Total cost – The sum of all property and operating costs can be used to estimate rental costs for the whole year or part of the year. If a structure or appliance is leased for less than an entire year and can be leased to another person for the remainder of the year, annual operating estimates should be reduced proportionately. If, realistically, the facility can only be rented once a year, as in the case of a ton of grain, the rent should reflect the cost of the property for an entire year. Alternatively, the sum can be divided by a typical annual production step to estimate a load per unit of production or use, for example. B the cost per processed pork. Owners are primarily interested in recovering their costs for a specific farm building or facility, including operating costs that are not paid directly by the operator. In addition, homeowners may consider proper maintenance and maintenance of their property to be important. The rental price should cover at least all the additional costs associated with the use of the facility. These variable costs include use-related repair and maintenance costs, procurement costs and additional wear and tear. Farm buildings and livestock farms often survive the needs of their owners, but remain usable. Other operators want services for certain types of farm buildings, but are unable to invest in new facilities.
Both parties can benefit from the development of a lease agreement. The owner receives a return of resources that are otherwise idle or unsaturated. The operator can use these resources without a large fixed capital investment. However, they must agree on the amount of rent and on the use and maintenance of the dwelling. Insurance and taxes – The annual cost of property and insurance taxes can be estimated to be between 1 and 2% of the current or average value for most types of agricultural assets. If actual insurance and taxes are known, this information can be used instead of estimates. In some countries, agricultural property is not subject to property tax. Check the accuracy of your own tax and insurance coverage rates. Other – The lease may contain a clause that would terminate the lease in the event of a natural disaster.
For example, if the land was flooded and the tenant could not use the property, it would be unfair to insist that the tenant continue to pay the rent in cash, unless the initial rent took into account the risk of flooding.