Renting land to farming neighbors?

Do you want to make passive income from your land? Are you trying to figure out what to do with acreage? Instead of selling your land, do this to improve it.

Leasing or renting land the right way can increase property values. Using leases done right increases ecological value while producing agricultural products.

You can use the money you earn to finance your homestead. But the relationships you create are worth much more. Discover the keys to success when renting land to farming neighbors.

When food security and healthy lifestyles are at risk, owning land is a solution for many. To start a homestead and gain the skills to run it, join us at https://www.prosperityhomestead.org/newsletter/

#HomesteadingSkills #LandLease #RentFarmLand #PassiveIncome #StartHomesteading #StartFarming #RegenerativeFarming

Become a supporter of this podcast: https://www.spreaker.com/podcast/prosperity-homestead--3659183/support.

Episode Transcript

(00:01):
When I talk about getting maximum valuefrom your land while still being ecologically responsible,
land leases and access agreements are apart of that. Let's talk carefully
about these areas that can cause somecontention of leasing parts of your other people,
and this will also help you beaware of the opportunity to lease land
that might be underutilized. I'm justit hit with prosperity homestead. So if

(00:24):
you're going to get your homestand upand running quick, you might live in
a small town or a city nearrural or agricultural land. Very often the
agricultural land is underutilized. Perhaps it'solder farmers that don't work the land as
much anymore, or it could bea landowner looking for a different arrangement that
would be more ecologically sound to supportthat piece of land. In the other

(00:46):
case is you could own rural landnow but not currently be using it and
find an income opportunity to lease thatland to someone else. Now, let
me start right up front and explainto you that land leases tend to be
like twenty dollars an eight per year. It's not a big revenue source,
but it could be the difference betweenkeeping an agricultural exemption or agricultural rights,

(01:07):
or lowering your property taxes, orotherwise having deferred maintenance taken care of on
your property. So, for example, if you're renting land to a cattle
farmer, part of the agreement maybefence maintenance, it may be receding,
mowing, different types of things thatare standard activities in the cattle raising activity,
but ultimately prevent the degregation of yourland or property. And so you

(01:32):
can lace land to a single farmeror the same piece of land to multiple
farmers, depending on the arrangement.And so in my case, I own
land, but I am actually undercontract to run somebody else's animals on the
land. And so the land thatI own is worth nothing, It's worth
very little. It's distressed land.It'll be ten fifteen years before that land

(01:56):
is a high quality asset. Butright now it is valuable enough to do
farm a contract farm and allow someoneelse's animals all my land. Now am
I going to get rich doing this, No, But it justifies the agricultural
extension. It helps develop the landbecause they'll be fencing that goes in place
that I can get under a cooperativeagreement. Because by the way, you

(02:19):
could be leasing land to somebody andthey need fencing, and you may need
to pay for that or at leastpay a share of that, because you
get the improved value of land.So this is a little bit more complex
than simply just handshake agreement. Youdo need to have a written agreement.
You need to understand what is theimproved value of the land for the farmer's
use of it. So the farmer'sgoing to do maintenance, they're gonna In

(02:42):
many cases grazing properly done increases soilfertility. You have to think about alternative
uses of the land. But allthese things you would think about anyway,
and it's a natural part of owningland. So if you've got a homestead
and currently you've got to zone onegarden in the permo ultra concept around your
garden space and the rest of yourland is fifty sixty acres, and you're

(03:04):
tired of mowing it, or you'renot cutting enough hay to use and the
hay bale stay on the field,you could partner through a lease or rental
agreement with a local farmer who couldbail to hay for you at no cost
to you and give you the balesthat you need, but they take off
all the other bales and use themin their activity. It could be for
large livestock, it could be forsmall livestock. It could bean the difference

(03:29):
between looking out over a derelict pieceof property or looking out over a small
bison herd or a small cattle herd, or goats or sheep, or something
that is going to increase the valueof your property if done the right way.
Now, in my program where wetalk about generating income from your land,
you may say, well, justinI don't want thirty five dollars a

(03:49):
year to rent out land. SoJoel Salaston talks about how he's able to
have hundreds of acres of land thathe doesn't own, that he's able to
pay one hundred dollars per acre peryear for that land, when typically it's
only like sixteen dollars an acre perper year or thirty dollars an acre per
year will barely cover your taxes inmost cases. The reason is is that

(04:10):
Joel Salaston has a system. Whetherit's his pigerator system, or it's a
cattle system, or it's a cattleand chicken system, he's got a system
that he can apply to the landthat doesn't degrade the soil, that doesn't
destroy the habitat, that ultimately raisesvolumes of meat on acreage. But he
has talent, he has skills,he has a team of people that's been

(04:30):
trained to do this, and thenhe's able to lease the land around his
area that may not be available inyour environment. So what you want to
start with this simple leases. Now, the way I look at it when
I work with the clients we haveif we have a private client sitting down
talking about this, we want toassume that you're going to use the land,
and renting out the land to anotherfarmer is just one of many options.

(04:55):
So let's say you have an openhayfield fifteen to twenty acres. It's
got a nice perimeter fence that needsa little bit of work. We want
to figure out what the cost isto restore the perimeter fence. We want
to know what type of fencing itis. Is it cattle fencing or goat
fencing or sheep and goat fencing,or is it suitable for smaller animals or
larger animals, doesn't have a barnon it. We want to know all

(05:16):
that stuff and then ultimately start developing. What is the price for you to
get maximum value from the land,because that's ideal. If you have a
farmer coming on and off your land, there's the liability concerned they might get
hurt, there's the permissions in privacy. There's the fact that farmers have different
schedules than homesteaders, or different schedulesthan urban people. It might limit your

(05:38):
ability to hunt the land. Andso ultimately we have to be looking at
these things. What is the idealuse of the land for you, and
then from there we can come backoff and find an ideal tenant for the
land to help you start cash flowingit right away. Now, if you
get a really good tenant like JoelSouthton or one of his students, you
know you could get one hundred acre. It's not likely, but that thirty

(05:58):
five an acre or whatever they covers. Your tax value has value beyond just
the money you receive and rent.And this is critically important. And this
is where homesteading skills and household managementcomes in into farm management. So let's
say you've got fifteen or twenty acreswith a fence and a farmer is willing
to come in and run their livestockon your property and they're going to repair

(06:24):
the fences. The fence repair hasmonetary value, so you've got the rent
and now you have improved infrastructure.Now the farmer may want a longer or
a shorter lease, depending on whattheir needs are. But if they're going
to replace fencing, you can expecta longer lease period or a cost sharing
associated with the fence replacement. Sofor example, you have cattle fencing with

(06:48):
barbed wire and they're going to needelectric fencing with a sheep or a goat
fence. There might be some adjustmentsthere. It may be a situation where
you lease the land to them,they bring their own electric fence that could
be removed after their lease ends,or they're using temporary fencing and you just
give them the electricity for free becauseit doesn't really take that much, or

(07:10):
they have solar charged fences. Everysituation will be unique, and you have
to think about this. This farmeris going to drive on and off your
land. They might need to segmentthe fencing on the land. They may
have different schedules for cutting the grass. So maybe you've cut that fifteen acres
into hay and you know you areborrowing someone else's equipment, and it's all

(07:31):
fine, But what if you ownthe equipment. What if you've got fifty
sixty acres of hay and you ownthis equipment, and you're going to release
this out for someone else to cuthay, and now you've got the cost
of equipment. See, the farmingactivity justifies the tax breaks and even in
some cases incentives and grants, andso if you do nothing with the land,

(07:54):
you will always lose. But ifyou rent out the land the right
way, there considerations to consider.Now in the case of where you own
equipment, maybe you've inherited a farmand you own equipment. You can now
have an operator run the equipment,and so you're owning the operation. You're
not renting the land. So nowyou just hire an operator to run the
equipment. That operator could be aneighboring farmer, and then you do a

(08:18):
revenue share or you do some kindof pay. Do you see how we
have different approaches. Now, thegreat thing about different approaches is that gives
you options. So there may notbe a local farmer that is going to
be available to manage your land.Now it really depends on the size of
the land. But let's say youhave fifteen or twenty acres of land and
you're not able to your nearest city, and you're not able to live on

(08:41):
the land, but you have theyou can't find a farmer to manage the
land. You don't want to hirea care take care to take care of
the land because you don't know whatyou want them to grow. Well.
Then another option, of course,is to turn that land into a community
garden, turn that land into acooperative, bring on additional farmers, maybe
start building a community around that landto minister the land. Now, one

(09:03):
of the things that we also do, and I'm not going to go through
all the hundreds, are so differentways to make money from your land,
because some of these ways that weretalking about today actually don't make you any
money. They save you money,they keep the land under good management,
they help you improve the land,but you're not getting cash. And so
one of the ways that I showedin a couple of videos is that we

(09:24):
actually put trails on the land.So a piece of land that I'm managing,
I make no money with it.It costs me money every month to
have the piece of land. Itwas derelict, overgrown land it has scrambles
and brush and little tiny trees andthere's no timber value to the land.
Well, I got a forest maulture, and you can see that in those
videos. I had a forest maulturego through and put trails on the land.

(09:45):
So the day the forest maulture wasfinished, I could ride my mountain
bike out there, I could hikeout there, I could camp out there,
I could start using the land.I remember when I first started surveying
the land itself. And then ofcourse the owner can do all these things
as well. But my agreement withthe owner is that I get used of
the land because I'm a caretaker.I'm a nomadic farm manager. And what

(10:07):
we're doing right now, and we'lltalk more about that as we develop some
of these programs. We start bringingin folks to take classes. But the
trails on the land makes the landaccessible. But it's not as easy as
just sending a forest maulture out there. We had to survey, we had
to do mapping, we had totalk with the owner's needs, we had
to talk with the neighbors needs,we had to look at the assessment of

(10:28):
the area. But ultimately I wasable to find hardscaped roads on this property
and clear those hardscaped roads. Andas soon as that forest multure pulled off
that piece of land, I couldstart the activities. The owner could start
the activities. I could bring incampers. I think we do have it
set up as a hip camp.We haven't had any campers out yet,
but it's set up as a hipcamp. These are things that you can

(10:52):
do so but here's some drawbacks.You will have other people on your land,
so there are insurance concerns. Youwill have a change in lifestyle.
Maybe you like looking at that land, but you don't want to put the
effort into create a meadow or wildflowers. You may not have the skill set

(11:13):
necessary to really utilize that land today. You may have fears or concerns about
you know, you live someplace else, can I really keep up with the
land. If you own land,you have to have some court elements straight
whether or not you're renting it out. But if you're renting that land out
to a local farmer, they willhelp save you trouble. So let's talk

(11:35):
about physical security. One of theproblems in my region with land that is
accessible is that people with four wheelersor people who are poaching will access the
land. Poach animals run four wheelers, and that is a course of liability.
It's very often they're detrimental to thepiece of land and then ultimately they
could construe the ownership of the land. So what does that mean. Anytime

(12:00):
somebody crosses your property to access propertythey own, and you allow them to
cross the property at a specific location, they could eventually petition for an easement,
or they can have an easement thatis construed, and then you could
have land that is not usable.So for example, if someone crosses your
land with a utility power for example, for example, the area around the

(12:22):
utilities becomes utility right away and nowyou have limited use and access to that
land. So if someone is runninga pig farm on your property and they
got permits to do a pig farm, you will not be able to after
that grow vegetables because there could becontamination issues. There could be water contamination
problems. Now, the best solutionfor this is to sit down with somebody

(12:45):
like myself who's a consultant and helpedmap this out. But you can also
sit down with your local agricultural extension. You can sit down with your like
a farm credit, and you cantalk to them and say, look,
if I lease this land out,how does it impact my mortgage, How
does it impact my insurance? Howdoes it impact my lifestyle. You can
draw up a plan, you canmap out the land. Maybe you don't
lease all the land, you'in leastpart of it. But most of the

(13:07):
agreements that I see that work verywell is a symbiotic relationship between you and
the farmer, because that farmer isgoing to be out there on the land
and if they see somebody's been cutyour fence to run a four wheeler throw.
I was serving a piece of propertyand someone had cut the fences in
order to run their four wheelers acrossthe sky's seventy acres now with seventy acres

(13:28):
of woods to him, and thefront half of the woods you couldn't really
access. But they had cut somany four wheel trails in the back of
that property illegally by the way trustpassing on that property, that he had
the liability if someone got hurt becausehe did not maintain his fencing. See,
they don't the way the government works, they don't care if someone cut

(13:48):
the fence nobody filed a trust passing. So you hear all these four wheelers
back there, it must be okaybecause you permitted it. They didn't have
proper signage, they didn't have properThe best thing for your properties to default
no access hunting without authorization, andthen of course that authorization is always a
written agreement. But ultimately, canyou see how not understanding these concepts can

(14:11):
cause some misconceptions. Now, Ilike to have farmers or caretakers or someone
else on the land periodically who areexpected to do certain types of inspections.
So a farmer who's running livestock onyour land will inspect your fences multiple times
a week. They're going to makesure those fences are strong. They're gonna
make sure those fences don't lose anyanimals or animals don't get stuck in the

(14:33):
fencing if they're cutting hey very oftenthey will lime and they will use calcium
out there, and they may rakeyour field for example, or drag your
fields. But you can have somebodyleasing your field for hay and then also
having someone out there running cattle.But if the cattle guys eating the ground
too low and they're not properly rotating, then you're gonna compromise your hay contract.

(14:58):
So you want to have a managementplan. And even though this is
a little bit of passive income andactually leasing the same land multiple times,
you need to have some kind ofagreement so that you know who's responsible for
what. Now. I have seenagreements where the owners will set up the
fencing, so you know you're gonnaput fencing anyway, So you put up
some really nice fencing, and thenyou you lease it out to multiple types

(15:20):
of farmers. So maybe you havea small farmer who's running cattle, and
then behind the cattle runs chicken,and then behind that runs a pig system,
and then there's a rest period andyou've got enough land to do this
well, then you could get onehundred two hundred dollars per acre in revenue
even though you're not doing the primaryfarming activity. You're now managing a farm,

(15:45):
or maybe you're all your focuses onyour homestead and you've got value added
product at the homestead. You've gotsmall livestock like chickens or rabbits and stuff
at the homestead, and then thatback forty that you're not using anyway is
being cultivated, it's being improved.It's it's having these contracts out there so

(16:06):
that you can get the additional labornecessary to manage a farm without actually having
to pay directly for the labor.So that's that fifteen dollars you get an
acre, That thirty dollars you getan acre could be complete profit for what
you're doing, and all of theother costs, whether you know, like
if you hired caretaker and stuff,the other costs are now sunk into the

(16:27):
farmer's activity. And then of coursewe want to be friendly, we want
to we want to have a goodcommunications and interaction because you know, here
on a tractor go through at sixo'clock in the morning might seem inconvenient,
but it's way more convenient than payingan extra two three thousand dollars a year
on property taxes. It's way moreconvenient than having someone running across your land

(16:51):
and destroying it because there's unauthorized accessto your land. Having the right paperwork
in place is much better than findingout later that now there's an ease it
crosses your property with utilities or roadaccess, and now you lose access to
your land, or it segments yourproperty For example, you may not be
aware of this, but a easementfor access between two neighbors, if the

(17:15):
neighbor turns around and turns their fortyacres into a development, can now turn
into a county road, and thena county road that provides through access could
become a state road. And sonow you can have a piece of property
where you are just letting them driveacross the middle of a farm field turn
into a split down the middle ofyour property. Now again, when you're

(17:36):
ready to do this, we havea coaching program. We have additional resources
and materials that will help you beaware of how to think about this.
The concept of homesteading we have hereis not industrial, but it's more like
a gentleman's estate. It's multiple streamsof income that are financing your lifestyle,
that are ultimately giving you the accessto land in a way that doesn't degrade

(17:59):
the land. Improves wildlife because somebodycutting your hey doesn't mean you can't hunt
it. That somebody's improving habitat forother animals such as grouse or bird life.
Maybe you've got a lake with awatershed. There's so many opportunities.
Unfortunately, I see a lot offolks that don't understand the nuances of what

(18:21):
we're discussing here, and they'll rentland to the neighbor and they'll complain about
a ton of electric fencing and theycan't even walk across their own land.
And you know, they hear thefarmer out there in the morning and in
the evening and all hours of theday, and then sometimes the neighbors will
even complain. And so you'll havefrustrations if this is not properly structured.
But then again, if you properlystructure this, dicks could mean additional income

(18:45):
for your homestead. This could meana benefit of lifestyle. I've seen,
for example, somebody raising cows andtaking the cows to milk processing, and
that the cattle farmer has got hundredsof thousands of dollars of infrastructure in this
and then they provide raw milk asin lieu of payment for the renting of
the land, or they're paying liketwenty five dollars an acre for the land

(19:07):
because it's it's a rotational, seasonalgrazing. But every month the owner of
that land is getting raw milk whichthey were turning in the cheeses and Kafierre
and different types of value added product, and then their cost of goods went
to zero, so they're getting abelow market rate for the rental of the
land. These cows are crossing theland, of course, manuring the land,

(19:29):
mineralizing the land. There's a littlebit of mowing that happens from time
to time because cows don't like reallydeep grass. But the value add was
that that little bit of margin,which was the fresh raw milk that they
were then processing in the cheese andkafierre and using for their family and using
for their their customers. Can yousee how this works, folks, Homesteading

(19:52):
is a lot more than what yousee on these videos. I know the
videos are entertaining, they're fun todo, But if you're serious about starting
a homestead, small farm, andeventually cultivating that into like a gentleman's estate
or like a generational asset which youcan pass on, something gives you food
security, physical security, and agood peace of mind for a lifestyle of

(20:17):
freedom and a lifestyle of fresh air, then you have to consider these other
elements. Don't make the mistakes ofgetting into a lease agreement or a deal
that you can't get out of.Don't make a mistake of not utilizing your
land to the best of its abilities. Joe s Alliston says that land has
a certain expression and you can helpit cultivate, you can help it express.

(20:40):
You can feed your neighbors, youcan feed your community. You can
become that pillar of a community wetalk about by building these values. Again,
there's insurance consideration, there's land rightsconsideration, there's value of the property
consideration, there's tax consideration. Theseare all things that we help private clients
with when it comes to the managethe land management. Now, I'm going

(21:04):
to leave you with one thing becauseyou might be saying I don't have ready
agricultural land. Now I told youthat. The situation for the land that
I'm managing that's been scrub land.It's in poor condition, it's not worth
a dime. But we were ableto get access points onto it, We're
getting water onto it. I'm doinga lot of development on this land for
the owners of the land in relationshipto these contracts that I'll use to raise

(21:27):
goats. But what if you havetimberland, what if you have hunting land,
Well, the same concept supply,just different application. And again that's
what I want to reveal to you. Here you don't have to dream about
what you want to do with theproperty. You don't have to wish you
could do something with a property.You can start that right now now.

(21:51):
Sometimes it's through someone else's means.Somebody else is looking for land right now,
and you're going to help them onyour land, and you're gonna structure
it in a way that it improvesthe value of the land, and they're
gonna get discounts because they're improving theland and you're not having to pay for
their labor. Or it could behiring a caretaker, which a lot of
folks will do as well. Butagain it's a written plan. This is

(22:14):
a subset of the design plan thatwe talk about in permaculture. This is
part of the operational elements of yourplan, and it's part of what helps
you cash flow your property because it'sa whole lot easier to do a two
acre or wildflower meadow when you havethe money to pay seventy five dollars a
pound for the seed, or togo out there and enjoy a garden,
or to enjoy the views and thesites, even if you don't use the

(22:37):
land all the time. Again,if you have questions about what we've covered
here today or success stories I'd loveto hear from you. You can visit
www dot prosperity homestead dot org,go to the contact page, ask your
questions. I love answering your questions. That's why we do the podcasts.
And then if you want free resources, a newsletter and other tools to help

(22:57):
you get on the land fast,especially right now when food security is questionable,
when supply chains have been disrupted,when people are worried about physical security,
you can get out of the cityand get to that land, get
secured, get stable, and thenbuild that generational family farm, build that
generational homestead, build that estate.And yes, you can do it,

(23:22):
and we can show you how.I'm just it hits with Prosperity Homestead.
Visit us at www dot prosperity homesteaddot org for more resources and to ask
your questions. Thanks for listening,