Author Topic: Buying property with a house to rent, AND with land for my horse(s)?  (Read 489 times)

mghjuno

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Hi, I'm asking primarily about the landlord/legal aspects of a purchase like this.

Background: I've owned and trained horses since I was a kid & I absolutely know what I'm doing regarding the horse aspect and managing $ spent on my hobby.  I currently own 1 horse which I board at a nearby farm for $225/month which is very reasonable for my area to the point of nearly being unheard of.  If I needed to move her for some reason the price would almost certainly go up.  My parents owned a farm for a while when I was a teenager, which had a small guest house on it that they rented to a friend.  It was very much an off the books, handshake deal kind of thing.  There was no issue with my horses living there while the family friend lived in the guest house.

We live in a very nice house which we do not want to sell, which is why I'm not looking for a new home with land to live in.

My primary goals in owning a rental property with room for my horse would be to protect myself from future board increases as farmland in my area is purchased by developers, and the common goal of most horse owners: to care for my horse my way without drama or compromise.  I am somewhat glossing over the fact that you cannot have 1 horse on a farm.  They are herd animals and they are extremely stressed living alone, so there absolutely must be at least 2.  If the 2nd one belongs to me my costs will increase somewhat in feed and vet care but would remain around my current monthly cost of board alone for 1.  I would certainly be open to renting the house to a horse owner with a separate charge for "board" of their horse similar I guess to pet rent.  I often see homes advertised for rent with room for horses for a separate charge, but I have no idea if the pasture and barn would be shared with the owner's horses or other livestock.

My financial goals on a deal such as this would be similar to any investment real estate deal, although I would consider the numbers to be a little squishier simply due to the fact that I have personal interest and goals involved in this investment which are not entirely financial.  Bottom line, I'd be very happy as long as the property was a wash financially and it didn't cost me money.

My primary question is this: are there issues with renting out ONLY the house on a property with the understanding that for example, the driveway will be shared by me, my horse trailer will be parked on the property, renter does not have access to the pastures and barn (assuming they do not pay for their horse to live there) and I will be on the property daily to care for and ride my horse(s)?  It is very common in my area for a farm to have a small rental house on it, but usually these are large commercial horse farms and it's pretty obvious that as a renter, if you choose to live there dozens of people will be there every day near your home making noises and possibly parking near your house.  However in my case it would most likely be a 5 acre or so property with a small house and as a renter, the landlord would be in your backyard so to speak on a daily basis.

Any thoughts or personal experience with situations similar to this one?     

waltworks

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Re: Buying property with a house to rent, AND with land for my horse(s)?
« Reply #1 on: November 05, 2017, 09:27:55 AM »
That's easy to do, you can just put those conditions into the lease. I mean, you may run into issues of all kinds - but that's normal for being a landlord. There's nothing special about having a portion of the property for your use, people do that all the time when renting houses/land.

However, I would say you should assess just how much the horse boarding could conceivably go up - because buying a property that doesn't cash flow is going to be a huge net drain (opportunity cost, if nothing else) on your finances. Buying a whole house so you can keep your horse there is almost certainly going to cost you more than having the boarding costs go up, even if they go up a LOT. If horse properties in your area are amazing deals that would cash flow from day 1, different story. But it doesn't sound like that's the case.

Remember that a house that is net zero cashflow (remember to include maintenance, vacancy, capex, etc) is still costing you money because you pay quite a bit in closing costs at the front end, and your downpayment (for non owner occupied, that will be 25% or more) is tied up making no money unless you get lucky with appreciation.

-W