Last year Fred, a real estate developer, purchased 25 acres of farmland on the outskirts of town for $100,000. He expects that the land's value will appreciate rapidly as the town expands in that direction. Since the property was recently reappraised at $115,000, some of the appreciation has already taken place. To enhance his return from the investment, Fred decides that he will begin leasing the land to a local farmer. He has determined that a fair rent would be at least $1,500 but no more than $3,500 per year. Fred also has an interest in a passive activity that generates an annual loss of $2,800. How do the passive loss rules affect Fred's decision on how much rent to charge for the farmland?