Goals Identified
Client’s goals are identified, including:
- Target Purchase Date
- Anticipated Holding Period
- Location Preferences
- Target Allocation
- Risk Profile
- Ownership Structure
Property Identification & Fundamental Evaluation
Agrinuity performs a search for properties for sale, upcoming auctions and properties soon to be on the market which meet the client’s criteria and provides the basic information for review by the client.
Agrinuity identifies properties from a variety of sources (realtor listings, land auctions, attorney auctions, farmers and land owners) and recommends the properties that suit your needs and goals.
Because we do not split commissions with realtors, they are more likely to assist us in our searches than they would another realtor. Our knowledge of the industry gives us the ability to accurately estimate property income before an extensive evaluation is performed and better negotiate leases when the time comes.
Information provided at this stage includes:
- Acreages
- Aerial Photos
- Topographical Maps
- Soil Profile
- Target Purchase Price
- Estimated Annual Income and Expenses
Extensive Evaluation
Once the client has agreed to proceed with the extensive evaluation of the target property, Agrinuity will perform the following services in an effort to accurately value the property:
Comparable Local Sales and Rental Rates
Local transfer declarations are used to determine the values of recently sold properties similar to the target property. Any recently filed rental agreements are also used to verify estimated local rental rates.
Evaluation of Local Ag Economy
Will provide an evaluation of the end users, by proportion, of crops produced in the area. This will reveal potential over-reliance on individual crop consuming industries such as ethanol, biodiesel, dairy or livestock production.
Crop Production History
If available, the production history of the target property will be provided in the form of federal crop insurance forms or yield maps. If unavailable, crop yields will be estimated using county average yields, weather history and property soil types. Production estimates will help determine the market rental rates of the target property.
Pertinent Government Documents
Review of local government policies and property specific documents to reveal potentially negative government issues such as: restrictive farm plans, classification of wetlands on the property, etc.
Evaluation of Soil Types
Evaluation of the soil on the property reveals potential farm management issues, supports yield assumptions, and will help predict the production capacity of the target property under normal and adverse weather conditions.
Evaluation of Most Recent Soil Tests
If soil tests are not available or are insufficient, Agrinuity will perform soil tests that will provide a representative sample of the fertility of the farm which will be sent to an independent lab for testing. Testing may expose potential expensive fertility deficits or pH imbalances on the target property.
Historic Weather and Climate
Local weather history, combined with recent publicly available aerial photos reveal potential farm management issues and will support provided crop production history.
GPS Measurements of the Property
To verify the size of the property Agrinuity measures the boundaries using GPS. This is also used to validate and potentially modify tillable acres as recorded at the Farm Service Agency.
Estimated Rents
Using yield history or estimates, the competitiveness of local operators and/or actual rental offers for the property, Agrinuity will provide an estimate of what the lease income will be for the first term of the lease.
Possible Future Improvements and Expenditures
Once evaluation has been completed the client is presented with any potential drainage, conservation or irrigation management issues that need to be addressed, both immediately and in the future, and their estimated associated costs.
Real Estate Taxes and Other Estimated Expenses
Real estate taxes for the property and other annually occurring expenses (drainage taxes, equipment maintenance, etc) as well as any non-annual expenses (drainage improvements, irrigation equipment, etc) will be estimated.
Ongoing Management
Property owners can choose their levels of involvement and risk with different leasing arrangements; from cash leases to custom farming operations and anything in between. Investment farmland is normally leased to a local producer/tenant who uses the land to raise a cash crop such as corn, soybeans or wheat. Since many investors do not have experience managing farmland, Agrinuity offers farm management services once the property has been acquired. Under a simple leasing structure, Agrinuity’s management responsibilities would include:
- Advising on lease structure
- Finding and screening tenants
- Negotiating leases
- Ensuring tenant abides by the terms of the lease
- Regular property inspections
- Advising owner on potential maintenance issues
- Acting as the owner’s agent at the local Farm Service Agency office
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