Cash Rent Auction Brings 78% More than the Average County Price!
Average Cash Rent Prices in Iowa
We just conducted a cash rent auction in Pocahontas County, Iowa and I want to share the results with you. According to the 2021 Cash rental rate survey from Iowa State University, Pocahontas County average is $240/acre. Today, our auction brought $427.50/acre! That is $187.5 above the average or 78% higher! For this 69.63 acre farm that’s a $13,055.63 difference in total rent income for the landowner! The Corn Suitability Rating (CSR2) for this farm is 83.9 which totaled to be $5.10/CSR2 when the average according to the 2021 survey is only $2.93/CSR2.
Cash Rental Rates for Iowa 2021 Survey
This brings me to the fact that not all survey’s and studies are accurate. Many landowners, and farmers use these surveys to get an idea of what farmland prices in Iowa are worth, cash rent prices in Iowa, and cost of farm expenses. However, our auction results prove that farmland can bring more than the averages these surveys show when presented to an open market. Resulting in higher prices for landowners or sellers! Our client (the landlord) was amazed by the results we were able to get her with her cash rent auction. She couldn’t believe it brought that much more than the average cash rent price.
Let’s dig in deeper to the survey. I want to make it clear to you that results from this survey are taken from farmers, landowners, agricultural lenders, and professional farm managers. I’d say 99% of cash rent deals are done privately and are based off of old farm leases and surveys like this one. The 1% that do decide to have an auction and allow tenants to compete see different results than the private deals. In most cases, cash rent auctions see higher than average prices! Overall, Iowa’s average cash rent price per tillable acres is $232
How Does Your Farm Lease Compare to the Average?
As a landowner or tenant how does that compare to your lease agreement? If you’re a landowner and thinking you’re charging to low of a price, reach out to me. I can help you determine your cash rent price and connect you with a tenant who is willing to pay the maximum dollar through our cash rent auctions. Don’t let your emotions interfere with business. Coming from a family farm background, I understand the relationships landowners have with their farm tenants and family.
However, if a tenant is playing on your emotions and dragging down the cash rent price and setting the terms of the lease, I would recognize this a red flag. If you are in this situation it’s best to say, I’d like to keep the farm lease as a business deal and let’s not play on each other’s emotions please.
How is Cash Rent Calculated in Iowa?
It can be tricky when your farm tenant is family or a close friend who has farmed the ground for years. With the increase in farmland prices in Iowa, and commodity prices, it might be a good time to re-evaluate what you are charging for rent. Farmers understand that prices are rising and if they are in it for a business transaction, they’ll understand why your lease next year will have higher prices.
Cash rent is offer calculated by taking the CSR2 average of your farm and multiplying it by the rental rate per CSR2 point. Again, this is just an average number based from a survey. Your farm could bring more than the average but the only way to truly find what it’s worth is to offer it to the public by auction which creates competition between bidders to achieve market price.
How to Lease Farmland
Have you recently inherited or bought some farmland in Iowa and need to find a tenant? Contact me today and I’ll help you get connected with a farmer in the area to lease your farmland. With a cash rent auction, you will set the terms of the lease, for example the contract length. We do all of your marketing and advertising for free and can help you achieve the highest price for your farmland lease! [email protected] or 515-954-8063
Jason Smith, Broker | Auctioneer
Founder, Farmland Auctioneer & Land Broker
Jason is a veteran farm real estate auctioneer with many awards and accolades. He is among the top Farmland Auctioneers in the Midwest. Licensed in Iowa, Minnesota, Nebraska and South Dakota.
Email: [email protected] | Phone: 515-537-6633
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