Older machine sheds built in the 1970s dot the Illinois farm landscape. Are these old sheds worth keeping and using as rental buildings? The challenge is that many old pole sheds are in bad shape and too small for modern farm equipment. These sheds are expensive to maintain and repair. The owner is also responsible for costs associated with insurance premiums and property taxes. For many old sheds like this, farmers do not need them. These older sheds can cost more to keep than the owner can receive in rent. The machine sheds built during that era used wood framing and poles set in the ground. Aluminum was used for the siding and the roof. 

Farm Equipment Has Become Significantly Larger

Farm machinery has become more significant in size with larger farm machinery; bigger sheds are necessary to house the equipment. In many areas of rural Illinois, these old sheds do not have much rental value. Additionally, the aluminum exterior tends to shrink and swell, allowing weather elements to leak through to the wood framing over time. The water leaks cause the wood to rot, which loosens nails and screws. This allows wind to get under the surface causing more flexing. In storms, the roofing and siding can peel back like opening a can of sardines. Rain from the roof pools on the ground and rots wood foundation boards and framing poles

These old sheds have bare, gravel, or concrete floors. Large doors, over time, become loose or damaged. Wildlife can easily get into these structures, posing the problem of large amounts of feces. The wiring may be old and deteriorated, creating safety hazards worsened by a building that can conduct electricity. The electrical shock hazard is real. Consider having electrical systems removed from the shed, and always use an electrician who isn’t going to “cut corners’ to save you money on repairs.

Boats, old cars, unused farm equipment, and furniture stored in these sheds become junk over time. Cleaning such sheds of “junk” is time-consuming and potentially hazardous to your health as your shed may have asbestos materials, animal feces, or lead paint contamination.

Is Keeping This Old Shed Draining Farm Revenue?

Ask your farmer and others if they have any use for your shed. Many will politely decline the suggestion, but some might take you up on it—reluctantly at times. You could make the shed rental contingent on the farm lease. This can be done with the farmer reluctantly going along with this to make the owner happy.

If your shed is near a lake, there may be a market for boat storage. Talk with a local commercial real estate broker about the rental value if the location is near a city.

Refurbishing the shed’s basic structures can easily exceed $25,000 unless your building is still in good shape. Aluminum roofing and siding will still flex, causing support wood framing to rot if the sheeting is not replaced. Removing the building will also come with a cost if you can't recover the costs. You may be left with the gravel or concrete floor even if you find someone interested in scrapping metal. If the poles were chemically treated, it would create an environmental hazard. Contact your state and local authorities to inquire about permits and tests that authorities may require. Removing a concrete floor be costly. 

Create a Budget

Create a budget for the estimates of repairs. Electrical work can quickly run into the $1,000 plus range to bring the building into safe electrical condition. Thunderstorms could rip your structure apart if you don't repair rotted framing and supports. The wind will find any potential way into your building, and you will eventually find parts of your shed strewn across the nearby fields. By the time you finish the repairs, you may come close to the cost of a new and better shed. Completing partial maintenance won’t completely solve the structural integrity issues. If you get an insurance claim payment from storm damage, your insurance company probably won’t pay further claims unless you fully repair the structure.

Your rent should cover real estate taxes, insurance, and repairs. For estimated costs, including gravel for the driveway and repairs. If you eventually remove the building, also prorate the cost of dismantling and addressing any environmental concerns. Resist the thought of ignoring the situation and leaving it for your eventual heirs.  

Over ten years, maintenance, taxes, insurance, and future demolition costs prorated out can quickly exceed $6,000 per year.  The market often does support that amount of rent. If you decide to lease your shed, have a written lease prepared by a licensed real estate attorney. 

Key points to discuss with your legal advisor include:

• Storage and disposal of hazardous materials, including oils, tires, fuels, and chemicals
• Who will pay for minor repairs and excessive damages, and how will disputes be remedied
• Reporting of known safety and repair issues
• How late or non-payment issues are resolved
• Subleasing
• Minimum renters’ insurance protection
• Listing the owner as an additional insured on the renter’s insurance policy
• Removal of abandoned renter’s property
• Activities allowed or prohibited
• Always check with state and local authorities about permitted or prohibited activities, including demolition

Landowners should carefully evaluate the future of an older machine shed to determine the status of the building going forward. The costs of ownership may not outweigh the benefits of keeping and maintaining the structure.

MEET THE AUTHOR

Kevin Brooks became the farm business management and marketing educator serving Fulton, Mason, Peoria, and Tazewell counties in 2022. He previously served in this role from 2000 to 2011 in Effingham and Champaign counties.

Kevin grew up on a corn and hog farm in Iowa. He received his bachelor of science degree in agriculture business from Truman State University and his master of science degree from University of Missouri in agriculture education.

Kevin is a fully licensed managing real estate broker in Mahomet, Illinois.He holds agriculture teaching certifications in Illinois and Missouri. He is also a commercially licensed UAS (drone) pilot holding an FAA Part 107 license. 

As with any business asset, the machine shed owner should capture a return on investment in addition to costs. In addition, figure in the rent an amount for your management time as a “return to labor and management.” Many old pole machine sheds in Illinois are not worth keeping.

The author is a Licensed Real Estate Managing Broker in Illinois. This article is not intended as legal advice and is provided as an educational service.