What constitutes a working farm?

[stangtime]

I'm not a newbie - been appraising for 20+ years. For many years I did farm reports for government agencies as well.

I'm currently working on a 20 acre residential report. The property has a main residence, large (2,000+ s.f. barn), and an additional home. The additional home is currently rented out. The barn has 8 horses in it. There are no crops or livestock. The lender wants to know if it is a working farm or income producing property.

I think it is both. I have a feeling the horses are not all owned by the owners of the property, they are probably renting out space for them and then there is the rental house.

But for definition purposes, what is the consensus of a "working farm?"

Dan

 

[Stone]

I think it depends on location. In most of the country, 20 acres is hardly ever a "working farm". However, CAN and some others will no doubt say that in their areas it very well could be.

 

[Michigan CG]

20 acres and some horses is a hobby.

 

[Terrel L. Shields]

The USDA defines a farm as any property (of any size) that produces $1000 of agricultural goods or is capable of producing agricultural goods worth $1000.

Horses are worthless unless you are a high-end registered horse breeder. A friend has a horse named Fredrick the Great. His stud fee is in 5 figures. They make money with the horse but hardly qualify as a "farm" short the very loose definition above.

However, the local sale (Auction) barns have a problem with people actually tying horses to their stalls and leaving in the night. I imagine a $1000 would buy you north of 20 head if you wanted them. I appraised an estate that had 4 horses. All were given to the owner and basically he wanted them to getting the grass mowed in the pasture. It is easier to accumulate 8 horses than it is to catch Ebola in W. Africa.

A "working" farm would imply full-time work for one person or more. It would have some expectation of filing Schedule F taxes, filling out agricultural census and be listed with the local USDA office. I'd be shocked if any of that was the case in what you describe.

The rental produces income and I bet the horses eat any profit from that.

 

[stangtime]

Excellent as always, thank you Terrel. I appreciate the replies from Michigan and Stone as well.

Dan

 

[TxArmadillo]

In my area, a house on 20 acres with a half dozen horses, a dozen cows, a herd of goats, and 20 acres is pretty normal. Pretty common to also have 5 acres dedicated to growing hay for the horses and cattle.

Around here, we would consider this to be a SFR with a 20 acre yard and a good-sized 4H project. The horses are big-boy toys, they kill and butcher a cow or two each year, and the goats are there to keep the Ag exemption.

Definitely not a working farm or ranch in my area.

 

[Mike Garrett RAA]

Sure sounds like a hobby farm to me. Out here even 100 acres probably isn't a working farm.

 

[BRCJR]

20 acres and some horses is a hobby.

Agree. We call those and others similar to it "Gentlemen Farms".

 

[stangtime]

An agreement here between appraisers? A rarity.

Thank you all. Again I appreciate the input.

Dan

 

[Terrel L. Shields]

We call those and others similar to it "Gentlemen Farms".

We have several near me where the woman is the owner and/or "farmer" if you will.