Date of this Version
This NebGuide provides an overview of factors to consider when setting rent levels or placing appropriate market value on swine facilities when a purchase is being considered or negotiated.
Assigning appropriate rents and values to farm buildings has always been challenging because of the diversity of building inventories, as well as the selective demand for these structures. For swine facilities, the challenge has even grown as buildings have become increasingly specialized in efforts to improve animal performance.
When evaluating a swine facility for leasing or valuation, several things must be considered, such as environmental and zoning compliance, location, site, condition and design of facilities and space requirements.
Determination of rent can be an area of disagreement, but if both parties take the same factors into consideration the chances of agreement are greater. The value of the hog facility itself helps determine depreciation, interest, repairs taxes and insurance -- all the factors that must be considered before setting rent. Therefore, it's important to understand how swine facilities are appraised. The appraisal process includes three approaches -- the cost approach, the sales comparison approach and the income capitalization approach.