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Renting Out Land - How Much Can You Be Making

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Published on Tuesday, February 23, 2016 by Land Century

You own land, and you want to hold onto it until it appreciates enough to be flipped for a profit. After all, you are making an investment, and your land isn’t making you money until you sell it. But you would be wrong if this was your attitude. Land is a great investment, but it needs to start making you money.

The truth is that if you’re not renting out your land in some fashion, you’re throwing money down the drain. Property taxes alone can cause you to lose out on your land’s true appreciation value because taxes can be low or high (thousands) depending on the size of the land. A smart investor will start making money immediately by renting out their land.

But how much can you really make off of renting your land? This is a difficult question to answer, and one that we’re going to try to answer from multiple different angles. Land is a versatile resource, and there are numerous ways you can rent your land out for a profit.

Farmland Rental

I’m going to be honest – you need a lot of land if you have hopes of renting it out. You’ll find that it is rather difficult to rent out a 10,000 square foot parcel, but I have seen some owners get creative and rent it out to adjacent home or land owners that utilize the land for a variety of reasons. The good thing is that these individuals will often pay enough for you to satisfy your required taxes.

But if you have a lot of land, you’ll be able to rent it out to farmers. These individuals may use the land for growing crops, or they may use the land for grazing purposes. You can lease out grazing rights to the land, but I do want to caution you to not offer a long lease term as this can cause you to have difficulty selling the land fast. If possible, only sign short leases for grazing and farming land if you plan to sell quickly.

Current statistics indicate that you’ll be able to demand a rental price that is equivalent to 4% of your land’s value. Now, farmland is selling for $7,000-$10,000 an acre in some areas (it varies state to state and is dependent on the quality of the soil), but for our calculations, we’ll choose $10,000 to make the math a little easier.

For example, let’s say that you have 10 acres of farmland with an approximate value of $100,000. You would be able to rent this land out for the following:

* $4000 a year
* $333 a month

All of this is cold hard cash because the farmer will be the one taking care of the land – they have to if they want it to be profitable for them. And this is more than enough to pay your property taxes, insurance and have a nice profit leftover. Don’t forget that you’ll be able to get some nice tax breaks, too, for actually using the farmland.

Hunting Lease / Rental

Hunting leases aren’t as profitable as renting farmland, but they’re not a bad idea for anyone that has prime hunting land. If your land can’t be used for farming, you need to find a way to make money from it, right? It’s getting harder to find people that will pay for hunting rights, but there are still opportunities available. And the amount that you can lease this land for will depend on your acreage. You need a ton of acreage to be able to lease land safely. Now, the numbers are going to vary greatly, and you’ll need to do your own research, but we have the following data available:

* A 74-acre lot is leasing for $18,500 in Indiana (prime hunting land).
* A 436-acre lot is leasing for $2,255 in South Dakota (less desirable land).

As you can see, hunting leases or rentals are only truly viable when you have massive amounts of land for lease. If you do, you can make a lot of great money off of this land for doing absolutely nothing on it. You’ll also be able to limit the amount of hunters that are allowed to hunt on the land.

Storage Rental

This is not an ideal situation in most cases, but it’s not uncommon for land owners to rent their land out for storage. What occurs is that the renter will use your land to store: cars, boats, RVs, ATVs, etc. If you’re not afraid to invest in the land, you can also set up small units that can be rented out individually. Units that are 10’ x 20’ can rent for $135 a month, but again, you’ll be competing with other professional storage companies.

You’ll also need to invest in security and lighting to entice people to store units. Making money off of your land is essential, but we don’t know exactly what type of land you’re trying to rent. If your land has a home on it, you can immediately start making money by renting out the home and land. Rent outside of major cities can be as low as $800 or as high as $10,000 depending on the home, or higher if you’re renting a mansion.

There is also the option of using the land for timber. While you may not be able to rent the land, you can essentially hire a manager for the timber and reap the profits. If you have a massive parcel, you may be able to rent the land to a timber company that will pay you a premium.

If this isn’t your cup of tea, it’s possible to sell firewood, wood chips and trees that haven’t fully matured to pay your bills. And you can just let the trees mature and sell them in the long-term for a hefty profit. But keep in mind that these trees will need to be tended to in an effort to ensure that they remain healthy.
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