My partner and I are looking at the purchase of a 14ac block in regional WA with the intention to run a horse agistment business to help pay for the IO loan.
She is very horsey and I love a lot of work. The property is earmarked special residential with lot sizes in the vicinity of 2000m2 with further consideration to a higher density zoning.
The plan is to run the agistment business for 5 to 7 years and then decide to subdivide ourselves or in a JV with a trustworthy partner.
Has anyone taken the concentrated agistment approach before? The business plan we have researched gives us a figure of 20 horses @ $25 pw to cover all outgoings and set up costs. Insurance is surprisingly low at $1300 pa. The land type will easily support 30 horses.
The regional centre has a population of 20,000 and has a high percentage of horsey folk.
A friend agists her horse on a 8ac property in the Perth foot hills at $45pw, no food provided and shares with 40 horses. I work that out to be $93k pa turn over.
Would appreciate any feed back. Thanks
JPD
JPD,
I’m confused a little as my frame of reference is Comm and Ind. where the ‘outgoings’ are simply the rates/WR/Land tax/insurances etc that the tenant pays. Outgoings doesn’t include interest on the loan.
When you say ‘all outgoings’, are you including the interest or not ??
By the way, do the horses chip in for all the outgoings ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi JPD,
I personally know nothing about horses other than my annual bet on the Melbourne Cup however, my sister in law and her husband have done exactly what you are proposing on a 13 acre block just north of Auckland NZ.In their plan they built an arena, and 6 stables to complement the grazing. For stabled horses they get more per week and of course, additional for feed. They also charge about $25 to $30 for riding/exercising the horses. It’s generally a full house where they are but I couldn’t tell you whether it’s working financially or not for them, they’re big spenders.
Cheers
Jeff20 horses on 14 acres?????
You will end up with a polluted, sour dustbowl and you’ll have to hand feed.
Thanks Ibuycashflow for your input, I imagine some agistment isn’t set up as a business but just happens. We would like to combine both interest and business. We have drafted up round yards and various pens for activities and holding.
Dazzling maybe you are confused because I didn’t mention the loan amount, but I imagine when I say all out goings it really means all out goings. Im sorry I don’t share your humour.
Waynel thanks for your concern about the land management issues I did not mention that as it can be in-depth. We have a management programme that we would set in place if we go ahead with settlement. My partner is an environmental officer for the Department of Environment and we are positive that what we put in place will be far better land use than what it is currently. Most agistment sites in WA are on sensitive sandy soils that break down with intensive use, hence it is common practice for owners to hand feed their animals. The soil structure on this property has a complex matrix that will absorb and fix nutrients efficiently.
I would appreciate any more cognisant feed back.
PS this is for real if anyone is woundwering.
JPD
I’ve owned horses for over 20 years and I’ve got to say that I am interested in your plan. It could be a disaster or it could work very well. I haven’t considered the costs involved but I can see two possible scenarieos.
If you are intending to put 20 (not to mention 30!) horses free range on 14 acres of the best land in Australia you will end up with nothing but a horrid, fly-blown dust-bowl plus 14 acres of fence to fence manure. I would estimate that, regardless of the quality of the land, this would occur within a matter of months.
As you say that your partner is a horse-wise person I assume that this is not your plan.
Perhaps a stable/grazing combo idea would work. You would be able to give the horses limited access to grazing and self exercise but supplement with primarily stable accomodation and hand feeding. If managed well this would not destroy/pollute your land. Add facilities such as an (indoor?) arena, washbays, etc and you may have a winner.
There are lots of variables involved. Do you have a specific plan as to how you are going to manage the property/business? I also wonder how the 8 acre property with 40 horses (that your friend refers to) is managed and the land is coping.
Kind Regards,
SonjaPS. Exactly what does the insurance you mentioned cover?
PPS. Just read your latest post. If the numbers add up and you are confident of your ability to manage the land and the business then I’d have to ask “why not do it?” Is there a particular reason that you hesitate?
I thought the going rate was one horse per 5 good acres? After all, they do eat like horses…and I agree, the poo factor would be immense!! But then I guess you could bag and sell it!?
Redhaven.
“I alone know the plans I have for you, plans to bring you prosperity and not disaster, plans to bring about the future you hope for.” ~ GOD ~ (Jeremiah 29:11)
Hello Sonja and thanks for your reply, it helps to discuss with others what alternatives are out there.
Our management plan includes the removal of manure from the small over night pens and harrowing of the major paddocks. Because of the previous land use there is an extensive irrigation system that we plan to use when paddocks are rotated. We do not plan to house horses in stables over an extended period of time but only for pre-events where the owners maybe competing in dressage etc.
We imagine that the numbers will wax and wane during the season and this will allow for some spelling of the paddocks.
Wash bays are in the plan as well as showers for the punters. I have the building bug and would like to construct a club house for the more social types, as I hear owners appreciate a good chat. We also plan to put up a map of the various trail rides, as the land in question fronts onto one of the most specky coast lines in the Great Southern.
Why don’t we go for it? Well its me that needs convincing as I just don’t understand the horse thing and need to get further feed back.
The area where we live has an equine industry worth $8mil and growing. The local development council has done a feasibility study into providing an equine centre for multi use, haven’t heard the report yet.
Thanks again Sonja much appreciated.
JPD
We have 14 fertile acres and only 4 horses. Unless you want to end up with a complete dust bowl the land simply won’t cope with anymore. The standard is one horse per 5 acres. I simply can’t imagine how you could consider 20 horses let alone 30! We rotate the paddocks and handfeed our horses daily. Before buying our own property I agisted my horses for many years. Maybe things you need to consider are council regulations. Is there a max number of animals allowed to be kept on a certain land size? You’ll need some sort of contract for the agisters to sign and a debt collection process when they don’t pay. And what about if they fall out of love with their horse and abondon it on your property? I’ve seen this many times as I am also a volunteer representative for one of the horse welfare organisations in VIC. What is your management process for any owner that fails to care for their horse adequately? In VIC as the land owner you are liable for any neglect/cruelty to animals kept on your property. Have you thought about buying dung beetles to help you manage the poo problem? Are their many trees on your property, if not have you factored into your expense errecting shelter sheds? Ours cost $2,000 per shelter shed (one in each of our 10 paddocks and that was just materials). For welfare issues alone, I would seriously be concerned if anyway had 40 horses kept on 8 acres as much as I would with 20 horses on 14.
The insurance you asked about Somja, its with CGU and includes $85k for building, $20k fencing, $35k bobile machinery, liability of $5mil, covers 3rd party if an animal escaps and causes injury or damage, but does not cover riding lessons. Premium $1300.41
JPD
Hello Karinthomson thanks for your input.
I must say that the dust factor is a prevalent concern in this thread along with the manure, can say that I agree. The idea is agistment and play areas, the owners will need to hand feed on a daily basis, as my partner does at her current agistment. I guess the intention would be that the property is on a high quality bridal trail which would encourage the owners to exercise/ride regularly.
The intention is that the we would want responsible owners/carers and this would be reflected in the contract which the owner would sign. We want the owner/s to be aware that if their animal is unwell and is not attend to adequately then we will call in a vet at their cost, if they don’t pay then we sell the horse. If the animal looks maltreated on arrival we will decline agistment and notify the appropriate authority.
The current land use is zoned rural and having spoken to local gov they say fine.
There are adequate shelter belts dividing the property into several paddocks and we would encourage owners to rug their horses in winter.
The density is an issue and we need to consider this in the daily management. Our friend says the 8ac property is a sand patch with numerous horse flies in summer. The horses are stabled at night and exercised at day, the owners hand feed, pick up dung and attend to the needs of their animal or the managers charge labour, vet fees etc. The health of the animals is a reflection on their business and this I imagine would be paramount to encouraging healthy and well cared for animals.
JPD
Hi JPD,
I have no knowledge of the situation in your area but, as a rule, horses are an expensive hobby (mine are now semi-retired and on free lease to RDA). Most owners are aware that they must part with $$$ to indulge their hobby.
Riding for the disabled (RDA) I believe operates on a national level – but I may be mistaken. They actually came recruiting to the agistment property where my horses were retired. If horses are forgotten/abandoned or simply retired the RDA are usually looking for good natured animals for their association but require a free lease in return for providing all care the animal requires.
It is true that people often forget or abandon their horses and leave them in what they see as equine old age retirement homes. I believe that this is more likely to occur with the sort of agistment property that my horses were on (approx. 300 acres fertile and free range property) than the sort of property you are proposing.
Like all other business/real estate ventures you need to know your local market. I’d say target a particular sector of the local equine community and tailor your business to suit their needs/wants. You mentioned dressage, for example, is that popular in your area? Perhaps a top quality dressage arena would attract people amd $$$.
Providing and encouraging opportunities such as the coast (beach?) for riding will also help preserve the quality of your land. Resting and irrigating paddocks is also a great idea (actually a necessity) in my opinion. Even more so as it seems you have a coastal (ie sandy) location.
When I was at uni the place I kept my horses had small lock-up sheds for feed, tack, etc. This was a big bonus for me as some of the other horse owners had a tendancy to help themselves to these things and as a uni student I had nowhere else to store them. This may or may not apply to your situation.
I assume that your partner has knowledge of or access to council policies. Complying with these will clearly make life much easier. This seems obvious and is common to any development.
As far as the insurance, I was wondering about people riding/handling their own (or a friend’s) horses on your property.
Kind Regards,
SonjaPS Horse manure sells if marketed well. Although not big $$$ it gets rid of it for a small return.
G’day JPD
Lucerne, lucerne, lucerne…
Dryland lucerne, or if you are on irrigation…. irrigation lucerne. We live in a great little dustbowl, just going through a ripping 8 year on/off drought, and the one thing that is still standing, keeping the sahara paddocks green and feed growing for our horses is lucerne. Seriously it has been great for the sandy soil, it is a really hardy plant, quite nutritious for horses, and if you have any reasonable kind of rainfall, [we average 10 inches a year]… but certainly have NOT had anywhere near that precipitation here last 8 years… yet the old lucerne [where it is sown, naturally], is like a noxious weed almost!! We only have to have a heavy dew on it sometimes…your partner will know or know where to get the right sort of lucerne for your land type… sow it in, lightly graze or no grazing for 12 months, to let it get established…[that might stuff up your plans?]… then rotate those beautiful horses around to your hearts content… 2 points; 14 acres does sound a bit small, [could you lease some extra land?], and $25 a week is too cheap, don’t do that to yourselves…
Good luck to you both, and we love people that love horses! Regards, Pam and Red.
P.S Watch out for the little bug things that eat it at a certain stage, chat to an agronomist re; ensuring establishment successfully.Thanks Curtis for the tip. We are looking into a tier rate for various paddocks. Funny you should mention finding extra land! The land owners next door have an overrun paddock and we are going to approach them and see if we can keep our own horses there. We would feel a bit awkward using someone else’s land and be making $$ from it.
Hi Pinnypoo, my previous reply was meant to have been addressed to you but somehow Karinthomson name crept in there, sorry about that.
JPD
HI JPD,
Is there any adjoining land that you could negotiate a lease on to make this plan work?
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi JPD,
We are absolute horse lovers and we considered buying a horse agistment ppty on 70 acres with indoor arena etc…
We were so keen about the figures, but after a while we realised that we were “making the figures work”…
We were emotionally involved in the deal because we wanted it to work.
If yours is definitely a good deal even in a worst case senario, then go for it…
We backed out, and I’m glad we did now. We were much better buying 10 or 20 smaller properties than 1 giant one, but then again…
It’s HORSES FOR COURSES…[biggrin]
Best of luck with it!!!
Del
Hi Don and Liz ,
Thanks for your suggestions, the areas around are either market gardens or special residential. There is a commercial building on 6000m2 which only uses about 30% of its land, the rest is an over run paddock, not much but worth considering.
Hi Del,
Yes its interesting how we can make the figures stack up when we want to. Sometimes it’s better to seek independent advice when making financial decisions, but there is the dilemma.
• We have had our financial planner ask us for advise on property deals-we no longer pour our $$$ in to managed funs these days.
• Our friends and family are not into investing for their future-we don’t talk much about our investing as the green eyed monster appears.What you’re buying MORE properties!
• We have tagged along to the Red Shirt Millionaires club (not its real name). I think their investment philosophy and advise to investors is great and will buy a few club properties. But we realised its about one type of investing only targeted at a select income type.
• Our Accountant rolls her eyes around in her head when the said plan is spoken of. For good reason too.
I guess this is why I am here now thrashing it around the Forum. The property we are looking at is the cost of a median priced house in Perth and in actual fact we were about to buy through “the club†when my beloved spotted this block on sub-dividable land.Oh yes and her horses were evicted from the free agistment as the land is to be developed for housing.
I guess we’ve gone down the path of, the rent on a IP in Perth vs a 14ac lot that could service a similar size loan through agisting, with the potential of creating 17 x 2000m2 lots in 5 to 7 years.
To have the same benefits as an IP in Perth the horse thing has to be run as a business to qualify for the tax breaks. An IP in Perth would return $280 to $300 at best, the agistment could return ? at worst. From what we have observed when looking at other agistment places there is more than 1 horse to 5ac and yes the properties are dust bowls.
The intention is to develop further on down the track so we are not wanting to invest to much in infrastructure. There is a 400m2 shed which we will modify for storage of food and tack with a few stalls for overnight holding. The fencing, machinery and gear we have left over from our previous farm, so the set up costs will be minimal. I can imagine my building skills will be of a benefit as well
Thanks to all who have replied and look forward to more feed back.
JPD
JPD,
Sounds like a good plan to me…
My wife and I own 40 acres at Bundaberg which she agists to a local cow cockie to run his cattle on. He only runs a dozen or so, and pays a small amount of cash to her as well as maintaining the property. It suffers from rag weed every now and again and he pays to have it cleared from the property.
Our plan sounds similar. Its zoned rural residential and we’re considering a subdivision at some point in the future. Its paid off so there’s no holding costs with it agisted and we can just forget about it and let it steadily appreciate until we’re ready to capitalise somehow.
Cheers,
Michael.Hi Michael,
Hows tings in Bundy? It’s a great place.
Its been 18 years since I was last in Bundaberg and was unintentionally looking at land then. Unfortunately for me I got roped into one of Don Greedy’s early developments at Agness Waters and had a fight to get out. Put me off investing for awhile. I was 22 and a bit naive to the ways of the Queensland Developer. Taught me to be careful though. The land out at 1770 has taken off from what my relatives say, and believe it would have been a good investment.
My priorities were very different then and just wanted to travel. Was visiting family and working on a tomato farm with the intention to travel to Europe when I was nabbed off the street in front of the real estate office and whisked out of town to view some land. After 8 hours of driving and looking at bush lots an ultimatum was given to me. Buy a block now or walk the 80km back to Bundaberg, so I caved in to the tactic (not wanting to walk) and started to look for a lawyer the next day. I laugh about it now but the thug of an agent was very intimidating at the time and had me sign the contract or else.
JPD
JPD,
Ouch!
Good for you in fighting your way out of it as a 22 YO.
I think we’re on a bit of a sleeper with the land in Bundy but to be honest I haven’t valued it or looked at developing it recently. Maybe in the next cycle in a few years time I’ll look at my development options to capitalise on it.
Good lukc with your agistment if you decide to go ahead, and if you don’t then I’m sure there’s something else that will come your way!
Cheers,
Michael.
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