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Frequent Contributor

farm equip. rental

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Can anyone help me in what to charge to rent my equip. to a beginning farmer. He has 50 acres of corn/soybean ground about 5 miles from me. He doesn't have any equip. yet. I have 20 year old 6 row equip in good shape. He would pick up the equip at my place and return it.  He is a young guy, good mechanic, that I have known since he was born. Any help would be appreciated. 

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Re: farm equip. rental

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Can you use a little help from him from time to time?

 

If so, maybe charge him custom rate from extension rate sheet for all ops minus (wage hours work for you less wage hours in his operations).

 

A little complicated but not terrible if you decide to require records and in my experience you're doing somebody a favor by making it an arms length arrangement from the start. With a little sweat equity it could still be a favorable arrangement for him.

 

Some such kind of arrangement will encourage him to look at it as a business from the start.

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Advisor

Re: farm equip. rental

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Find out what locals charge for similar equipment, make adjustments to that to match your need for financial returns, compared against how much you want to help this young farmer succeed.  If planting rates are $14/acre and you could make do with half that or somewhere inbetween, go for it.  If your relationship with this guy is solid, he will bend over backwards to thank you in many ways.  Perhaps an agreement including help with making repairs in return for a lower price would be another way of working it out.

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Frequent Contributor

Re: farm equip. rental

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Its fifty acres,not  whole lot.Telll him if he puts fuel in the tractor he can use it.  If he gets a crop he cn give you a few bucks this fall.

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Advisor

Re: farm equip. rental

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My reason for charging a small fee is purely strategic in establishing two important points; First, the young farmer recognizes the importance of fulfilling obligations, that this is a business arrangement and should be treated like one, even if they are small and insignificant to the elder farmer, and two, he can say with pride he contributed a worthy effort to his own success.  Whether the older farmer wishes to give it back in some other way is entirely up to him. 

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Veteran Advisor

Re: farm equip. rental

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When I first started out, I rented a few things from a guy.

He paid me $X per hour to help him out, and I paid him $Y per acre machine rent, and had to have insurance, in case of accident, or damage.

I didn't realize it at the time, but now I see that he was actually coming up with stuff for me to do, so my rent would only be $1 or $2 an acre, overall.  If he really wanted to, he could have done most of it, but on the other hand, he & his wife would go to a family function, and I'd check his cattle, fix fence, repair machinery, etc, so it's not like I freeloaded, but I do think he had me do more than he absolutely had to, to help cheapen my rent.

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Re: farm equip. rental

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Can you use a little help from him from time to time?

 

If so, maybe charge him custom rate from extension rate sheet for all ops minus (wage hours work for you less wage hours in his operations).

 

A little complicated but not terrible if you decide to require records and in my experience you're doing somebody a favor by making it an arms length arrangement from the start. With a little sweat equity it could still be a favorable arrangement for him.

 

Some such kind of arrangement will encourage him to look at it as a business from the start.

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another suggestion

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Having helped launch a young feller in that way- who didn't have the proverbial pot to pee in when he started- I'd also suggest this.

 

There isn't a lot you can do in regards to this but it is very valuable to have a good 4 year yield history- a good APH along with revenue crop insurance can help you borrow money even when you don't have any.

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Honored Advisor

Re: farm equip. rental

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One fine point to check out:  If you stilll insure this equipment against its loss or damage, you may need to see if your policy allows you to rent it out.  Often, items that are insured under your own use are not covered when rented...maybe when loaned, but not always that, either.  It bears a phone call to your agent. 

 

Also, from a liability standpoint, if it got involved in an accident in transit, that might come back to bite you in the butt.  If this guy lacks equipment of his own, he may not have any sort of policy at all, even for liability.  Insurance is one place where a lot of shoestring operations are severely lacking. 

 

Risk management is top priority, in protecting your core business.  As much as we like to help others, we need to cover our family's interests first. 

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Honored Advisor

Re: farm equip. rental

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I see you have mentioned the insurance issue as well.  This one also harks back to my :Borrowers" thread on the women's page last week.  The  vast majority concluded there that lending things out ( or even renting at a nominal fee) is usually not a good idea. 

 

Since it is such a few acres, it may be a far better to do the work under your own operation, as custom...that would leave a lot of the gray areas in tighter focus. 

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Advisor

Re: farm equip. rental

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I do that for an individual as well.  It works out better.  He pays, but also gets to work some of it off with projects I know he can do okay.

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