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NWMO | Easy, use this formula
County T yield x (agreed upon date) x .33 = rent
Example
County t yield = 200 bu/ac
Agreed upon date = March 1st
Example price $4.50/bu
Constant factor = 33%
200 x $4.50 x 33% = $297/ac rent
Landowner pays for land improvements and taxes, rent or takes care of the rest
If price goes to $7/bu
200 x $7 x 33% = $462/ac
If price goes to $3/bu
200 x $3 x 33% = $198/ac
See how the price of rent follows the price of grain and works out? It makes sure everyone is taken care of. The equation is what it is. Unfeeling, uncaring, unbiased. Maybe one year it works out for the land owner, the next it might work better for the tenant
If a landowner doesn’t like that equation, then they’re probably not going to be fun to work with in general and you’re better off passing
Just because a land investor pays $15000/ac for land and desires a 5% return on their money does not mean that rent should be $750/ac. If an investor doesn’t have enough sense to understand that then farmland isn’t the investment for them | |
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Should landlords be adjusting their rent for inflation.
