When to Turn a Farmland Rental Agreement into a Farmland Purchase

FBN Network

Aug 06, 2024

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If you’re renting the land you farm on, the decision of whether to continue renting or purchase farm land is likely never too far from your mind. 

But how do you know when the time is right to make the change?

When to Turn a Farmland Rental Agreement into a Farmland Purchase

While every operation is unique, there are several factors to consider when deciding whether to rent or buy land for your operation:

  • Long-term Operational Decision: If you know you and future generations of your family will be farming the land it may make sense to purchase the property. 

  • Familiarity with the Land: After farming the same land for several years, you will develop an understanding of what that land is capable of producing. If the land fulfills your production expectations, it may be smart to purchase that property for future production. This understanding and familiarity with the land will also help you determine if the proposed sale price is fair. 

  • Operational Fit: Land closer to home is worth more than an outlier farm. If you have the option, purchasing land that fits within your existing operation geographically is often worth exploring.

  • Financial Position: Take stock of your current financial position. If your liquidity, equity, and cash flow positions are strong, a purchase may make sense. Keep in mind that purchasing farmland requires significant capital.

  • Control and Stability: Owning land eliminates the risk of land availability surprises that can arise with year-to-year land leases. Additionally, owning land allows for investment in property and soil improvements that will continue to benefit your operation in future seasons. If these dynamics appeal to you, exploring a purchase makes sense.

  • Opportunity: Not all people get the opportunity to buy the ground they rent. Being able to purchase the land is about timing and opportunity. It is important to have a good relationship with your landlord to get the opportunity to continue renting the ground until you get a chance to purchase it. 


Trying to decide whether to buy farmland or continue renting? Check out Renting vs. Buying Farmland: Which Is Right for You?, a free educational guide from FBN Finance.


Farmland Loans from FBN® Finance

If you've reviewed the considerations above and believe a land purchase is the right next step for your ag operation, the FBN Finance team is here to help you with the next steps in securing a land loan for your farm.

Plus, with FBN Finance’s instant approvals, your land loan application could potentially be approved within minutes for land loans up to $2.5 million* if you qualify.

With an average of 15+ years' experience each in ag finance, FBN Finance loan advisors are highly experienced and deeply familiar with the unique challenges of the ag industry. Our team is ready to talk you through all facets of the real estate loan process and make sure you get the solution that best fits your needs. Click here, complete the brief form below, or call us directly at 866-551-3950 to speak with a loan advisor today.


*Subject to final review and verification and underwriting.

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Terms and conditions apply. Land financing offered by FBN Finance, LLC, provided in connection with our underwriting partners, and is available only where FBN Finance, LLC is licensed. To qualify, a borrower must be a member of Farmer’s Business Network, Inc., and meet the underwriting requirements of FBN Finance, LLC and its lending partners. All credit is subject to approval and underwriting. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify. NMLS ID: 1631119.

FBN Network

Aug 06, 2024

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