The subject property is an 880 gross acre irrigated field crop farm. The property has 825...

  

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The subject property is an 880 gross acre irrigated field crop farm. The property has 825 net farmable (cropland) acres, a 4-acre farmstead that contains all buildings and 51 acres in non-productive land (farm roads, ditches and drains). The insurable value of the subject's buildings is $270,000. Crops, Production and Landlord Income Following are typical crops grown in the area, normal crop rotation, typical crop yields, forecasted prices, and typical sharecrop landlord rents. Crop Production Typical Normal Crop Crops Rotation Typical Yield/Acre Forecasted Landlord $/Ton Share Alfalfa 40% 7 tons $290 20% Tomatoes 30% 46 tons $125 13% Wheat 15% 70 cwt. $240 27% Com 15% 6 tons $260 18% 1 ton = 2,000 lbs. 1 cwt. = 100 lbs. Cash rent being paid for similar property in the area is stable at $312 per net farmable acre including consideration for buildings on the property. Income to owner-operator, sharecrop landlord and cash rent landlord includes consideration for use of buildings on the property. To put it another way, the rental of the farmland allows the tenant to use the buildings at no additional cost. Expenses Crop Production Costs (S/Acre) Tillage and cultural costs * Crop Insurance Harvest costs Post-harvest costs Interest on operating capital Total Alfalfa Tomatoes Wheat Corn $795 $3,489 $653 $1,291 17 65 16 12 347 780 45 89 157 103 52 109 19 81 17 32 * includes all costs for growing crops (including irrigation water costs) 6. (5 Points) What is sharecrop landlord annual net income? $ 7. (5 Points) What is cash rent landlord annual gross income? $ 8. (5 Points) What are cash rent landlord annual expenses? $ 9. (5 Points) What is cash rent landlord annual net income? Expenses, continued Real Estate and Other Expenses $44/gross acre $7/net farmable acre $0.85/$100 insurable value $5,200 $2,500 $4,750 $58,000 $4,000/month 3% of Gross Income Real estate taxes Irrigation district land assessment Buildings insurance Buildings repairs & maintenance Farm personal property taxes Income tax depreciation (buildings) Owner-operator labor and management Miscellaneous owner-operator overhead Imputed landlord management fee Owner-Operator Expenses Owner-operator pays real estate taxes, irrigation district land assessment, buildings insurance, buildings repairs & maintenance, farm personal property taxes, labor and management, and owner-operator overhead. Landlord Expenses Both sharecrop and cash rent landlords pay real estate taxes, irrigation district land assessment, buildings insurance, buildings repairs & maintenance and imputed landlord management fees. Market Data The following sales occurred recently in the subject property area. All sale properties are similar to the subject property regarding crops grown, yields, rental potential and operating costs. Sale No. Price 1 2 3 $10,500,000 $11,235,000 $14,675,000 Buildings Insurable Value $260,000 $210,000 $270,000 Owner-Operator Net Income $368,550 $390,978 $516,560 Sharecrop Rent Net Income $305,550 $328,062 $422,640 Cash Rent Net Income $185,850 $201,107 $268,553 ARE 145-Homework #3 Page 3 The subject property is an 880 gross acre irrigated field crop farm. The property has 825 net farmable (cropland) acres, a 4-acre farmstead that contains all buildings and 51 acres in non-productive land (farm roads, ditches and drains). The insurable value of the subject's buildings is $270,000. Crops, Production and Landlord Income Following are typical crops grown in the area, normal crop rotation, typical crop yields, forecasted prices, and typical sharecrop landlord rents. Crop Production Typical Normal Crop Crops Rotation Typical Yield/Acre Forecasted Landlord $/Ton Share Alfalfa 40% 7 tons $290 20% Tomatoes 30% 46 tons $125 13% Wheat 15% 70 cwt. $240 27% Com 15% 6 tons $260 18% 1 ton = 2,000 lbs. 1 cwt. = 100 lbs. Cash rent being paid for similar property in the area is stable at $312 per net farmable acre including consideration for buildings on the property. Income to owner-operator, sharecrop landlord and cash rent landlord includes consideration for use of buildings on the property. To put it another way, the rental of the farmland allows the tenant to use the buildings at no additional cost. Expenses Crop Production Costs (S/Acre) Tillage and cultural costs * Crop Insurance Harvest costs Post-harvest costs Interest on operating capital Total Alfalfa Tomatoes Wheat Corn $795 $3,489 $653 $1,291 17 65 16 12 347 780 45 89 157 103 52 109 19 81 17 32 * includes all costs for growing crops (including irrigation water costs) 6. (5 Points) What is sharecrop landlord annual net income? $ 7. (5 Points) What is cash rent landlord annual gross income? $ 8. (5 Points) What are cash rent landlord annual expenses? $ 9. (5 Points) What is cash rent landlord annual net income? Expenses, continued Real Estate and Other Expenses $44/gross acre $7/net farmable acre $0.85/$100 insurable value $5,200 $2,500 $4,750 $58,000 $4,000/month 3% of Gross Income Real estate taxes Irrigation district land assessment Buildings insurance Buildings repairs & maintenance Farm personal property taxes Income tax depreciation (buildings) Owner-operator labor and management Miscellaneous owner-operator overhead Imputed landlord management fee Owner-Operator Expenses Owner-operator pays real estate taxes, irrigation district land assessment, buildings insurance, buildings repairs & maintenance, farm personal property taxes, labor and management, and owner-operator overhead. Landlord Expenses Both sharecrop and cash rent landlords pay real estate taxes, irrigation district land assessment, buildings insurance, buildings repairs & maintenance and imputed landlord management fees. Market Data The following sales occurred recently in the subject property area. All sale properties are similar to the subject property regarding crops grown, yields, rental potential and operating costs. Sale No. Price 1 2 3 $10,500,000 $11,235,000 $14,675,000 Buildings Insurable Value $260,000 $210,000 $270,000 Owner-Operator Net Income $368,550 $390,978 $516,560 Sharecrop Rent Net Income $305,550 $328,062 $422,640 Cash Rent Net Income $185,850 $201,107 $268,553 ARE 145-Homework #3 Page 3