Scythe & Spade Blog

Benefits of Leasing Property (Part 2 of 2)

By: Patina Thompson

Leasing lands in today’s volatile real estate market can be beneficial to a well versed tenant. Tenants can enjoy the continued productivity of farming while avoiding the ups and downs associated with land values. Quality wins out in this instance, because even with fluctuating commodity prices, good land can still grow good crops.
The tenant still has to be educated and cautious when entering into a lease contract. Both parties should identify their responsibilities clearly. Rented land could be made more productive with improvements which often increase the value of the land, can improve irrigation system efficiency and allow the tenant to increase productivity. Such improvements are typically the financial responsibility of the landowner but sometimes a tenant may be reimbursed for improvements with prior written approval of the Landlord. One drawback could come up if you have a year-to-year lease. The improvement may add a more permanent value to the property that the tenant cannot reap during the term of the lease. Such improvements, when practical, cannot be removed by the outgoing tenant.
Our team at Scythe & Spade is dedicated to protecting both the landowner and tenant with a well developed lease. The lease should outline which party is responsible financially in different situations and who is going to physically maintain existing and future structures. A “standard” of how the property should appear should also be addressed in the lease. The tenant should also consider who is responsible for paying water assessment fees, property taxes or other applicable fees according to each situation or location. It’s important to keep detailed records of such transactions. Maintenance of systems and structures on the property are also responsibilities of the tenant, of which time and money also play a factor. 
In any case, a Landlord and Tenant relationship should be open, honest and economic for all those involved. Give us at Scythe & Spade a call to see how we can help you and build a solid lease that can benefit you for years to come. After all, a good lease on good land can grow good crops.

Benefits of Leasing Property (Part 1 of 2)

By: Patina Thompson

Buying and leasing land is an investment many may not consider, but it has many benefits. Leased lands can benefit from responsible grazing and farming practices, as well as benefiting the landowner with a lower tax rate and some added income. Absentee landowners can get rewarded even further with a competent farm management company overseeing this sometimes complicated task.
According to the Assessor, Agricultural land in Arizona is land which is one or more of the following; Cropland of at least 20 gross acres, Ten or more gross acres of permanent crop, Grazing land with a minimum capacity of 40 animal units, or land devoted to high density use in the production of commodities including grapes and cotton for marketing. Lands classified as agricultural are taxed at a lower rate. This increases the profit margin to the landowner while simultaneously giving them a tax break. 
Farming of agricultural lands can greatly improve the marketability and, ultimately, the value of the land as a whole. As with any investment, advantages and disadvantages exist. Advantages are easy to notice if you can find a good tenant to steward the land. As a disadvantage, landowners are open to tenants doing damage just as with a residential lease and good tenants can be hard to find. During this wait, landowners incur the expenses associated with the land.
A grazing lease is another option with somewhat of a smaller risk for damage because you’re typically dealing with minimal equipment and minimal expenses paired with livestock.
Feasibility studies and budgets are helpful to forecast what financial gains are expected. Leases are typically based on an acre-unit or animal-unit basis and are paid annually. Feasibility studies can evaluate what returns you can expect within 3-5 year time frames. Scythe & Spade is familiar with rental rates for all areas of Arizona and can perform a financial analysis of your returns tailored to your long or short term goals.
If you have the luxury of owning any sized piece of dirt that’s not being utilized, you should think about the option of leasing. Scythe & Spade can provide an experienced farm and lease management team to oversee operations and locate tenants. Why not think about leasing and enjoy the many benefits it can provide? Contact us for a listing of available lands to lease or to inquire about leasing your land out from our diverse database of tenants, with a knowledgeable team behind you, it’s a win-win situation!