Are you looking for a new investment platform and want to diversify your asset classes? Consider farmland investing.
Acretrader and FarmTogether are two crowdfunding platforms that make investing in farmland more accessible. The diversified agricultural investment is ideal if you live in an urban area or don’t have the hundreds of thousands of dollars it typically takes to invest in farmland.
- Is Farmland a Good Investment?
- How to Invest in Farmland?
- Liquidity and Diversification
- Overview of FarmTogether and Acretrader
- FarmTogether Top Features
- Acretrader Top Features
- FarmTogether Vs. Acretrader: Which Farm Crowdfunding Platform is Best for You
- What is FarmTogether and How Does it Work?
- What is Acretrader and How Does it Work?
- Acretrader Vs. FarmTogether: What Are the Key Similarities?
- FarmTogether Vs. Acretrader – Wrap up
This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.
The two farmland investing platforms offer accredited investors attractive historical returns with low volatility. Like their farmland counterparts, they’re strong enough to withstand recession times.
This article helps you understand farmland investment and compares the two platforms in-depth to help you decide whether FarmTogether or AcreTrade are right for you.
Is Farmland a Good Investment?
If you’re looking to invest but want to invest in something less volatile than the stock market, consider agricultural investing. Historically, farmland has been less volatile than the stock market, enabling you to ride out down market years with an extra layer of stability.
There are several ways that farmland gives back in return. Over the long term, due to its limited supply, farmland increases in value. That provides an opportunity for capital appreciation.
Additionally, depending on the platform you use to invest, you might get paid back in crop yields and cash. These nontraditional types of dividend payments can increase your passive income.
Overall, farmland has a low correlation with traditional assets like stocks, bonds and publicly traded real estate. Investing in farmland is a reasonably solid investment to add to a diversified investment portfolio.
Also, farmland investing might protect your net worth against inflation.
How to Invest in Farmland?
If you’re like most investors and don’t have, or don’t want to spend hundreds of thousands of dollars on a single piece of farmland, you can use farmland crowdfunding platforms to invest in shares of farms for a reasonable amount of money.
According to Investopedia, crowdfunding is “the use of small amounts of capital from a large number of individuals to finance a new business venture.” Essentially, it’s a way for
investors to pool their money and buy a property together and then split the dividends and appreciation or increase in the farm’s value.
Usually, you have to be an accredited investor with farmland crowdfunding. However, farm REITs exist for those who don’t fit that investor category. The farmREITs tend to have a lower buy-in point and are more accessible to the average investor.
Liquidity and Diversification
When investing in agriculture, you’ll need to leave your money invested in the farm for several years. The platform will state the expected investment term, but 5 years is typically a minimum. When the property is sold, you’ll receive your initial contribution plus any appreciation.
Unlike stock and bond fund investing in public markets, investing in farmland and other alternative or private investments is typically illiquid.
FarmTogether has plans to introduce a secondary market. If this occurs, it might be easier to redeem your initial investment earlier. And AcreTrader has a marketplace to resell your farm but offers no guarantees that there will be a buyer for your investment.
AcreTrader also lists the expected term of each deal. They state that 5-10 years is the typical lock-up period. However, in the FAQ section, the company said investors should be prepared to invest for at least 1 year and, after that period, might be able to arrange a private sale. Even so, we’re unsure how easy it’s to set up a private sale, and we wouldn’t depend on this option.
In general, farmland investing is illiquid. It’s wise not to invest money you’ll need within the next 5-10 years in an agriculture investment.
Overview of FarmTogether and Acretrader
FarmTogether and Acretrader are two popular platforms for agriculture investments. They have similarities – allowing accredited investors to participate in farmland crowdfunding – and their distinctions.
Each platform requires a minimum investment of $10,000 to $15,000, sometimes higher. The minimum investment varies per farm.
One similarity between the two platforms is that, at present, each serves only accredited investors. You must meet certain income and knowledge benchmarks to become an accredited investor.
To be an accredited investor, you must meet one criterion:
- Individuals must earn more than $200,000 annually or $300,000 as a couple.
- Have a liquid net worth of more than $1,000,000, not including your home.
- Possess advanced knowledge of finance and investments like credentialed financial planners and registered stock brokers.
The fees and the number of available offers are distinct on each platform.
FarmTogether Top Features
FarmTogether is an excellent platform for long-term, high-income accredited investors. Farmtrader offers several investment choices.
- Crowdfunded farmland where investors buy a portion of an individual fund.
- Sustainable Farmland Fund Institutional grade farmland fund which requires a $100,000 investment minimum.
- Bespoke opportunity for those seeking sole interest in farmland with $3 million minimum.
- Secondary market for investors to sell shares (expected soon).
- Easy to use platform for beginners.
- Simple onboarding process.
Acretrader Top Features
AcreTrader is ideal for investors seeking passive income from U.S. farmland investing. It has a robust vetting process to instill confidence that you’re making a solid investment when you use the Acretrader platform. Investors are actually investing in shares of the LLC that owns the farm. Acretrader handles administrative aspects of the farm management and maintenance.
- Fantastic team with sound underwriting practices
- Flat 0.75% annual servicing fee on all deals
- Solid 3% – 5% cash yield on investments in addition to capital appreciation.
- Over 28 open projects on the platform
FarmTogether Vs. Acretrader: Which Farm Crowdfunding Platform is Best for You
If you’re an accredited investor looking to invest in farmland, you’ll want to compare the two sites – FarmTogether and Acretrader – to decide which is best for you.
Here’s a rundown of the two sites and their pros and cons.
What is FarmTogether and How Does it Work?
Farm together is an online marketplace for US-based agriculture investments. They pride themselves on being easy to use. Also, they take the research out of the investment process: They invest countless professional hours and use state-of-the-art technology to choose only the best farmland to invest in.
FarmTogether principals also invest in each agricultural investment they select. That way, they can instill confidence that the investment is solid.
We believe crowdfunding sponsors must have ‘skin in the game’ and invest alongside outside investors. If that isn’t the case, it’s typically a bad sign.
FarmTogether is also a one-stop shop for all the paperwork as well. Through their secure portal, you select an investment, review all the related documents, and sign. Additionally, the platform sets up each farm within its LLC, and each investor owns a percentage of that company. Their profits coincide with the percentage ownership in the farm.
As a FarmTogether team member, you oversee the functioning of the LLC, so it’s truly passive income for you.
FarmTogether Fees and Investment Minimums
Fees vary per deal and are stated along with the investment details. According to their website, their fee structure is aimed to be lower than the industry standard. The annual asset management fee is 1-2%.
For example, the upfront fee for a recent orchard offer was 2%, with an annual 1.5% management fee. There may be additional fees stated for each deal. However, to offset the fees, there can also be additional profit opportunities.
Typically, the minimum investment varies and ranges from $15,000 to $50,000 depending on which plot of land you invest in. However, if you want to put your money into a sole investment, you must have $3 million or more.
Also, there may be upfront fees not included in the minimum initial investment.
FarmTogether Investment Returns
FarmTogether offers two types of returns: income and appreciation. Because FarmTogether leases out the farmland through their LLC, as an investor, you get a portion of the rent paid. Dividends are paid either quarterly, semi-annually or annually.
Like most real estate investments, farmland is expected to appreciate or increase in value. That value is realized when the land is sold.
Expected FarmTogether returns – net of fees – as stated on the website:
- Absolute returns: 6% to 13%
- Average cash yields: 2% to 9%
- Experts know their stuff. The management picks suitable investments – particularly in citrus, grapes, and produce-bearing trees – and partners with experienced farmland developers.
- Easy to use platform. FarmTogether was developed for first-time agricultural investors, and its platform is complete with a new investor dashboard.
- Socially responsible investment platform. They develop carbon-negative farms, and 100 percent of their acreage is enrolled in a Sustainable Farmland Management Standard.
- Farmland fund offers short holding period (2 years)
- Only accredited investors can participate in FarmTogether, so it’s not open to the average investor yet.
- Less liquid than traditional financial markets, lack of secondary market at present.
- Investing in one farm is less diversified and riskier than owning a portfolio of agricultural investments.
- Greater variability in fees than Acretrader.
What is Acretrader and How Does it Work?
Acretrader is another agricultural investing platform. It’s a real estate crowdfunding platform that allows you to own shares of farmland.
The platform has fewer offerings at a time than FarmTogether and is run by a smaller team, but it was BBB accredited in 2019. AcreTrader works to offer only the best farmland purchases and create a seamless online investment process through their portal.
Like FarmTogether, everything an accredited investor needs is on the portal – from potential farm offerings to due diligence materials and legal documentation. And it takes only minutes to sign up.
The process is similar to FarmTogether. Acretrader creates LLCs that purchase the farms, and then you, as an investor, buy shares of the LLC equivalent to the purchase price of 1/10th of an acre. However, you must invest in a minimum of at least an acre.
After that, Acretrader takes care of the rest. They manage the farmland and collect the rent and pass along your portion of the cash flow and capital appreciation.
Acretrader Fees and Investment Minimums
Acretrader charges 0.75% annual asset management fees, some of the lowest in the business. The stated minimum investment amount is $10,000. Even so, like FarmTogether, the actual minimums vary per specific farm, with the highest minimum going up to $25,000. The amount is enough to buy you anywhere between 1-4 acres, depending on your investment property.
Unlike FarmTogether, Acretrader acts as a real estate broker and makes a commission on each property as well. That can help to keep fees low, as the firm also makes money on its brokerage role.
Acretrader Investment Returns
Acretrader returns seem lower, but always take return information with a grain of salt. Promised returns aren’t the same as realized returns. The company breaks out dividend returns and total returns. Dividends are expected to be paid out annually. Capital gains aren’t received until a farm is sold.
All of the figures are expectations. Despite the upper level of returns at 9% for AcreTrader versus the 13% upper level for FarmTogether, I wouldn’t necessarily use this as a deciding factor.
Acretrader returns – net of fees -as stated on the website:
- Lower risk properties: 3% to 5% dividends
- Internal rate of return: 11% (includes dividends and capital appreciation)
- Low investment minimums and lower asset management fees.
- Excellent user interface and educational materials.
- Handpicked farmland pieces including timber and farms.
- Fewer deals because of how they vet their farms.
- Newer company means a shorter track record.
- There may be a secondary market in the future, but this will not guarantee an early exit from the investment.
Acretrader Vs. FarmTogether: What Are the Key Similarities?
Although FarmTongether and Acretrader differ in various aspects, as indicated in our previous section, the two are similar to some extent. Here‘s how:
Professional Management Teams
AcreTrader and FarmTogether management teams are investment, financial, and farmland investment experts.
FarmTogether’s team comprises 9 expert members, including the following:
- Jerad Hine (CEO): Experienced in asset and wealth management at Bank of America and JP Morgan Chase. Also, he supported the growth of timberland and farm businesses while working for Nuveen.
- Josiah Terrell-Perica (co-founder and director of farmland investing): Worked at Wood Creek Capital in real assets investing and at PGIM’s Agricultural Investments in research and underwriting.
- Artem Milinchuk (co-founder and head of strategy): MBA holder and experienced in finance-related matters of farmland and agriculture
AcreTrader’s team has 13 well-trained members. Some of them include the following:
- Carter Malloy (Founder): He was brought up in a firming family and worked in a global equity firm for several years. Also, he had various businesses, where one focused on sustainable fuel technologies.
- Ben Maddox (director of farm operations): Worked as Heifer International’s farm analyst. Also, he’s an MBA holder and has farm management accreditation from the American Society of Farm Managers and Rural Appraisers.
- COO Garrett McClintock: Managed agriculture businesses with more than $40 million worth of annual revenues at Oxbow.
Support for Farmland as an Ideal Investment
FarmTogether and Acretrader portray farmland as a perfect investment opportunity. They indicate a high likelihood of good returns on investment (ROI), regardless of financial market performance. Also, the two offer capital appreciation and passive income. The minimal correlation with traditional financial assets make farmland a stable addition to a stock and bond portfolio.
However, the possiblility of losing money exists with either platform, or with investing in general. Don’t invest in FarmTogether or Acretrader with money you’ll need within the next five or so years.
Vision and Mission Statements
Both have a similar approach to serving their customers. FarmTogether opens up the asset class to more investors. It concentrates on buying and selling land and deals with global concepts like peace and sustainability.
AcreTrader’s vision is to ease the land buying and selling process: They make land buying and selling more accessible for their customers through technology, expertise, and data use.
Signing up for FamTogether and AcreTrader is free. You can check various potential properties before making a buying decision.
The platforms administer and manage the farms. Thus, you don’t have to engage in farm management or learn much about farming. The investment allows you to retain your day-to-day job.
Investments Choice Opportunity
Some equivalent platforms automatically invest your money in a specific real estate portfolio that may not meet your financial objective. That isn’t the case with our focus on farmlands. Instead, FarmTogether and AcreTrader allow you to choose the farm you want to fund from their diverse investment options.
The two farm crowdfunding platforms use innovative technologies to teach investors about designated properties in which they can invest. Their online investment processes are very smooth. Also, they have an online Learning Center providing farmland investment and agriculture information.
Different Account Types
Both crowdfunding platforms support various types of individual and entity investment accounts. They also include self-directed retirement accounts. Also, Arcretrader supports trust accounts.
A Fairly Small Minimum Investment
The two farm crowdfunding platforms require relatively small minimum investment amounts ($10,000 for AcreTrader and $15,000 for FarmTogether). The requirement is considerably less than investing in commercial real estate or farmland alone.
The main competitors of AcreTrader include Franshare, FarmlandFinder, and Harvest Returns. Other rivals of this crowdfunding platform include Eureeca, Ekylibre, Immovesting, aWhere, Investbook, Mergdata, and Darian, among others.
Yes, AcreTrade is legitimate. Currently, the platform has a rating of A+ with the BBB Better Business Bureau. BBB’s rating is based on how well a company connects with its clients. Since their rating is A+ to F, AcreTrader’s performance is excellent, as it’s in the highest rating category.
FarmTongether makes money by charging a one-time fee for putting a deal together and an annual management fee for all projects. Also, they generate income from lease payments, crop yield, and land value appreciation.
Yes, AcreTrade is a good deal. The crowdfunding platform is worth it if you’re an accredited investor wanting to venture into a farmland startup. Their experienced management team gets the work done so professionally that you don’t have to mind your little or no experience in the field.
The requirements for AcreTrader are that you must be an accredited investor with a minimum investment between $10,000-$25,000. Additionally, the company has a 3-8 years holding period which you must maintain for lack of a secondary market. The farmland has consistent returns and low volatility, making it an excellent platform to diversify your farmland portfolio.
FarmTogether is a Leading Harvest member, an innovative nonprofit organization, and a sustainability leader in the industry. Leading harvest was created by and for agricultural value chain stakeholders. The agricultural operations of FarmTogether are certified for their compliance with the Leading Harvest Farmland Management Standard.
FarmTogether Vs. Acretrader – Wrap up
Farmland investments are poised for growth because of the limited availability of land. Using a platform like FarmTogether or Acretrader is a great way to get into the market for approximately $10,000 to $15,000.
And, if you’re already looking at investing in farmland, one of these platforms might be for you. Both farmland investing platforms allow you to invest using a self-directed IRA, which means you could use them as tax-advantaged investments.
Acretrader has transparent and low fees, so you know exactly how much the investment will cost in fees. And since it acts as a brokerage firm, it charges the seller a 5 percent fee, which means that your investment management fees are typically lower than FarmTogether..
FarmTogether is socially conscious, has a diverse staff, and is committed to ensuring the farms it manages are environmentally friendly. So, you can invest in something that’s also helping make the world greener.
ArcreTrader vs. FarmTogether has comprehensive features and a good user experience. No matter your choice, you’ll be invested in an alternative investment less correlated with the returns of typical stocks and bonds. Both can be ideal for a diversified investment strategy..
- Empower vs Ziggma Investment Tracker Apps
- Learn About Real Estate Crowdfunding and Investing Without the Hassle
- Pros and Cons of REITs
- EquityMultiple Real Estate Review – Real Estate Crowdfunding
- Fundrise vs REITs – Which is Best?
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t personally believe is valuable.