Mindful Matters for the Maturing Farmstead ... - Nebraska...Licensed Real Estate Broker in...
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Michael J. Krause Accredited Farm Manager Licensed Real Estate Broker in Nebraska/Iowa [email protected] 1 • Professional Farm Management • Farmland Sales & Acquisitions • Farmland Auctions • Agricultural Appraisals Mindful Matters for the Maturing Farmstead Women Managing Ag Land Conference December 11, 2019 Caring for You and Your Farm
Transcript of Mindful Matters for the Maturing Farmstead ... - Nebraska...Licensed Real Estate Broker in...
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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• Professional Farm Management
• Farmland Sales & Acquisitions
• Farmland Auctions
• Agricultural Appraisals
Mindful Matters for the Maturing
Farmstead
Women Managing Ag Land ConferenceDecember 11, 2019
Caring for You and Your Farm
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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YOU HAVE AN OLD HOUSE
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Asset Stewardship
YOU HAVE AN OLD HOUSE
What do you do?
• Problem
• Windfall
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Asset Stewardship• Preserve what you have
• Improve what you have
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Asset Stewardship
How did it Originate?
• Original homestead
• Newer modern family home
• Purchased farmland with a house
• Employee living unit
• Family member returning
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Sentimental vs. Practical
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RETAIN
SELL
DEMOLISH
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Retain, Sell or Demolish• Evaluate whether to retain
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Retain, Sell or Demolish• Evaluate whether to sell
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Retain, Sell or Demolish• Evaluate whether to demolish
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Retain:
House and Building Site Condition
• Quality House – minimal updating
• Major Repair to make habitable
• Functionally obsolete floor plan
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Retain: Top quality house little need for repair
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Retain: Major repair needed to make habitable
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Retain: Functionally obsolete floorplan
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Retain: Five bedroom/one tub/one toilet
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
9
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Retain:
Setting the Rent Calculation
• Home’s Value
• Comparable Rentals
• Factors Impacting Rental Values
• Annual Rental Adjustment
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Retain:
Using Your Home’s Value
• Determine Value
• 0.8% to 1.1% Factor
• $100,000 x 1.1% = $1,100 monthly rent
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Retain:
Comparable Rentals
• Number of bedrooms/bathrooms
• Year Built
• Square Footage/Acreage Size
• Out Buildings
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Retain: Lease buildings for storage or livestock
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Retain:Factors Impacting Rental Values
• Economic Trends
• Bad economy – rental demand increases
• Decreased demand – reduces rental rate
• Location
• Hard surface road
• Proximity to town
• Amenities
• Attached garage
• Functional obsolescence
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Retain: Attached Garage
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
12
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Retain: Machine Shed
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Retain:
Annual Rental Adjustments
• Maintenance/Repair Cost*
• Real Estate Taxes
• Cost of Vacancy Periods
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Pictures of House Prior and After Paint
Before After
Retain:
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Pictures of House Prior and After Vinyl Siding, Windows and Doors Installed
Before After
Retain:
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Maintain acreage for appearance and/or functionality.
Crib used for machinery storage by house tenant.
Before After
Retain:
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Mechanics of a Lease
• Binding Contract
• In Writing
• Except residential lease agreements 1-year
or less – (not recommended)
• Provisions to Protect Owner
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Mechanics of a Lease
5 Key Elements of a Valid Contract:
• A legal purpose
• Mutual acceptance
• Consideration
• Voluntary acceptance
• Competent parties
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Mechanics of a Lease
Lease Provisions:
• Term
• Rental
• Rental Deposit
• Use-Absences-Abandonment
• Utilities
• Maintenance
• Access
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
16
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Mechanics of a Lease
Lease Provisions:
• Assignment and Subletting
• Fixtures and Improvements
• Nonpayment of Rent
• Notice
• Liability and PP Insurance
• Other Provisions
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Mechanics of a Lease: Example
6. Maintenance: b):
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Mechanics of a Lease6. Maintenance: b):
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Vetting House Tenants
Application:
• Background Check
• Credit Check
• Drivers License
https://www.mysmartmove.com
By TransUnion
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Safty and Liability Concerns:
Is it worth it???
• Smoke Detector
• Carbon Monoxide Alarm
• Lead Paint
• Monitor Illegal Activity
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Safty and Liability Concerns:Administer Building and Liability Insurance
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Retain:
Other Opportunities
• Hunting Lodge
• Bed and Breakfast
• Family Retreat
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Sell Off Farmstead:
Evaluate Property Usefulness
• Land Purchase
• Location
• Center Pivot Irrigation
• Farmability
• Neighbor Nuisance
• Soil Quality
• Livestock Handling
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
20
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Sell Off Farmstead: Consider Sale
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Sell Off Farmstead: Pivot Obstruction
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
21
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Sell Off Farmstead: Neighbor Nuisance
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Sell Off Farmstead: Raze Farmstead
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Sell Off Farmstead:
Commence the Sale
• Real Estate Sales Agreement
• Survey
• Easements
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Sell Off Farmstead: Easements
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
23
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Demolish
• Inspect
• Abatement
• Select Contractor
• Burn/Bury/Haul Away
• Land Reclamation Costs
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Demolish: Inspection for Asbestos
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
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Demolish: After Abatement
Transite Siding/9” Floor Tiles/Window Glazing/Furnace Duct Wrap
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Demolish: Permanent Site Map
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
25
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Demolish: Deconstruction Cost
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Demolish: Farmstead Clean-up
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
26
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Demolish: Rural Fire Department
Practice Burn for Training
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Demolish: Rural Fire Department
Practice Burn for Training
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
27
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Pole Shed Roof Damage
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Barn and Silos Before Removal
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
28
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View After Barn and Silos Removed
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Cattle Shed Removal
Before After
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
29
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Three Small Bins Along Lane Removed
Before After
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Hog Shed and Silo Removal
Before After
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
30
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Hog Shed and Concrete Converted to Crop Acres
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Building Summary - From This . . .
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
31
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To This . . .
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IS YOUR INSURANCE
ADEQUATE?
Tornado destroyed this barn.
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
32
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Insurance proceeds totaling $16,500 were invested in drainage
and grain storage. Site was leveled and seeded to grass due to
the highly erodible nature of the soil.
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SUMMARY
Knowing the potential of your
farmstead combined with careful
consideration of your long-term goals
will make YOUR decisions much
easier with regard to “Retain, Sell or
Demolish”.
Michael J. Krause
Accredited Farm Manager
Licensed Real Estate Broker in Nebraska/Iowa
33
www.hfmgt.com
Caring for You and Your Farm
Questions?
