3% Lease Increase per Year

[hooligan]

Seems fair. If it’s a good lease and good land owner I’d ask for a long term contract at that 3%

[JTCowpoke]

Are the deer's horns getting three percent larger every year?

Oh boy, does your car go further on a tank of gas when they raise the price?

[Dale Moser]

A couple of things...

He could just play catchup in 5 years for the same dollar amount. I think that would sting more than the 3% per year.

It costs to move off a lease. If you like it, have a good landowner, be happy to secure it with those terms.

We all want annual pay raises of a minimum of 3% per year to cover "cost of living increase" but won't stand for the price of things to go up by the same amount.

Yup


I'd sign that on our lease for a 10 year extension TODAY...and we've been there 25 years, havn't had an increase in several.

[Hart8]

Finish reading the post fella's..He said they'd pay it,til they can't afford it.He ain't bitching,just unfamiliar with it.Jesus.


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[Snakelover]

Feels like I'm in the twilight zone. Had to re-read thread... Was offering 2.5% a joke? If the lease is $2,000 per year that .5% would save you $10 LOL

True enough. And I'm not saying to turn it into a deal breaker, but it never hurts to ask a simple question. Due to compounding, that half percent would make $648 difference in the total amount each member would pay over ten years and $2,986 difference over 20 years. Multiply that by 10 or 12 members and it might be worth asking, "Would you consider 2.5%?" Worst he can say is no. Or maybe hell no.

[kyle1974]

Supply and demand. When you have a hot commodity maximize your profit. Lots of people looking for a lease.

that's also an excellent way to foster long term partnerships with people who will only think of the best thing for the property year to year.

[meltingfeather]

Thoughts?

Pay it or move on... pretty simple.
He could not say anything and just tell you every year what the new price is.

[basschump]

A good working relationship with a landowner and a contract are worth their weight in gold. So much better than a huge unexpected jump (eg 25%) without expecting it. The nominal increase protects you as much as the landowner.


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[CrossTimbers]

I'd counter with a CPI increase, that way it holds with actual inflation.

[Graysonhogs]

Are the deer's horns getting three percent larger every year?

Trick question, deer don't have horns.

[Graysonhogs]

My take: Pay the 3% and be done with it. If you don't like the lease, don't. Somebody will take it at that price before you leave the property with your stuff. I wouldn't "counter" with anything. You aren't in mediation and you might just pizz the ol boy off.

[Hayek'sPupil]

On average over the last five years or so, 3% is a little inflated for Texas. I might counter with 2.5%. But I think his reasoning is sound. In the long run, it might even help keep someone else from scooping the lease out from under you. Personally, I wouldn't be opposed to it, assuming it's a good lease and a good landowner.

"In the long run we're all dead" - John Maynard Keynes (who did not seem to mind inflating the economy)

[Hayek'sPupil]

So we are in our Third year of a three year contract and the lease owner said he is going to go up 3% every year from now on. Its not that much per member but I have been on long term leases before in the hill country and never had this brought up to me. He said everything increases per year, which I agree, We have passed on some young deer, because we want to be there long term. Seems like we have a good relationship with the land owner...

Guess pay it and move on until we can't pay anymore or we think its not worth it...

Thoughts?

Assume, like others, its what this lease owner considers inflationary pressure. This is not the correct definition of inflation. Inflation is not simply a rise in the general price "level". Inflation is a price distortionary process brought on by the expansion of money and credit and/or government spending to stimulate the economy which serves to misallocate capital by manipulating the incentives on long and short term investments. It is not just a rise in the price level though that tends to occur down the road but not always.

https://mises.org/wire/inflation-beginners

[lovemylegacy]

The landowner is being up front with you. That's a change from what I read on here and from what I have experienced myself. A 3% increase per year is less than what we have experienced I can tell you that. You actually have the advantage of planning into the future to the point that it will be to expensive or exceed its personal worth. If you are happy with the lease and its worth a 3% value increase per year, keep it.

Im assuming the 3 year contract was a set price?

[TxDispatcher]

Thanks for all the thoughts and ideas ...its worth 3% for me not to move all my stuff but I have other members to deal with. You just have to put yourself in the land owners shoes sometimes to justify the cost increase.

I bet you won't have a problem filling the spots should guys decide to leave