Vinyard leasing costs

[NewbieTed]

I have land adjoining a winery in Virginia. The winery owner would like to lease land from me to grow grapes. How do I determine how much to charge for the lease? Is there a typical rate?

 

[Jovimaple]

Welcome to WMT! I don't have an answer to your question but maybe some of the vinyard owners will chime in.

 

[Jim Welch]

I’ve no idea what agricultural land goes for but hunting rights used to be equivalent to the property taxes where I hunted in southern Delaware. Then out of staters discovered the great whitetail genes in the area and last I heard it is several multiples of the property taxes depending on the property.
I’d check with farmers in the area what the going rate is for general farming land. I imagine a vineyard is going to want a rather long term lease though.
Have they broached a figure and lease length?

 

[ChuckD]

I have land adjoining a winery in Virginia. The winery owner would like to lease land from me to grow grapes. How do I determine how much to charge for the lease? Is there a typical rate?

Do you have a university extension program in Virginia? If they have a grape or fruits program contact them. If not try the agriculture program.

 

[NewbieTed]

I’ve no idea what agricultural land goes for but hunting rights used to be equivalent to the property taxes where I hunted in southern Delaware. Then out of staters discovered the great whitetail genes in the area and last I heard it is several multiples of the property taxes depending on the property.
I’d check with farmers in the area what the going rate is for general farming land. I imagine a vineyard is going to want a rather long term lease though.
Have they broached a figure and lease length?

Thanks. They have proposed a $1000/yr. General farming land is much less than this. They have not broached a figure for lease length.

 

[Mekpdue]

I have land adjoining a winery in Virginia. The winery owner would like to lease land from me to grow grapes. How do I determine how much to charge for the lease? Is there a typical rate?

I echo the Extension Office for some information. Also, @winemaker81 you have any input?

 

[winemaker81]

I echo the Extension Office for some information. Also, @winemaker81 you have any input?

Nothing that's not already been said. I'm not a grape grower, so anything I know is second hand.

 

[Jim Welch]

Thanks. They have proposed a $1000/yr. General farming land is much less than this. They have not broached a figure for lease length.

Well if that will cover the property taxes and you’ve no near or mid term plans for the property it sounds like a win/win. I’d have a clause allowing an increase in the event property taxes go up though. I’d retain hunting rights though, you may be able to make some money from that even if you don’t hunt. Deer hunters will pay top dollar for good hunting lands.

 

[Snafflebit]

Questions I would get answered are:
Who pays for improvements? soil ripping, planting, trellis, irrigation, piping, access roads, removal of all of this if necessary to sell the land in the future.
Lease length? it takes 5 years for vines to mature for winemaking. I expect they will ask for 15 years minimum. Vines in business use get a 10 year depreciation schedule. Whoever pays for the capital investment gets to depreciate that investment.
Expectations? The winery may hope to develop a relationship and eventually buy your property.

The lease cost per acre is whatever the market will bear. Just like all real estate, prices are hyperlocal and a real estate agent would know better that answer. Just make sure you are getting enough to cover your costs and work. Ask any landlord, rental property is not a passive investment no matter what people say.