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Dodge County, WI | Work yourself into an ownership position on the operations side. This would mean an LLC for the operation side (land rent, seed, chemical, fertilizer, machinery rent from friend, ALL expenses and income run through it) and your friend rents his land and equipment to the LLC.
LLC gives you lots of flexibility options, and write it so that you're in charge if he passes away. Everything that you both agree upon in writing.
The newly formed LLC would need to get an operating loan, ideally. Probably on your friends good name and credit. If LLC can't get one on its own you'll need to get one yourself so you can both contribute money to the LLC so it can pay for the items it needs.
Both of you get together and decide what percentage you are each going to have in the partnership. Say you start at 50/50. Your friend and you make contributions at the agreed percentage for what the LLC needs to buy and at the end of the year when crops are finished selling, God willing you make profit, you are now 50% owner. Next year, go 100%. Should be similar financial pain as first year.
At the end of year two you're 100% owner of a farm operation.
Hopefully your friend takes you seriously the last two years and has been helping you by getting introduced/maintaining the landlord relationships, the purchasing, and making sell decisions.
Year three, even if friend passes, you have 350 acre operation, 100%stake in the LLC, credit with ppl you work with, and are in a position to start buying equipment. Or land.
Depending on how much of a break your friend gives you, machinery purchasing can be discounted pretty heavily, if he so chooses. Lots of ways he can help you financially.
I would not expect that 100 acres he owns to be anything but a bonus, considering his age. Anything can happen with survivor family, we've all heard the stories.
But the way I've laid out gets you into an ownership position on the part that matters to keep you farming even if friend dies.
Good luck. Wish you would have started this five years ago.
Ben | |
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Farm Hand to Farmer (Seeking Advise)
