and selling farmland.
A big benefit to selling your farm is that you could get a large sum of money at once. You don't have to wait for monthly or yearly rent payments to accumulate. You can then turn around and invest the money you received for your farm into another farm or a different business venture. Alternatively, you could simply take the money and retire. One large sum is an option only available through selling.
A great option for those looking to get a little more for their land and income over time! There are two primary benefits to owner-financed sales for the owner seller: First, the owner seller will be able to generate income for many years to come by charging the farmer-buyer an interest rate on top of the principal. This is especially beneficial for owner-sellers approaching retirement when income can be hard to come by. Secondly, instead of having to pay the government one lump sum, the owner-seller can spread out taxes paid on capital gains over many years.
If you sell the land outright, you would no longer have to worry about managing and supervising the farm's operations. If you decide to rent the land out, you would no longer have to work it. However, you would still need to supervise the land to ensure that the renter is following the terms of the lease. This can be a headache, especially if you end up with a problem renter.
Even if you do decide to sell your land, you don't necessarily need to stop working it. It is possible to sell your farm and simply lease it back. This would allow you to continue making money from the farm while still receiving the proceeds from its sale.
If you sell the farm, you no longer have any rights to the land (unless something is worked into the agreement, but this isn't a common arrangement). You also don't have the potential profits if the value of the farm increases unexpectedly, perhaps when commodity prices spike. If you simply rent out the farm, you can always go back to running it if conditions change.
It may be a good idea to rent your farm out while you are considering a sale. This will allow you plenty of time to consider your options.
FarmFundr is owned and operated by a third generation farmer. We take extreme pride in the properties that we acquire or rent and manage. We'd like to learn more about your farmland and offer you options. Even if your property isn't the right fit for us, we have a network of qualified buyers and family farmers ready to make you an offer. Learn more or tell us about your property HERE.
