Renting out farmland can be difficult because most services are focused on selling it rather than leasing it. However, there are many resources than can help landowners find potential tenants. They include online directories and classifieds, as well as real estate services that specialize in farms. Landowners will need to determine the worth of their property by checking it against local published land values, and they should consider testing the quality of the soil. Finding tenants may require networking through local agricultural organizations or at land auctions.
Local Land Values
Find the value of farmland in your area by searching the latest farmland value survey. These surveys are generally published by a state university agriculture program. Farmland rental rates are often termed "cash rents" after the most common land lease contract. The U.S. Department of Agriculture publishes mean cash rental rates for any county that has more than 20,000 acres of crops. Land values will change depending on crop demands, weather conditions or other regional factors.
Soil and Land Evaluation
Evaluate your parcel's soil type and characteristics to determine its potential productivity and maintenance requirements. For example, a high Corn Suitability Rating soil score can raise a property's value in the Midwest. The USDA Web Soil Survey provides some information on regional soil quality. Nuisance issues -- such as weeds or pests -- or the cost of repairing culverts and fences can also diminish farmland value.
Terms of Rental
Decide what type of rental agreement to use. According to Iowa State University, most cash rental agreements are based on gross revenue from crops, which lets landowners share in the profits of good crops, but also involves the risk of poor crops. Another method is to calculate the rental based on what a tenant would have left for rent after paying the cost of production. This is sometimes known as a residual.
Find local and regional services through which farmland is advertised for lease or sale. In many cases, you will have to advertise in national, regional or local agriculture publications. Online commercial real estate listings, such as those available at Loopnet.com and LandandFarm.com, provide forums to advertise cropland rentals. Landowners can also advertise farmland rentals on online classified services like Craigslist or in a local newspaper.
Network within local or regional agricultural organizations to discover who may be interested in renting farmland. Farmland auctions are good events to visit to discover leasing opportunities, and most local agriculture organizations will have information on upcoming auctions.
- Jupiterimages/Comstock/Getty Images