As a Real Estate Agent, I receive many request for equestrian boarding facilities for sale.  Often these clients are enthusiastic until the actual economics of owning such a facility are set down in black and white.  Seldom do such buyers actually leave the comfort of the city once they understand the work and time constraints involved in a horse career or even keeping horses at home.  Horse keeping is too costly and labor intensive for most hobbyists (one to three horse amateur rider), and becoming a professional is a difficult road to take.  On the other hand, boarding your horse at a boarding/training stable can be very expensive, and provide less hands-on satisfaction.  In this article, we'll discuss a possible compromise solution: a horse condominium.  The condominium concept of individual space and joint ownership of common areas can apply to equine living space as well as human living space.

Here's an example.  Consider a 25 stall facility with 10 individual owners, at a cost of $35,000 each.  As an owner, you would receive 1 of 10 shares in the partnership.  There are many options, including buying into an existing group; setting up your own group, or establishing a limited partnership.  If you start already know or market shares to the general public.  Your real estate agent can help with the marketing.

Before you leap in, make sure you understand the advantages and liabilities involved.  Advantages include the possible tax write-offs on your horse, expenses and property taxes, in addition to owning an actual asset.  Be sure to check with your tax accountant when considering writing off your horse, his keep, and showing expenses--tax laws regarding horses are complex.  In addition, check with your equine associations (such as American Horse Shows Association, American Hanoverian Association, and so on) regarding the rules separating amateur status from professional.  These rules vary between associations; an equine-related business may, or may not, affect your status.  While the benefits of involvement in a horse condominium can be very rewarding, research your individual circumstances carefully, to avoid unexpected consequences.  You should be aware of the accountability of joint ownership and liability in addition to possible gains on profits and selling the property.  Your stake in the business includes both profits and losses.  Thinking long-term, future zoning may make the property tremendously valuable at some point.

If you do not have the case in hand, you may be able to borrow against your existing mortgage, life insurance, or retirement plans.  Your real estate broker can help guide you to the right people to help you weigh your options as you establish your partnership.

If you decide to set up your own partnership, you'll want to find the perfect piece of property.  Purchasing an existing (and profitable) boarding facility already on the property is the ideal situation.  If none are available, look for land with adequate acreage, suitable terrain and drainage.  Property that is in close proximity to town for and easy commute is preferable.  Existing residences on the property are a plus, as they can be rented out to minimize the debt ratio.  Be sure to examine long term development by checking with the county and city as to what is proposed in the next 10 to 20 years.  If you are lucky, a zone change to commercial or industrial uses could be worth $500,000 per acre in the year 2020.

If the ideal facility doesn't already exit, build your own!  Use the example shown in the Sample Plan--(above) in this article as a median to judge an existing property.

When considering a horse condominium, let yourself get goal-minded.  A condominium is an opportunity to invest long and short term in your horse interests.  Customize the concept according to your own needs, budget, and interests--there is lots of room for flexibility and creativity.

First, does your initial investment pay anything besides the down payment on the land/facility?  The board being charged to non-investors and the discounted rate for investors should be enough to cover the mortgage payment, insurance, property taxes, manager's salary, labor, and other regular costs.

Until the non-investor stalls are rented, expenses will probably exceed income.  As in our Sample Plan, establish a checking account out of the actual investor buy-in amounts to cover any losses during start-up.  Remember, as an owner you are responsible for your share of the losses.  Plan to have enough capital to accommodate for possible losses.

In addition, make sure you have the items covered in writing for your protection.  Include these  in any contract you and all investors have agreed to.  These must be enforced by the facility's Board of Directors (or Investors) on all boarders (investor and non-investor).  Once you have hammered out these issues, anything else that comes up should be minor.

Facility.  If you are building your facility, you have lots of leeway.  If the facility already exists, look at things like footing and stall and arena size.  All must work with your needs.

Footing.  Make sure it will work with the disciplines you plan to accommodate.  Have a consensus before you buy in.  Develop a schedule of who will work it up and when.

Resident Trainer.  Spell out who will have priority in the arena.  The facility should get a fee from the trainer for all lessons taught.  Establish a procedure for hiring and firing trainers.

Haul In Riders. Allowing outside riders to use the ring for a fee can be a good money maker.  Establish fees and rules.

Shows & Events.  Often a good money maker, but be sure that the scheduling is cleared with investors.  Make sure that the insurance coverage is adequate.

Insurance & Liability.  Get details on the converge.  Be sure it is adequate for the facility.  Put releases and boarding contracts in place for all boarders.  Have a signed release for each rider. As an investor (owner), you can be liable.  Have a quality insurance agent and attorney review all contracts.  How much are the fees per month/annually and how are they to be paid?

Feed & Labor.  Are these included in the monthly board?  Specify type, quantity, and responsibility for who will feed/when.  Provide fair salaries for the on-site manager and stall labor.   Have procedures in place for hiring and firing.  Spell out responsibilities in detail.

Utilities.  Who controls and who pays?  Provide a telephone for emergencies.

Investor Sublease.  Make provisions for the investor who wants to sublease their stall, if you choose to allow this.

Arbitration. Have a written procedure for dealing with disputes between owners.

Debt Default.  Have provisions in writing, reviewed by an attorney, should one partner default on their share of the debt.

In summary, the phrase "the devil is in the details" is appropriate.  Do your homework up front, call in experts as needed, and make sure that you are compatible with the other owners.  You will be business partners as well as riding companions in what we hope will be an enjoyable experience--as well as a profitable investment.

Erin Warren is a Licensed Agent within Oregon.  Suzanne K. Hitz is a Business & Financial Consultant with her own business.