How to calculate a value for airstrip on my land?

[FarmerMark]

Good morning! Is everyone here a pilot? I am not a pilot yet but my neighbor is and the runway is half on my property. I have a few questions regarding the value of my portion of the runway. Can anyone help me calculate a value for rental purposes

 

[Doc Holliday]

Too many variables.

I assume that’s farm land. If you were to lease it out for farming, what would it bring?

If it doesn’t have potential for anything else, then that’s a start.

 

[Checkout_my_Six]

I don't think it has any additional value....unless it produces revenue.

 

[FarmerMark]

Thanks Doc! At present it is farmland, but we are looking into developing it into an airport community. My friend and neighbor owns some of the runway and I own more than half. At present I don't charge him for leasing the land. His business is growing. I'm trying to figure out how to calculate a value. It's more than just farmland in my opinion. The houses will be alongside the runway and each one will have the ability to have a hanger and durect access to the runway.

 

[FarmerMark]

I don't think it has any additional value....unless it produces revenue.

It does have additional value in my opinion because it is producing revenue for him and without my letting him use the land for a runway he would have no business. He builds planes and teaches flight instruction. He's an awesome guy and we are close friends but the land has value beyond agricultural in my opinion

 

[GaryM]

I don't think it has any additional value....unless it produces revenue.

It certainly has value if it causes loss of use of that land by the landowner, for example, if it is taking acreage out of production. And if the neighbor uses that portion of the runway on the neighbor's property unchallenged for a number of years, in many states they could claim to own it by adverse possession. So drawing up an agreement and charging some amount of rent makes sense to me. If in the future, if you are both using the runway, the rent could be dropped.

Curious as to how half the runway ended up on the property of a non-flying neighbor in the first place. Was permission ever given?

 

[Racerx]

That's the revenue of 1 person who is the primary user. At present he's the only one it is of value to. If he sells and the next owner is just a farmer the runway is of zero use to them. If anything it will cost money to maintain. My vote, zero value added value at present.

I'm assuming this is just a grass strip and not asphalt and permission was given for use.

 

[William Pete Hodges]

My wife is a real estate appraiser and she has had occasion to appraise property with an airstrip and properties that are part of a home/airport community. I am not an appraiser but I can relate a few things I've learned from her through osmosis.

An appraisal of a property takes into account a lot of factors including the property, buildings and other mamade improvements. The best appraisal with the highest accuracy would be based on a recent sale of an identical property very close to the subject, the same same size, with all the same improvements at the same age and in the same condition. Appraisers use recent sales of at least 3 similar properties close to the subject to derive a value of the subject property.

A property with an airstrip has limited appeal to the general public, therefore comparable properties (comps) can be difficult to find. Another problem is this type of property doesn't sell very often because owners tend to keep them a long time.

There are a couple of different ways to account for this. One way is to find other sales of home/airport type properties farther out if possible, then adjust them for the change in area and the other differences between them. One problem with this is the more changes the less accurate the appraisal is, especially if you go out of the county or even the state to find comps. Another way is to use a different type of property that has similarities to the owner's likelyhodd of keeping property a long time and similar need for a fair amount of special use land. My wife ended up using a couple of horse farms as comps because she could not find enough home airport comps in the state at the time. She got a compliment from her supervisor at the time for her line of thinking.

My suggestion is to seek some professional advice here. My understanding is a grass airstrip isn't worth very much unless it is generating revenue for the owner. Depending on other improvements with it is is really just a big lawn. BUT I am not an appraiser and this is NOT professional advice.

Hope this helps

 

[Bell206]

but we are looking into developing it into an airport community.

Perhaps before you work on leasing numbers, you may want to check with your local/state agencies on your upgrade plans. Have seen more than one airport upgrade plan get detoured for lack of this type of due diligence.

 

[Kelvin]

Rental purposes?

Are you or your neighbor planning on putting houses along the runway? Did I read that right?
Who will own the lots?
Are there utilities?
Zoning?
Access to state roads from future lots?

This a deal where it may be in everyone best interest to get a rock solid real estate attorney involved that has development experience. It might be that the land for the project be identified and each of you contribute land into a new LLC or other entity that suits your needs...then go from there...

This can get very complicate in a very short period of time if not handled correctly.

 

[rhkennerly]

The real question is “what is the property worth to your neighbor?” He’s dead in the water without your end. If this project develops the way you foresee, your side is going to be way more valuable. If he cuts you off, you can just extend the runway in the other direction.

If I were you, I’d be leasing your neighbor’s end of the runway instead. Or better yet, buying it. If there is a falling out (and there will be) it’s going to be a mess if all this isn’t formalized.

I’d be forming a legal partnership vested in a development company. Apraise and then sell or cede the entire runway & areas to be developed to the partnership. More equity could be developed by your partner, since his part is smaller, by developing an FBO & fuel depot on his end, for instance.

 

[C3flyer]

It's hard to value half a run way. I would just go off what it would be for an ag lease... Maybe add a little to it.
But if I was buying a house on a runway... I would not want each end owned by 2 different people.

 

[Dana]

I would not want each end owned by 2 different people.

That's what led to the demise of Johnnycake Airport in Connecticut. One owner wanted to sell, the other did not.

 

[Bob Noel]

a consideration is how property taxes are assessed (if any). My BIL has land that must be maintained as farm land in order to qualify for a lower property tax rate.

 

[TCABM]

Good morning! Is everyone here a pilot? I am not a pilot yet but my neighbor is and the runway is half on my property. I have a few questions regarding the value of my portion of the runway. Can anyone help me calculate a value for rental purposes

How much income does the runway generate annually?

If there wasn’t a runway there, what would the land be used for instead?

Is the runway paved, marked, or lit? What about other improvements such as a taxiway? Is the runway charted?

How did runway get onto your land to begin with? Is there an easement recorded somewhere? What are the details?

 

[mandm]

You used the word “we” are planning to build a community so I imagine that means your neighbor is involved. But he also owns the other half? and you need both halves to make a runway.

I have zero experience with this kind of stuff but I would draw up plans, and separate the runway and taxiways into one ownership, a company that you both have 50/50 stake in, or do 3rds ownership with the HOA for the future community to be built owning a third.

I don’t think there’s big money in this, when I see empty lots for sale they are usually 30-50k each depending upon the location of course, so maybe you guys could split these profits depending on who owns what percentage right now? Also it will likely take some up front costs to get it going, marketing costs and it will probably take a long time to sell the lots and then even longer to wait for others to start building their homes and hangars. You need something that’s desirable to get people to buy in and invest / build.

 

[UngaWunga]

Doing that all on a handshake deal sounds like a good way for someone to get screwed in the future when there's actual money involved.

 

[moparrob66]

Yeah, youre going to need a thoughtful, long term plan. I like the idea of airport communities but what's to stop the houses being sold to non-aviators? If enough Karens move in and start kvetching about all the airplane noise, your dream turns into a nightmare. Best bet is to buy enough dirt for the strip to be 100% yours, ideally in a spot far from land likely to be developed and occupied by anti-aircraft Karens...

 

[ateamer]

Yeah, youre going to need a thoughtful, long term plan. I like the idea of airport communities but what's to stop the houses being sold to non-aviators? If enough Karens move in and start kvetching about all the airplane noise, your dream turns into a nightmare. Best bet is to buy enough dirt for the strip to be 100% yours, ideally in a spot far from land likely to be developed and occupied by anti-aircraft Karens...

Our airpark covenants include one stating that its primary purpose is as an airport, and that the sounds from aircraft cannot be deemed a nuisance within the CC&Rs, and that buyers acknowledge and agree that they permanently waive any objection to aviation activities around the airpark, and that as long as at least one owner wishes to keep it as an airpark, it will remain so.

It takes 75% of the owners to vote “yes” to an covenant change, an intentionally high bar.

 

[moparrob66]

That seems like a decent safeguard. I hope it stays that way!