6 Common Questions About Leasing An Equestrian Facility

6 Common Questions About Leasing An Equestrian Facility

This entry is part 1 of 3 in the series Horse Farm Leasing

Part 3, and the final part to your “Horse Farm Lease” series. These are some common questions we’ve been asked and thought it a good idea to share the answers with you all.

What should I do if I am leasing out my facility to a trainer and keeping my horses at the facility?

This isn’t uncommon.

We recommend keeping the arrangements at a two arms-length transaction.

For example, if you want to keep your horses in training with the trainer you are leasing the property to, it is advisable to do it the following way: The trainer pays you to lease the facility, you pay them for training board.

It is better to do this than discount the lease price to keep your horses at the property – it keeps things very clear and simple. Your trainer might be your friend but at the end of the day, if they are running a business it should be treated as such.

What are my insurance requirements?

Both the landlord and the tenant should have insurance.

For the landlord/owner:

You want to make sure your barn and facility are covered under your own insurance and protect yourself from liability, damages and any lawsuits. Before signing any lease, you need to talk to your insurance agent about where your liability lies with renting our your barn and facility.

For the tenant:

As a tenant, you should have insurance that covers extensive liability (commercial if you are running a boarding or training operation). You should also look into contents insurance coverage as well as coverages for loss in finances as a result of lawsuits or injury. If applicable, workers’ compensation insurance is also recommended.

How do I figure out what rent to charge (Landlord) / pay (Tenant)?

Rental amounts are going to depend on the following:

    1. The Location of The Property

      You are going to see higher rents being asked in more desirable areas. Places like Caledon, Halton Hills, Burlington, Flamborough and Guelph. Those within close proximity to horse show venues, vets, and trainers. However, you’ll need to factor in the condition of the property and facility as well.

    2. Property Dependant

      Simply put, the condition and the type of property is going to determine the rent as well. A run-down property is not going to fetch top rent. One with only a farm and no arena will fetch low rent as it will only appeal to a certain demographic of horse owners and not others like show jumping trainers. A higher-end, fully equipped facility, well maintained and looked after, you will likely get more rent.

    3. Size of the Barn & Property

      As you might imagine, the size of the barn and the property will also play a factor in the rent being charged. This will be in relation to the number of stalls and paddocks on offer as well. For example, all other things being equal, a 10 stall barn with 10 paddocks is going to be desirable that a 10 stall barn with 4 paddocks.

    4. (Landlord) Cover Your Costs

      As a landlord, you will want to factor in the costs you have into the rental price. Ideally, you’ll want to cover mortgage costs, taxes and any other expenses.

  1.  

What is the difference between renting out just a horse facility versus a horse facility and residence?

Renting out the horse facility – when you’re renting out just an equestrian facility there will only need to be one lease to cover the facility. The lines are a bit blurry on this but technically renting out a horse facility would fall under an agricultural lease and as such is typically held under the commercial tenancies act.

Renting out a horse facility and home – when renting out your horse farm and a residence on that farm to the same person, you want to have terms, conditions and clauses in one lease that covers both the facility and the residence.

What if I am just renting out my small, private barn?

As a landlord, you can really create your own lease for this type of rental and include clauses that protect you and your property. I would still want the lease to either be drawn up or looked over by a competent and knowledgeable lawyer on both sides.

You’ll seriously want to consider the size of your barn, the number of grazing paddocks you have and the number of horses you allow in.  If you have a 10 stall barn with only 10 acres of land you will seriously need to consider how that is going to impact the paddocks. Will the lease make sure to properly rotate horses and keep them off the grass during muddy seasons?

There is a lot to consider when it comes to renting out your private barn. Especially if it is in close proximity to your home and if you have one or two horses there yourself.

Proceed with caution on this one.

How do you choose a tenant?

For a large facility, ideally, you want a good trainer, with a good reputation to lease your property. Someone with a track record of clientele who has experience running a horse farm.

As with any property you are leasing out, do your due diligence.

For example:

  • Ask for references from past facility owners from whom the trainer has rented the property. If they are just starting out on their own, you might want to hear from the person they have been training under. It is ideal to have the two most recent landlords’ phone numbers so that you can call both yourself.
  • Run a credit check
  • Do some digging online. See what others say about them. If they have an existing operation, check to see if it has reviews.
  • Make sure they are in good standing with OEF & EC

How do you choose an owner?

As mentioned in the Renters: Before Your Lease A Horse Barn article, here are some things you can do as your own due diligence:

  • Ask around about the barn you are hoping to rent
  • Get in touch with the previous tenant if you know who it was
  • Simply ask the owner questions upfront. For example, how much horse knowledge they have, how hands-on they are, why the previous tenant left, will they be keeping horses there, etc.

 

This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.

Why Use A Mortgage Broker To Help Finance Your Country Home

Why Use A Mortgage Broker To Help Finance Your Country Home

Financing a country home purchase is very common. If you’ve purchased a home before, you know you can do so by either going directly to your bank or by seeking out the help of a mortgage broker.

Here are some reasons why you might want to look into using a mortgage broker to help you finance your dream country home purchase!

Figuring out your budget

If you’re serious about buying a country home you should know your budget before you start shopping around.

Especially in a market like we have today. You might see a property you like on Sunday and by Thursday it’s sold. And that’s if the Sellers aren’t holding offers.

A mortgage broker can help with figuring out your budget or price range.

They can also get you a pre-approval that puts you in a more confident position when it comes time to offer. Again, especially with the current market we are in.

Sure, you can use an online mortgage affordability calculator to get a basic idea but you should find out for sure. Especially because there are many other variables that come into play with mortgage approvals.

Figuring out your budget will involve looking at things like your current gross income, bank statements, your existing credit, owned assets, any existing debt you already have and what you had for lunch on Tuesday. Just kidding about the last one but it can feel like that sometimes!

Lenders often use a Total Debt Servicing Ratio, where they take into account all your housing costs and other existing monthly debt payments. They will typically cap this at 40% of your gross monthly income.

Remember not to make any large purchases, incur more debt, change jobs, or apply for new credit after being pre-approved and before buying your home. Buying that Porsche and having a large monthly payment before you close on your new home is a sure way to get into financing trouble… so wait until after closing day to make that purchase!

Now, we have said this many times before. You do not need to buy a house at the top end of your budget. Stick with what you are comfortable with. This might be sacrificing some of your wants in a home but it is important to be financially comfortable with all your existing expenses and current income.

If you don’t want to use a mortgage broker, you are welcome to use your bank. Either way, this first step, getting pre-approved and figuring out your budget, is a must before you start your home search.

Now, any bank or lender can help you come up with the above. So why use a mortgage broker?

Why You Should Consider Using Your Mortgage Broker

Using a Mortgage Broker For Financing a Rural Home

You should definitely explore both options. Just because you speak to a mortgage broker doesn’t mean you can’t explore your own options with a bank, and visa versa.

Here are some reasons why we do recommend exploring your options with a mortgage broker, especially when buying a rural home:

  1. Mortgage Brokers Work Harder For You

    What we mean by this is, mortgage brokers often have access to various lenders, can shop around and negotiate a better rate for you. They also offer advice on how to structure your financial position in a way that will be looked on more favourably by lenders.

    More times than not, a bank is going to plug in your information into a program and have it spit out what you qualify for with them only. They aren’t going to try hard to get you a mortgage or look out for your best interests. They certainly aren’t shopping around to different lenders for your best rate. However, if they are your home branch, they might offer you some sort perk for combining services with them.

    Ultimately though, the advice you get from a good mortgage broker is both helpful and unbiased (or at least it should be).

  2. Mortgage Brokers Have Access To Various Types Of Lenders

    As mentioned above, your mortgage broker has access to A-lenders (big banks), B-lenders and may have access to private money loans as well.

    Now, without delving too deep into the various reasons why you would want to go with one over the other, here is something to think about.

    As we have covered in our Country Home Real Estate Guide, and other articles on the topic, financing a country home can be different than financing your regular in-town or suburban home.

    Especially when it comes to properties over 10 acres, properties with agricultural zoning and for those with a special use like an equestrian facility.

    If you have a reasonable downpayment, and are looking at a regular country property of a normal size you should be able to go with the lender of your choosing. You just have to decide who is going to give you the best rate AND the best terms.

    If an A lender is not an option, you can explore B Lenders instead. Now, you will likely be paying a higher interest rate so that is something you’ll want to factor into your costs. B Lenders are often attractive to self-employed people and business owners who structure their accounting such a way that it is more favourable for their business purposes regardless of the interest rate.

    Either way, getting help with choosing a lender is another reason to use a mortgage broker. They can help you find a suitable lender for your particular situation.

  3. You Don’t Have To Pay Mortgage Brokers To Use Their Service

    Typically mortgage brokers get compensated by A-lenders directly so you don’t pay anything to use their services.

    With B-lenders however, you may be required to pay a lender fee

Planning Your Purchase

A mortgage broker can help you plan your purchase.

Before you even start thinking about looking at properties, talk with a mortgage broker, get your paperwork in order and plan your purchase.

If you currently own a home, you’ll need to know what your options are for putting in an offer on another property…

For instance:

  • Do you need to put a Sale of Buyer Property condition in your offer? This is not exactly favourable as you can get bumped by another offer, if the Seller doesn’t decline it because of this condition. In this situation you’ll want to know if you have to have this condition or are you in a position where you can move forward with buying another house before you sell your current one?

  • Can you get bridge financing if closing dates don’t line up? This would be helpful if needed because you can take more time to move – say a week or a month, rather than having to do it ALL in on day.
  • Do you want to keep your existing property to rent out?  If so how does this affect the purchase price of your next home?
  • How can you use the equity in your existing home to purchase your new home?

All of these options, and more, are things you can discuss with your mortgage broker to come up with a solid plan. Putting you in a position to successfully buy a country home.

Choosing the Right Mortgage Broker 

Mortgage Document

If you’re buying any regular home, or even a small acreage, you should be fine going with any mortgage broker or one you have used before.

Now, if you are buying a bigger acreage, a small farm or an equestrian facility it would be wise to use someone who has experience with these types of properties.

Especially with ones that have agricultural zoning as this can make things more complicated.

This may also depend on how much downpayment you are putting down.

If you are trying to do a less than 10% down you will have to think very carefully about what property you offer on and you will need a mortgage broker with experience.

If you are looking at 20% or more, you have a little more wiggle room with who you use.

Naturally, over the many numbers of years we’ve been in real estate, we have great mortgage broker contacts that can take care of you on your search for a rural home or hobby farm.

Our Favourite Horse Barn Designs

Our Favourite Horse Barn Designs

I have always been in awe of architects and architecture! The great ones are able to take your vision and bring it to life in amazing ways. In today’s modern era I am constantly impressed by what I see in home designs, and especially horse barn designs. Some of the buildings these architects and their contractors are able to produce inspire us with ideas of what we might one day be able to build ourselves.

Many of the barns on this list wouldn’t necessarily work in Canada, our winters here do limit what we are able to do! But it doesn’t hurt to pull elements that you like and add them to your own design.

Is there a horse barn architect you love? Let us know and we’d love to add them to our list here!

OCTAGONAL BEAUTY

Architect: B&D Builders
Barn Location: Rockleigh, NJ
More Images: 
https://banddbuilders.com/projects/rockleigh-nj/

We’ve chosen this impeccably designed horse facility from B&D builders to starts us off. These builders have a ton of projects that we could have showcased here. You should definitely explore their website if you are looking for inspiration or if you just want to see some uniquely designed horse farms.

Sophisticated style and convenience come together seamlessly here.

I love the novelty of the octagon timber frame barn design. You can see great attention to detail was paid to the comfort of the horses here. Rubber pavers, wide grooming stalls and natural elements make for a very inviting atmosphere.

And just wait until you see the breathtaking curved timber frame arena. I am all about natural light and the huge windows instantly caught my eye. All of the side arena windows open up completely for the warmer months.

Make sure to view more images of this barn here.

STRIKING TIMBER FRAME MASTERPIECE

Architect: DC Builders
Location: Oregon
More Images: https://www.dcbuilding.com/portfolio/oregon-city-home-equestrian-facility/

This builder/architect has many, many fabulous projects to choose from (and they have contacts in Canada too!).

I chose this barn from DC Builders because one, as you’ll come to see, clearly I am obsessed with the timber frame barn style, but also because I love the idea of having little runouts on every stall. This is would make a horse on stall rest very happy! We talked about DC Builders in our “What Does it Cost to Build an Equestrian Facility” article. They offer beautiful, but affordable prefab solutions to building your horse barn.

There is also a whopping 5000 sq. ft luxury residence built onto the barn which is the perfect spot for either yourself or a lucky barn manager. The arena itself is open, airy and a fantastic size at 90’ x 204’.

Don’t forget to check out more images of this project, and others, here.

ISLAND EQUESTRIAN

Architect: McClellan Architects
Location: Seattle Area
More Images: https://www.mccarch.com/island-equestrian-construction

You might have seen this distinct and incredibly imaginative horse facility online at some point. And this list just wouldn’t be complete without it.

Featured in EQ Magazine, where you can read more about what went into the tough process for this little facility.

A barn like no other! This beautiful facility has all the conveniences you could need with the incredible added value of open space, natural light and nestled in a serene surrounding. Although it has an open design, materials and design were used thoughtfully to ensure protection from the elements.

There are so many more good things I could say about this incredible feat of architecture, but nothing does it more justice than looking at the images. You can do that here.

MEDITERRANEAN MARVEL

Architect: M.A Architecture
Location: South Florida
More Images: https://maarchitecture.com/portfolio/aspen-glen-barn/

Image Credit: M.A Architecture

This barn is a masterpiece.

The oversized Mediterranean style doors and natural stone touches set an impressive tone even before you enter this stunning barn. Inside you have a beautiful, wide aisle layout, imposing timber frames and more stone to finish the look. The architects said they were going for a rustic vibe but one with a Mediterranean flare. They have definitely succeeded.

The residence of the home and barn have been designed to complement one another perfectly. You can see both here

DARK HORSE EQUESTRIAN

Architect: Sequoia Contracting Company
Location: Ridgefield, Connecticut
More Images: https://www.sequoiacontracting.com/dark-horse

If you follow Stable Style on Instagram, or if you have viewed any popular horse barn hashtag, you’ve likely seen this pristine and pretty perfect horse barn.

A modest barn with all the amenities and style of a top level equestrian training facility. A impeccably stylish barn, the designers made sure not to miss a single detail that would contribute to the horses comfort and safety. Each stall has two doors, one that leads directly outside, as well as a fan for each horse. According to Stable Style, Sequoia even built a commercial grade ice maker.

The horses here are definitely living in the lap of luxury.

For more details about this gorgeous barn, read @StableStyle ’s article here.

OLD WORLD CHARM

Architect: B&D Builders
Location: Sewell, NJ
More Images: https://custombarnbuilding.com/projects/sewell-nj/

We had to include another B&D horse barn project on our list. I love the design of stone barns and thought this was an impeccable example of a modern stone barn but one that still has that old world, old English stable character to it.

Great attention to detail has been paid to the building of this barn. Gorgeous mahogany doors and windows, as well as a medieval-style chandelier make for an eye-catching first impression. The finishes are all higher-end which ties everything together perfectly.

Find out more about this striking and unique barn here.

Getting Your Country Home Ready For Sale

Getting Your Country Home Ready For Sale

Getting your country home ready for sale can sound like a daunting task. It feels like there is so much to do and not enough time to do it on top of everything else you have going on.

And if you are thinking about selling your home, you’ve likely turned to Google for some advice.

As such, some of the tips we offer in this article will be old hat to you. And some will apply to any type of home. But, as is the case for rural homes, there is always a little bit extra to do.

So, here are our tips for being the most prepared when it comes time to sell your country property.

1. Home Touch Ups

Home Renovations Country living

We’ll begin inside the home.

Your aim should be to showcase your home at its best… I don’t know if a more obvious statement has even be written but there you go.

To be frank, this is where a good chunk of the value is going to be perceived by the buyer. They will be walking into the home ready to judge whether or no the home is deserving of the price you are asking.

Touch-ups will depend on your budget, so we’ll break it down in two ways.

 

For those with larger budgets:

Ideally focus on updating your kitchen, bathrooms, flooring and painting, if needed.

Within reason, these items can really add value to your home.

Also, try to avoid grey laminate flooring. It is being overused and starting to look mildly dated. It also doesn’t look great in country properties as it is quite an urban and suburban trend. Opt instead for rustic colours, light, like a pine or rustic brown depending on the rest of your home.

If you do want grey tones, go for something similar to smoke wood fusion from home depot. Some examples:

Flooring

If there is nothing to update upstairs, you could look to adding value by finishing or updating your basement as well. Possibly adding in another bathroom if you only have one or one and a half on the main floor.

 

For those with smaller budgets (or for those with larger budgets that want to do more).

A fresh coat of paint can go a long way!

Keep colours neutral and light.  It can be tough for a buyer who likes a cleaner, natural look to appreciate a room that is painted in loud or dark-toned colours. It is easier for a buyer who likes loud colours to visualize those colours on a “blank” canvas, so to speak. You want to create an environment that welcomes a buyer to imagine themselves and their furniture in the home.

 

New outlet and light switch covers.

This might sound silly but it is a great, and inexpensive way to make your home look more fresh and updated. Especially when the walls have a new coat of paint on them.

 

Update light fixtures. 

Modern light fixtures can really change the look of a room. Something to consider!

 

Remove dated window coverings (please)!

You know those dated, sometimes velvet-like drapes that blocks out any semblance of the sun? Yes? Those have to go. It does nothing to showcase your house in a good light (pun intended). The same goes for the thin horizontal blinds or even those vertical material ones. Blinds can be purchased from Home Depot for a very reasonable price and make the entire room look so much better.

 

If you can’t update the whole kitchen, consider updating these items:
  • Painting the Cabinets – Painting your cabinets can be an excellent way to refresh a kitchen. But if you decide to do this, don’t cheap out. You can get some beautifully looking painted cabinets but the right paint and painter is essential for this.
  • Updating Cabinet Hardware – if you have very dated cabinets and don’t want to paint them, don’t go ultra-contemporary. Just go with something simple that looks better, newer.Some examples for you:

    Painted Cabinets, Before and After

    Image Credit: Countryliving.ca

Caulking, caulking, and more caulking. 

It doesn’t take a lot to re-caulk around your bathtub and or kitchen sink. I recently showed a property (priced at close to $1 million) that needed re-caulking around the shower and tub surround. Re-caulking is such an easy and cheap fix that there is no excuse to not have it done (especially if you are asking a higher-end price for your home). It makes a bathroom look clean and pristine!

 

Removing old carpet.

Sometimes a lucky few have hardwood under that old carpet. If your home does have old carpet over hardwood flooring… RIP IT UP and let that hardwood SHINE. No one, and I repeat no one, likes those brown, yellow and green (sometimes all those colours combined) carpets from back in the 60s. I find it hard to believe it will be a trend to reemerge in the future.

 

Clean carpets.

If you don’t have hardwood flooring under the carpets and don’t want to spend money on updating the floors, definitely have your carpets cleaned before pictures and showings begin.

 

2. Spending Money on Utility Systems and Home Exterior

Updating essentials like roof, windows, air conditioning unit, furnace, likely won’t get you more money for your home and aren’t necessary to sell your home either. It can help when it comes to negotiating though. Especially if these items were in need of being replaced!

Buyers often ask the age of the roof so if you are getting to that 25-year mark on your shingles, it might be a good idea to have the roof redone.

If you live in a solid brick home (lucky!) And the brick needs some work – like repointing – it can be worth doing. Again, not so much to add money to the sale price but to present a clean, well cared for home that you know is worth negotiating to or close to your sale price.

 

3. Declutter & Depersonalise

 

I know… ‘Tidying Up With Marie Condo’ and ‘The Home Edit’ on Netflix has everyone, and every article, recommending you declutter and reorganize your life.

You know, I know, every now knows, that decluttering, reorganizing and depersonalising your home is an essential part of getting your home ready for sale. So I won’t go in to too much detail here.

You are moving after all, so why not get a jump start on packing up the non-essentials.

As much as you might like your collectibles from your world travels, the buyer doesn’t need to see all of them. Try to “refresh” your shelves with these styling tips from McGee & Co. (Pictured Above). The rest can be boxed up and ready for your move.

An article I read years ago said it best. “Think Hotel Room”, yes it is decorated [and furnished] but it is not overly personal”. That should be your aim.

Here is a great before and after example from ClutterflyInc.

Declutter before and after

Now, finally, let’s move on to the more country-side of things!

 

4. What to do About Outbuildings

Barn with Junk

You really need to put yourself in the mind of a buyer that is seeing your property for the first time.

When they drive up your driveway what will they see? A neat and tidy property or one cluttered with old bits of machinery, wood scraps and junk? What would you rather see driving up to a property you might purchase?

I know that when you’re living in the countryside things seem to need constant repairing and it’s easy to let things pile up. But if you can, try to declutter around the exterior and do your best to organize the interior prior to your sale. Or at the very least, move the junk out of sight for the time being!

Besides, if there is debris, more times than not, a buyer will ask for the seller to leave both the interior and exterior in a “debris-free” condition in their offer. You may as well get a jump start on that before you list.

Now, outbuildings often need work but if you need to focus your budget on fixing only a few things, I still say stick with the home. Sure, if there is a gaping hole in the roof of your barn and you’re able to fix it up, do so. But if your budget is limited, again keep the focus on doing some things inside your home.

 

5. Landscaping & Lawn Maintenance

Country Home Curb Appeal

Our advice would be not to spend a lot of money landscaping.

If you have the budget to add in some sort of deck or seating area to your back yard, that would be fabulous. But if not, don’t spend the money on an expensive landscaping job.

Landscaping is something you should really only spend money on if it is something you get to enjoy.

Now, having said that, if your yard is in disarray, a clean up here would be necessary.  Trust me, I get it.  I was not gifted with the skill of keeping plants alive even. I am barely keeping a small cactus inside our house alive. So, if you are like me, just aim to keep your yard neat and tidy. 

The grass MUST be mowed. At least around the property and other lawn areas. If you have a good chunk of your property naturalized, that’s fine but try to keep grasses, vines and plants around the house under control.  If you can, plant a few flowers around the entrance of the home as well.

Potted flowers at the front entrance can go a long way to adding curb appeal too. They just need to last long enough for pictures and showings!

Keep your driveway plowed in our snowy winters as well as walkways to the house and paths to outbuildings, barns and the like.

If your property looks run down and overgrown with weeds it leaves a bad first impression for the buyer.  They may think the rest of the property and home is going to be in the same state, even if it isn’t. They may be thinking there are things they can’t see that should worry them.

A house that looks loved, will be loved.

6. Records & Documentation

Paperwork

Ok, I know I said you need to declutter but there are certain types of paperwork and documents we WANT you to keep around.

Here are some examples of items you might want to provide to an interested buyer.

Septic System and Well.

If you keep your documents on well and septic systems, A++ for you! These documents are helpful for buyers, cooperating realtors and inspectors when looking at rural homes.

Documents to keep on your septic and well can include;

  • Where the septic and well are located (if it isn’t obvious)
  • When the septic was last pumped
  • How often the septic has been pumped during your ownership
  • A record of water quality tests
  • If you have documents on when the septic was built, that’s even better. Not mandatory but if it is a newer system, a septic certificate should be kept on file.
Utility Information.

If you are willing to share utility cost information that is a fantastic bit of detail to provide to new country home buyers. This way they feel more prepared and confident about putting in an offer.

 

Easements & Zoning.

If there are any easements on the property, your realtor will likely need some sort of record for that. Or your realtor can easily retrieve this from your local municipality. Having zoning information, as well as any environmental restrictions on hand is also helpful. But again, this is easily retrieved and confirmed by your local municipality.

 

Tax Information. 
  • Annual property taxes will be needed prior to listing your property.
  • If you are part of any rebate programs(E.G. Managed Forrest Tax Incentive Program) you can provide this information as well. You don’t have to necessarily say how much of a rebate you get. This may only be applicable to you anyway. However, mentioning you are part of the program is good so buyers know it might be something they can apply for as well.
Property Updates.

Any recent updates you’ve made to the property can be shared with your realtor and kept on file as well – especially the expensive ones. For instance, if you have recently had the roof re-shingled, or furnace and a/c updated you should share those details with your realtor so they can make it part of the listing and listing notes.

Well, we hope this article helped give you some idea of what you might want to get ready for your country home listing. We, of course, would be happy to help with this. You can download our listing package here for information on what we offer our clients and their country home listings!

 

 

5 Factors Affecting Horse Farm Prices in Ontario

5 Factors Affecting Horse Farm Prices in Ontario

If you’ve been watching the equestrian real estate market in Ontario, you might have seen that prices are on the rise and have been for some time.

We’ve been watching the price trends closely over the years.

As of writing this article, in October 2020, here are some average prices to take note of:

**** These prices are for properties in the greater golden horseshoe only. ***

Hobby Farms

Where the property has a home and a small barn. Possibly some paddocks. The average list price is currently around $1,864,000. In fact, most sales for this type of property happen around the $1,200,000 to $1,500,000 mark.

Equestrian Facilities

Where the property has a home, barn, indoor arena, and possible outdoor arena. That is, infrastructure to warrant the name “facility”. You are currently looking at an average list price of about $3,700,000. However, we see that the majority of sales for equestrian facilities happened somewhere between $1,900,000 to $2,500,000 this year.

Now, we know averages can be skewed depending on the number and types of listings available. And, also by a result of very high and very low outlier properties. For instance, there is currently two very high-end equestrian facilities listed at $18,000,000 and $19,000,000 that will be playing a factor in price here.

Also, properties with a barn, existing fencing and/or arenas often come at a premium when compared to properties without these items.

Now, the added value of infrastructure isn’t the only reason impacting horse farm prices in Ontario. Similar to other types of real estate, other forces seem to be playing a role in prices across the Province.

 

1. Real Estate is Increasing Across the Board

CREA Stats for September

CREA Statistics: ALL Residential Sales in Ontario

Well, at least residential real estate is.

 

In fact, according to CREA, we are looking at a 14.9% average price increase in the first 9 months of this year when compared to the first 9 months of 2019. It should be expected then, that larger properties – hobby farms and equestrian facilities – would increase in price as well.

Farmland values are also on the rise and have been since about 1987. According to Farm Credit Canada, the average value of Canadian Farmland increased by 5.2% in 2019. With Ontario seeing an increase of 6.7% in 2019 as well. To put a number value on this, in 2019, it was reported that in Southwestern Ontario, farmland prices were at a total average of $14,458 PER ACRE.

And as has often been the case, farmland values are often good indicators of price trends in general.

 

2. The Cost to Borrow Money – Interest Rates

 

Naturally, interest rates have an impact on the value of investments, real estate included. 

In an attempt for the government to keep money flowing through the economy during the pandemic we’ve just experienced, we saw the lowering of interest rates. This is part of why we are seeing such high levels of buyer activity in residential markets and more competition than in the previous couple of years.

This goes for farmland as well… according to a study by Bonnefield, along with a number of other factors, historically “Low interest rates reduce the cost of capital to acquire farmland; therefore, periods of low interest rates correlate with higher farmland values.” Or at least this is what we have witnessed historically.

Similarly, with low interest rates, the cost to borrow money to buy a horse property becomes attractive to more people.

Lower interest rates might mean people are more willing to take the risk to purchase a horse property now, possibly more so than we have seen before. Especially properties that would accommodate a private facility. With barn shutdowns and the uncertainty of whether we will see another shutdown, horse people are looking at this as a viable alternative to paying board.

We would say that, with things being as they currently are, and should interest rates remain low, we are likely to see continued demand for horse and hobby farms. And a drive upwards in values to continue. Perhaps not at such a substantial rate as we’ve seen this year, but likely at more typical rates.

There has also been a serious lack of good properties to choose from for some time. This has resulted in pent-up demand from the buyer’s market and leads us to our next point.

 

3. There Isn’t Much Good Inventory to Choose From

 

Horse Farm Ontario

 

In many facets of the residential real estate market, finding a good home at a good price has become difficult. When one does come up, it seems it is either snapped up by a buyer within a few days or you find yourself competing for the property.

In terms of properties that can accommodate horses, relatively speaking, there aren’t many of these types of equestrian properties available for purchase in the first place.

It is simple economics that higher demand and limited supply equal an increase in value.

As of writing this post, there are about 180 equestrian type properties (i.e. equestrian facilities and hobby farms) in the Greater Golden Horseshoe area. Now, I say about because some listing agents do not accurately categorise these properties as being hobby or horse farms. But that is a rant for another time. 

And of course, this number can fluctuate daily and monthly with sales and listings coming on to the market.

But, this is not a lot to choose from, from an already “unique” subset of residential real estate. And what narrows it down even further are the high priced properties (over $2 million) and the ones that need a complete renovation on the lower end. You (and many others) are then left with just a few good options to choose from.

Although these may be considered a niche property, i.e. not everyone has a horse or wants a property with a barn on it, they are still in high enough demand.

There are more people looking to move to the countryside nowadays and a barn can provide as useful storage. Alternatively, a barn can also be used to keep other animals like chickens, lamas, and such. So you are now competing with people who want a little hobby farm, or country home, as well… and believe me we are seeing more and more every year.

 

4. The Added Value of Infrastructure 

 

Image showing barn infrastructure

 

If someone has purchased a property with a home on it, added a barn and perhaps some fencing for paddocks – others looking for this are going to pay a premium before they settle on a property without the existing infrastructure. What I am saying is, if someone wants this type of property and can afford to, they will pay for the value already added.

As for equestrian facilities, if you read our article on the costs of building an equestrian facility you will know the cost to build an equestrian facility is extraordinarily expensive. So these types of niche properties are going to go for a premium as well.

Now, it is also worth noting that these properties do take a longer time to sell and it is likely because of the higher price point on average. They may not be as “liquid” as a single-family home in the city, for example. However, the more that people want out of that fast-paced lifestyle, and the more people who can work from anywhere, the more hobby farms, country homes and small facilities will be harder to acquire.

 

5. Location is a Big Driving Factor in Price

 

Map showing popular horse areas in ontario

 

For the most part, horse properties in high demand also seem to be in locations where real estate prices are at their highest.

For example, York, Peel (Caledon specifically), Halton and parts of Wellington and Dufferin Counties are considered prime equestrian locations. They are close to all horse necessities – show venues, vets, race tracks and so on. These areas also have a close proximity to Toronto. As such, these locations are going to see higher prices.

Hamilton (specifically Flamborough) is another area not far behind in terms of popularity, proximity, and rising prices for horse and hobby farms.

Importantly though, as these more expensive areas make it tough to find an affordable horse facility, people look to other areas for opportunities. We see people pushing out to more rural parts of Simcoe, Wellington and Dufferin Counties as well as regions like Niagara and as already mentioned, Hamilton. We have seen a lot of value increases in these areas as a result of increased demand.

 

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You might be reading this article and thinking to yourself that now isn’t the time to buy a horse property or hobby farm. And you could be right.

Prices are quite inflated and at the recorded 14.9% average increase in residential property prices over the first 9 months of 2020, this is not a sustainable rate of appreciation.

But here is something to think about … when we saw a similar market in 2016 and 2017, many said they were going to wait to buy a property until the market “falls”. Well, many are still waiting and have missed out on some serious appreciation gains. Also, with interest rates being where they are, it might be a good idea to take advantage of them as they are now.

It is also worth noting that, never have we seen such a push and opportunity for people to leave the suburbs and the cities to move to the countryside. As people look for affordable living options outside of the major cities and for peace and space in a rural setting, we will see more and more of this each day.

Unless something extremely drastic happens, we are still likely, at worst, to see a return to more normal appreciation rates of about 3-5% per year. This will not mean a drop in real estate prices but rather a less drastic increase in average prices from where they currently are to, rather, a more sustainable rate of appreciation.

But, without a crystal ball it is difficult to say where things will go with certainty. Many thought a pandemic would cause a sizable slowdown to the market, and it did for a few weeks. But even now, still in a pandemic, the market is performing, arguably better than it ever has.

Canada will continue to be a place investors look at to purchase property and a place people look to as a place to call home. And country homes, hobby farms and equestrian properties are not an exception to this.