Cattle lease

[tdc_cattle]

Heard through the grapevine that a neighbor is considering getting out of cattle. I'm thinking about approaching him about leasing his cattle. Anyone have experience as a party in a cattle lease? How do you handle cull cows? Is the owner responsible for any costs or time? What works and what doesn't?

 

[Ky cowboy]

I lease the cattle and the ground, he owns the cattle. I retain all the heifers and he gets the bull calfs, we split the hay and I keep all the heifers for replacements on his farm. The farm was way understocked and getting in bad shape he is responsible for all major repairs like fencing etc. I do all the work except feeding hay in the winter for some reason he likes to do it. It has worked well for both parties as I wasn't out a bunch of money to buy cows initially and he still makes a little on the steers he gets to sale. Only issue is identifying whos is cows are whos we use different color tags but I'm in the process of registering a brand so it permanent.

 

[tdc_cattle]

He's in his 60's and wants to get away from some of the daily grind so feeding hay and daily tasks would fall on me. I assume I'd pay rent on his pastures and be responsible for hay or should he pay some? I guess it depends on the calf split.

I'd kind of like some kind of a graduated lease with me taking on more expense each year, maybe be in a position to buy him completely out over 3-5 years.

I'm just looking for thoughts before I approach him. I think he'll be receptive I'd just like to know what's fair.

 

[Son of Butch]

Anything that two parties can agree on can be negotiated.
As with leasing a house, permanent expenses and improvements (fixing the roof = fixing the fences) are on the owner.
Hay expense would equate to heating/utilities for the home and would be the renter's responsibility.

Rent would be cash, unless otherwise agreed, i.e. the calf split.
Reasonable wear and tear are at the owners expense.
Negligent damage caused by the renter would be the renter's responsibility to pay for or properly repair.
Daily chores would be the renter's responsibility, but you could negotiate hiring him... i.e. extra calves in the split

Any permanent improvements you make become the owners property at the end of the lease unless otherwise agreed
upon in writing. Put all side agreements into writing and attach to the lease, so there are no misunderstandings due
to lack of communication. If you change or amend terms as time goes on, document it in writing so there is no misunderstanding later on. Open communication is key as many farmers are introverts and may not mention small
annoyances that could grow into resentment and later damage your business relationship.

 

[TennesseeTuxedo]

"Many farmers are introverts"

Man you said a mouthful right there. I've noticed the same thing.

 

[Hunter]

I've heard of a 60/40 split. Whoever owns the land and cattle gets 60%. Have also heard of a price per head where you supply the cattle and they take care of everything else.

I have not done either but just showing a few different options.
Good luck.

 

[tdc_cattle]

Anything that two parties can agree on can be negotiated.
As with leasing a house, permanent expenses and improvements (fixing the roof = fixing the fences) are on the owner.
Hay expense would equate to heating/utilities for the home and would be the renter's responsibility.

Rent would be cash, unless otherwise agreed, i.e. the calf split.
Reasonable wear and tear are at the owners expense.
Negligent damage caused by the renter would be the renter's responsibility to pay for or properly repair.
Daily chores would be the renter's responsibility, but you could negotiate hiring him... i.e. extra calves in the split

Any permanent improvements you make become the owners property at the end of the lease unless otherwise agreed
upon in writing. Put all side agreements into writing and attach to the lease, so there are no misunderstandings due
to lack of communication. If you change or amend terms as time goes on, document it in writing so there is no misunderstanding later on. Open communication is key as many farmers are introverts and may not mention small
annoyances that could grow into resentment and later damage your business relationship.

I hadn't thought about rent being part of the calf share.

From conversations I've had with him in the past he wants to be out of cattle and row crop in about five years. It's probably to much to think that we could arrange something that'd be mutually beneficial and allow me to completely buy him out over five years.

 

[shaz]

"Many farmers are introverts"

Man you said a mouthful right there. I've noticed the same thing.

One of the primary reasons I chose to raise cattle is that I'm NOT a salesman and don't have to be.

 

[farmerjan]

Why not just offer to buy the cattle and lease the farm, or the pastureland? Do the cattle purchase on a 3, 4, or 5 year deal; you would get the calves to sell or keep as you see fit, he would get a payment yearly or twice a year or whatever works, and in the 5 years he would be completely out of it? We did that with the friend who was dying of cancer. His cows were old and we got them for little over what they would have brought at the stockyards and then they were our responsibility. Live, die, raise calves, cull, whatever. We made monthly payments to the widow, and we managed them as we saw fit.
Don't know what the hay situation is; you could buy the hay from him, help him make it or whatever.

 

[tdc_cattle]

I'd be fine with that if he's willing to owner finance. The end is what I'm trying to do with a lease.

 

[Brute 23]

If you heard it thru the grapevine your probably too late already.

 

[tdc_cattle]

If you heard it thru the grapevine your probably too late already.

In most cases I'd agree, but who it came from would know before anyone else and isn't telling anyone else. Haven't talked to the neighbor yet but hope to in the next few days.

 

[plumber_greg]

Don't want to hijack your thread, but I am in the same boat.
I am planning to retire next fall. My wife and I plan on doing something stupid. Gonna' borrow a million dollars from SBA and buy into a landscaping business in Sarasota Fl.
Have around 100 cows, 35 yearling heifers, 4 bulls, all pasture and hay ground paid for. Am in the cycle of selling heifers every year and keeping yearlings back.
Selling the cattle is NOT an option, tax hit would be 50% of the sale total.
Am talking to someone my age, 62, about some type of percentage agreement. I have all the equipment, except haying equipment always hired that done, and top of the line facilities to handle the cattle. All pastures are divided up into MIG.
Anyone have any thoughts on what they would agree on? We have only had pleminary talks, the business deal in Fl. has to work out first. I must have something to do, or else I'll just be an alcolhoic.
Plan to be back and forth from FL. to Mo., ain't giving up my house yet. gs

 

[Lazy M]

"Many farmers are introverts"

Man you said a mouthful right there. I've noticed the same thing.

I'm no introvert. My cows think I'm the most happening guy ever!

 

[ddd75]

Don't want to hijack your thread, but I am in the same boat.
I am planning to retire next fall. My wife and I plan on doing something stupid. Gonna' borrow a million dollars from SBA and buy into a landscaping business in Sarasota Fl.
Have around 100 cows, 35 yearling heifers, 4 bulls, all pasture and hay ground paid for. Am in the cycle of selling heifers every year and keeping yearlings back.
Selling the cattle is NOT an option, tax hit would be 50% of the sale total.
Am talking to someone my age, 62, about some type of percentage agreement. I have all the equipment, except haying equipment always hired that done, and top of the line facilities to handle the cattle. All pastures are divided up into MIG.
Anyone have any thoughts on what they would agree on? We have only had pleminary talks, the business deal in Fl. has to work out first. I must have something to do, or else I'll just be an alcolhoic.
Plan to be back and forth from FL. to Mo., ain't giving up my house yet. gs

raising cattle in missouri to landscaping in florida? quite a change! hope it works out.

 

[tdc_cattle]

Well he isn't going to do anything right now but we had a productive conversation

 

[RanchMan90]

Well he isn't going to do anything right now but we had a productive conversation

Cash is king on these sort of deals. That'll buy you some time for if and when he gets ready.

 

[plumber_greg]

tdc, I'm back. Yes, quite a change.
My plumbing business I have requires a lot of landscaping work. Not, I guess, a novice at the business.
My son owns a commercial landscaping business there, they will be combined. Managers are already in place to run the business, I will mostly be in sales.
But, what do I do with the cows and land?
Cash is not king. Small business loan, 1.5 million loan will require less than 50k to get it going.
Former business owner makes paperwork look like he is carrying the rest of the down payment. But he never gets it, just values the business higher to get his money from SBA.
Money I put in it is for lawyers, and accountants and such to make sure the business is solid.
Grandkids are there, that helps. Also have some here, that makes it hurt.
How to get it done, how to get it done?????????? gs