Cash Rent Farmland Auctions In Iowa
Depending on who you talk to cash rent auctions for farmland can really cause a stir in the state. Mike Duffy of Iowa State University said late last year that cash rents had never been so far out of step with land values ever. How does that get equalized? Well, most likely time would take care of much of it, rents will always be a step behind values either in an upward or downward swing but would be quicker to catch up on a downward swing. Many landlords have in the last 2-3 years raised rents to be more closly in step with value. Generally I’ve always figured cash rent at 5% of asset value. If a farm has a value of $1,000,000 cash rent should be around $50,000. There are different ways to figure how much to rent a farm for but it comes down to negotiations between the landlord and tenant, there can be some issues that could bring that figure down some as well. So what do you do when you can’t come to agreement, or you want to see if you farm will rent for more than your current tenant is willing to pay? A farmland cash rent auction is the answer. It opens up acreage, it gives everybody a fair shot at the farm, perhaps one of the best things about cash rent auctions, even the current tenant. You can set the terms prior to the auction such as the length, maintenance of the property and more. Auctions will likely bring you the highest cash rent, when there is competition for the property you’ll see the highest rents and this is what creates mixed emotions. It really comes down to producers margin and tolerance for lower margins on some properties. Is this fair? I think when you consider that the landowner is sharing in the reward of higher commidity prices, after all it is the landowner than holds and paid for the most valuable asset that is vital to agriculture, the land. Do you think its fair that that person share in the rewards? It seems like a no brainer to me that the landowner should be able to share in it. A cash rent auction done in Iowa by Jim Hughes Real Estate last week has create some buzz around the state and it was covered by Agriculture.com with this video. Here is more information on computing Cropland Cash Rental Leases
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cash rent auctions, cropland, Farmland Rent, Farmland Value, farmland values, iowa auctioneers, Iowa Farmland, iowa land auctions, leases, tillable