7 Steps to Find the Right Farm Tenant
Finding the right farm tenant can be a stressful undertaking. For most landowners, a renter change doesn’t happen often. But when it does happen, it can mean partnering with a farmer who can bring you long-term value just by how they manage your farm.
Here are seven steps to help you find the right tenant to rent your farm.
1. Define Your Goals
The first step can happen at any point in your farmland ownership but is a must if you are making changes. Sit down and determine what your goals are for the land. Do you see your land as a long-term investment? Is this parcel a piece of family history that you want to be part of in the future? Or is your land just another page in your investment portfolio? These thoughts should help you to determine your short and long-term strategy when renting farmland.
2. Evaluate the Past
Once you have given considerable thought to the future of your land, the next step is to evaluate the past. What practices have been in place in the last two years, five years, ten years and longer? Have these practices been beneficial to the land or has it caused degradation over the years? Some examples of this could be evaluating tillage practices, nutrient management plans, effectiveness of air and water systems, etc.
If you are a landowner who has been around farming, you may be versed in these topics. But I know there are many landowners who have little to no farm knowledge. One thing I have learned is that each of us can always learn something new. So, don’t be afraid to ask questions and seek advice. This should be a key factor in your decision-making process.
3. Build the Ideal Tenant Profile
In some ways, you are building a profile of the farmer you want to be working with. Once you have determined what farming practices are important to you and why, it’s time to look at personality and character. What kinds of people do you enjoy working with? To determine this, you may have to understand your own personality type first. Here is link to another post I wrote that will go into a little more depth on what are the four general personality types. If you are not working with people you can relate to and interact with easily, the relationship will always be a struggle.
Personality is important, but character is equally important. The relationship between a landowner and the farmer is just that, a relationship. Making sure you are renting to a farmer who understands you and your values must be part of this process. Is this potential farmer trustworthy? What is their reputation as a person and as a business partner? It is beneficial to consider both, because sometimes there are differences. The character of your renter will impact the length of your relationship.
4. Identify Tenant Prospects
They fourth step after you have done your homework is to identify possibilities. If the first three steps aren’t in place, you will spend much time talking with farmers who may not be what you are looking for. If you are a local landlord, talking with individuals who know and work with farmers could be a big help.
Share with them what type of individual you are looking for and they may be able to offer you a few names. If you are more of an absentee landlord, meaning you don’t live in the community where your farmland is located, this can be a challenge. It may take more effort, but it can be done.
Regardless of whether you are local or absentee, identifying tenant prospects is the biggest challenge. Turnover in land for rent doesn’t happen often, so when it does every farmer is interested. This interest can be overwhelming. Bird Dog is a solution that empowers you to talk with the farmers who are best for you, long term. Bird Dog identifies the farmer prospects and connects you to high quality individuals. This allows you to spend more time talking about farming practices and who has the personality and character you are looking for. The bottom line is you should be looking for a long-term business relationship.
5. Interview Tenant Prospects
The fifth step is to interview each prospective farmer and get a feel for who they are and whether they are a right match for you. Make sure to schedule a time to talk. This interview can tell you a lot about how professional they are, and if they value you and your time. Communication between you and the farmer is very important and this time will give you an idea if it is important to them. During these interviews, have a list of questions. Write down their responses so you can reference back to it later. As you narrow down your options, a second and third meeting may be valuable.
6. Do a Reference Check
The next step in my opinion would be to check with a few references to see and hear what others say about this individual. The more you peel back layers of the onion, the true character of the possible tenant gets exposed. The people this farmer prospect surrounds him or herself with will share much with you about who they are. Make sure you do your due diligence in talking with these references.
7. Make an Offer
The seventh and final step is to make your decision and finalize the lease agreement. Make sure to take the necessary time to work through this process. Every lease should be in writing to eliminate issues down the road. I would also encourage you to seek professional assistance when you have lease questions.
One thing to keep in mind is that one goal of the farmer is to reduce risk on every farm. The longer the lease agreement is, the more beneficial it is, because implementing an agronomic plan does take time. Make sure as you finalize the agreement that each party benefits from it, both in the short-term but also many years from the date it is signed.
As I have said many times, you are determining a business relationship that has the potential to be a long-term relationship. Take the necessary time to think through this process, do your homework and spend time evaluating these candidates. This is something you may not do often but when you do it, do it right.
Dave Myers is CEO of Bird Dog LLC. Bird Dog helps landowners connect with farmers who are the right renter for them long term. Finding a new tenant isn’t something most landowners do often and can be overwhelming. Bird Dog helps make this process easy and effective, leaving you more time for the things you enjoy and confident in your decision.
Topics: land investment