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Iowa | I bought a farm a few years ago that had an existing 5 year lease on it. Kids inherited it and wanted the money. Little did many of them know the widow had put in her will that the current tenant could farm it for 5 year after she died. It was stated in the auction and I do believe that it brought around %25-%35 less than market value. I did have the option to buy out the 5 year lease for the sum of 5 years of what the rent would be, but essentially paying rent, and the mortgage payment along with the crop inputs basically meant I would be working the ground for free for the 5 years, vs just letting the lease run its course.
That being said, there are sales around here with an existing one year lease, and that doesn't seem to affect the price like the 5 year did for the piece I got.
Also, something people are missing is the "excess fertility" does have value as the buyer of the ground can write it off if it is above "native prairie" just like you can with fences and tile. Just need a letter with soil test results and a crop consultant letter with a value... | |
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Farm lease value??
