4 ways to make a landlord happy
1. Make landlords your top customer
Sure, ethanol plants and livestock farmers are your customers. After all, that's where your grains often end up. Still, you can't sell to these end users without a land base.
That's why Brian Watkins, a Kenton, Ohio, farmer, considers landlords his top customers.
“A huge part of what I do is to understand them and their needs,” he says.
Landlords differ in needs. Some rarely touch base with you, notes Watkins. Others will call you every week. Regardless of their interest, it's important to meet their needs, he notes.
If you do this, satisfied landlords can be your best salespeople.
“In any business, you want satisfied customers, and, ultimately, you want your customers to be your advocates,” he says.
2. Set yourself apart
Back in 1986, meeting three requirements – on top of paying cash rent or having a crop-share arrangement – often were sufficient to securing land, says Steve Wright, area vice president at Farmers National Company. Those three requirements were:
● Mowing roadsides.
● Keeping soybean fields weed-free.
● Working hard.
Those factors still apply in 2011. There's more, though. Working smart is now required vs. just working hard. Offering a competitive bid is also a must. Many times, though, offering something extra is required to cinch your bid.
Many times, this is in addition to cash. For example, having a tile plow to improve drainage for landlords can be a selling point.
3. Know that landlord expectations have changed
Wright notes there's been a shift in rental agreements he's seen over the past 25 years. In 1986, 25% of farms his firm worked with had cash-rental agreements; the remainder had share-rental arrangements. Today, that amount has nearly flipped, with 65% of farms Wright works with being cash-rented. The remainder is under share or custom-farming agreements.
“Expectations go up with generational change,” says Wright. “In 1986, landowners were willing to share in the risk. Today's landowners want a larger and more secure return. The new generation is treating it like the rest of their (investment) portfolio. They want a 3.5% to 5% income return, and they want upside potential without downside risk. There is enough demand that landowners can dictate the terms.”
4. Consider the long-term with land bids
Howard Halderman, president of Halderman Companies in Wabash, Indiana, cites a late 1990s case where competing bids for a farm came in at two levels: $140 and $90 per acre.
The economics that year were more in line with the $90 bid, says Halderman. The higher bidders noted they likely couldn't make money at that level. Long-term, though, it enabled them to get their foot in the door, establish a relationship, and secure land for future years when they could make money at the higher level.
“Land doesn't change [hands] a lot,” Halderman says. “A lot of farmers I deal with have been with us for 25 years. We don't have lots of turnover.”