Selling the farm....questions

Diana

Diana

Final Approach
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Diana
A question for those of you who have experience in dealing with property...what is the best way to do this:

If you own 200 acres of pasture/crop land with grass runways on the property, and want to continue to live on the farm and use the airfield for at least ten years, how would you sell the property? Would you sell most of it and keep just the land with the runways and house and hangar? Or would it be more profitable to sell the entire property with an easement for the runways, and arrange to rent or lease the house/yard/barn/hangar as part of the transaction?

Thoughts?
 
Some relatives of mine own farm land out in California that they lease out to someone. The nice part about that is that it's the gift that keeps on giving.
 
I'd like to help, but I understand "buying a farm", or even a piece of one, is bad.:goofy:
 
You could consider selling the whole shebang, keep a life estate for the house and hangar with an easement for the runway.
 
Look into a "Life Estate" Where you sell the property to another but retain the right to live and use whatever portion the parties agree upon in the contract for the rest of your lives or whatever time period you set. Your state's real estate laws may be different. Just a thought. Howard
 
Howard Wilson said:
Look into a "Life Estate" Where you sell the property to another but retain the right to live and use whatever portion the parties agree upon in the contract for the rest of your lives or whatever time period you set. Your state's real estate laws may be different. Just a thought. Howard
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Sounds almost like a reverse mortgage.

John
 
Cap'n Jack said:
I'd like to help, but I understand "buying a farm", or even a piece of one, is bad.:goofy:
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Buying a farm is okay, it is when you bought the farm is when you are in room temp. It means you have collected life insurance, the hard way. ;)
 
If you really need to sell the land sell just what you never will want again. Just the cropland will go for a higher price than whole farms in your neighborhood. Probably by at least 20%. Include a option for first right of refusal on the rest of the land to the buyer and tack on another 5%. I have sold land with easements and all it does is start a large war with everyone it seems. Cropland is so worth so much right now its tempting to sell. Cropland is going for 6000 to 9600 per acre around me. I have actually sold a few farms this year and bought a few farms so don't blame you for giving the market a shot. Another thing you might consider is that someone that has airplane might want to buy and use for tax rightoff or hunting camping area.
 
Ted DuPuis said:
Some relatives of mine own farm land out in California that they lease out to someone. The nice part about that is that it's the gift that keeps on giving.
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We've been leasing the land to a local farmer for years. It's time to make a change in the retirement plan. :)

Let'sgoflying! said:
Nonono, you can't sell the fa-arm!!
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You can still fly up here to see us. :) But don't put it off too long! ;)
 
wabower said:
You could consider selling the whole shebang, keep a life estate for the house and hangar with an easement for the runway.
Click to expand...

Howard Wilson said:
Look into a "Life Estate" Where you sell the property to another but retain the right to live and use whatever portion the parties agree upon in the contract for the rest of your lives or whatever time period you set. Your state's real estate laws may be different. Just a thought. Howard
Click to expand...
I'd never heard of a life estate before. Hmmmmmm. Need to Google. We'd prefer to keep living here if we sold the whole thing. And we need to still be able to have fly-ins and hangar parties.
 
Theboys said:
If you really need to sell the land sell just what you never will want again.
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We thought about just selling the south part of the farm. It's mixed...crop with pasture with a lake and farm pond and woods. That way we wouldn't have to worry about losing the runway or house or hangar.

Theboys said:
Just the cropland will go for a higher price than whole farms in your neighborhood. Probably by at least 20%. Include a option for first right of refusal on the rest of the land to the buyer and tack on another 5%.
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Interesting. :) I like the idea of the additional 5%. :)

Theboys said:
I have sold land with easements and all it does is start a large war with everyone it seems.
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I'm interested in hearing more about that. Don't really know anything about easements or who has the right to do what.

Theboys said:
Cropland is so worth so much right now its tempting to sell. Cropland is going for 6000 to 9600 per acre around me. I have actually sold a few farms this year and bought a few farms so don't blame you for giving the market a shot.
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Wow, I wish land was going for that much in this area!

Theboys said:
Another thing you might consider is that someone that has airplane might want to buy and use for tax rightoff or hunting camping area.
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We thought about that too. It might be harder to find a buyer who wouldn't need to have the runways for the next ten years. It's certainly a thought, though.

Thanks everyone, for your input. :)
 
Diana,

Cropland is going for $6k an acre (or more) in SEMO also...take a close look, I think you'll be surprised with what your farm is worth...pleasantly so.
 
A Sale with a Leaseback of the portions you want. Ten year lease, with two five year options, or something similar to give you flexibility.
 
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John Baker said:
Sounds almost like a reverse mortgage.

John
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I guess they're similar in the length of time the contract may cover. My understanding of the life estate is, that the contract of sale can stipulate whatever financial and timing agreement the parties agree to. Not that familiar with the reverse mortgage , but it seems like there may be more gotchas built in if the conditions of the contract are played out over a longer period of time versus an up front settlement with the life estate. Not sure if there are govt. requirements on the form the reverse mortgage can take? h
 
wabower said:
You could consider selling the whole shebang, keep a life estate for the house and hangar with an easement for the runway.
Click to expand...

We don't really know much about easements. At this point we have some control over what the farmer does around the runways. Although, on occasion, someone gets sloppy out there and they kill the grass on the runway, which makes me cranky. He knows to keep trucks and tractors off the runways, but they screw up at times. If I have an easement, how much control would I have?
 
timwinters said:
Diana,

Cropland is going for $6k an acre (or more) in SEMO also...take a close look, I think you'll be surprised with what your farm is worth...pleasantly so.
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Gosh, I wish it was going for that much in SWMO! However, I'm always up for a pleasant surprise. ;)
 
The terms of the easement can be as restrictive as the parties agree to make them. You won't have as much control as you have now, but it can be a workable arrangement. The benefit to a one-time deal is that it's a one-time negotiation and closing with timing as the only variable.

The same can be said for the disadvantages, since there's no more upside when the deal is signed and you lose an element of control when title passes. Our extended family has done several such transactions with farm properties in Oklahoma, and is contemplating another one in the near future. Numerous options are available, so you can just decide which one (or combination) you like best.

Diana said:
We don't really know much about easements. At this point we have some control over what the farmer does around the runways. Although, on occasion, someone gets sloppy out there and they kill the grass on the runway, which makes me cranky. He knows to keep trucks and tractors off the runways, but they screw up at times. If I have an easement, how much control would I have?
Click to expand...
 
I think you might be better off selling half of the farm now and just give whoever buys it first right of refusal on the other half at whatever price you can sell it for at that time. I have sold land with easements and in Nebraska it is a little shaky. The person who owns the land owns it period. The person who has the easement on the land, who, in this case would be you, is entitled to the use of that piece of land for the purpose the easment covers. However the owner of the land can put a series of gates or cattle crossings or whatever on the easement as long as he still makes it availiable to you. You would have no control over them driving on it while farming or killing some of the grass or using it to graze cattle or whatever. For you purpose I think you might not be happy with the outcome. I'm not sure what you are getting for rent on the farm but maybe you might look at that for more income. If you have 100 tillable acres 200 to 300 isn't unreasonable for rent these days. Not sure what it is in your area though. A farm manager would know for sure or your local banker. One of the easments on land I sold made three neighbors mad at each other and made there lawyers happy. Still ended up the way I had intended it but has been 5 years and they are all still mad at each other.
 
wabower said:
The terms of the easement can be as restrictive as the parties agree to make them. You won't have as much control as you have now, but it can be a workable arrangement. The benefit to a one-time deal is that it's a one-time negotiation and closing with timing as the only variable.

The same can be said for the disadvantages, since there's no more upside when the deal is signed and you lose an element of control when title passes. Our extended family has done several such transactions with farm properties in Oklahoma, and is contemplating another one in the near future. Numerous options are available, so you can just decide which one (or combination) you like best.
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I wonder if we could sell all the cropland around the runways and the taxiway, but keep ownership of the land the runways are on?
 
Theboys said:
I think you might be better off selling half of the farm now and just give whoever buys it first right of refusal on the other half at whatever price you can sell it for at that time. I have sold land with easements and in Nebraska it is a little shaky. The person who owns the land owns it period. The person who has the easement on the land, who, in this case would be you, is entitled to the use of that piece of land for the purpose the easment covers. However the owner of the land can put a series of gates or cattle crossings or whatever on the easement as long as he still makes it availiable to you. You would have no control over them driving on it while farming or killing some of the grass or using it to graze cattle or whatever. For you purpose I think you might not be happy with the outcome. I'm not sure what you are getting for rent on the farm but maybe you might look at that for more income. If you have 100 tillable acres 200 to 300 isn't unreasonable for rent these days. Not sure what it is in your area though. A farm manager would know for sure or your local banker. One of the easments on land I sold made three neighbors mad at each other and made there lawyers happy. Still ended up the way I had intended it but has been 5 years and they are all still mad at each other.
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Thanks for your input. This really makes me think we need to keep ownership of that part of the property, for now.
 
Diana said:
I wonder if we could sell all the cropland around the runways and the taxiway, but keep ownership of the land the runways are on?
Click to expand...

I would think if you are going to break up the property that might be a good option. I agree with other stay away from an easement.
 
You can sell anything you own. Finding a buyer for a non-traditional deal would arguably be more difficult (and perhaps work to your disadvantage price-wise) than selling as one parcel.

If you want to sell individual parcels, all that's required is a survey to define the boundaries plus adherence to any restrictions set forth by local law. You'll want to understand the ramifications of sub-dividing the land, how such a deal might affect zoning and agricultural property tax rates, how the buyer would gain access to the various parcels, etc.

If you believe the hype about increased tax rates on capital gains, there could be an incentive to make a deal before that happens.

Diana said:
I wonder if we could sell all the cropland around the runways and the taxiway, but keep ownership of the land the runways are on?
Click to expand...
 
Never sell land or real estate. (well there is a price for everything I suppose but) Lease it out if you want additional income, especially now, if you were going sell the farm you missed the time just before the super inflated bubble burst. The airfield is also priceless, they close easy but try to open one... Haters will turn up in droves at the town council meeting.

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