The Advantages and Disadvantages of Selling or Renting Out Farmland

August 22, 2022

What does the future hold for your farm and your financial interests? When you want to take a step back from all of the responsibilities and effort that go into running and working on a full-time enterprise like a successful farm, you have a few options to consider, depending on your experience and what your immediate as well as long-term plans might be.

Whether you have recently inherited a family farm or are in the process of getting ready to retire from your agricultural business, you’ll be faced with options to rent your farm out or to sell it. Here are some advantages and disadvantages of renting and selling farmland today:

Renting Farmland

For individuals who want to continue living in a rural location instead of moving to a big city, there is an advantage to renting some of your farmland, and staying in your country abode, as noted by a recent report from Western Farm Press.

The added income from renting without the headache of having to work the farm yourself, can be quite appealing.

A drawback to renting is that you have to put in some effort (and maybe have some measure of good luck, too) to identify a good farmer whom you can trust to take good care of your land while he or she is working it.

Selling Your Farmland

There are many situations in which selling your farm may make sense. Maybe you'd like to cash out on the land and continue to rent it, if you'd still like to farm. Or for those who want to leave rural life behind and move into a city, it may make sense to sell farmland and be free of all entanglements with the rural property. For those who have inherited a family farm that you have no desire to live on or work at, it’s is wise to look for a suitable business arrangement to handle this asset as you best see fit.

If you are making a big change in your life, such as you are about to retire or are at least getting closer to retirement, you might find it most beneficial to sell your farmland outright to get your money back now, rather than biding your time and having to keep watch over your land.  An owner-finance type of arrangement can be a great retirement opportunity as you can receive consistent income from your property. We specialize in those types of arrangements, in fact.

A drawback to selling your farmland now instead of renting it out is that it’s safe to assume it will continue to appreciate in value, so you would be losing money by an early sale. The Indiana Prairie Farmer points out that “Recent surveys indicate that farmland values have increased from 12% to 17% in the last year,” per data from a Purdue University survey. This is something to consider.

Advice From Trusted Professionals to Inform Your Decision About Selling or Renting Farmland

At FarmFundr, we know how personal farmland ownership can be. We are interested in talking with you to learn about property and offer you options that best suit your goals. Tell us more about your property, here.