The popularity of crowdfunding – in which large numbers of peoples invest smaller amounts in a real estate project – is off the charts.
Typically, these ventures are designed to raise capital for residential or commercial real estate work, whether it’s starting from the ground up or rehabbing sites to increase their value.
However, a new player has entered the crowdfunding arena, with an entirely unique asset class: agricultural real estate offerings, aka farmland. It’s called FarmTogether, and it’s well worth your time to sit down and take a long look at its potential.
This article is sponsored by FarmTogether.
Summary
FarmTogether is a decidedly unique tool for investing that blends the strengths of crowdfunding and fractional shares that have taken the world of investments by storm.
Crowdfunded projects let people buy into projects at affordable prices. And real estate has proven itself to be a sound place to put your money and let it go to work for you. This is passive investing that earns you money without any ongoing effort whatsoever on your part.
Farmland is an enormous asset to the world at large, with its value continuing to increase with the growing demand to feed the world’s burgeoning population.
This platform is an exciting new prospect for investors.
Pros
Cons
The investing platform may appeal to many of your personal and financial beliefs. Among them are diversifying your portfolio and being socially responsible by investing in sustainable U.S. farmland.
Be honest, have you ever considered farmland a wise investment? It’s actually been a key component in the asset list of the uber-wealthy for years and years. Now, with crowdfunding, you can buy into the investment class for far less cash on hand. In this case, the minimum investments for FarmTogether is in the range of $10,000 to $50,000.
Farmland is considered a sound investment because of its slow but steady returns over time.
It’s passive investing at its very best. You put down the money you can come up with, then basically forget about it and watch it rise in value over the longer run.
What defines the longer run for FarmTogether projects? They look for projects anticipated to take a minimum of five years to be completed.
This type of investment is smart for people who have long term goals such as saving for a child’s college or their own retirement.
The inherent value of agricultural property grows independently of other asset classes. For instance, the land can be increasingly profitable even when the price of silver drops. Or any other precious metal.
What’s more, for decades, farmland has proven itself to be a solid investment, faring far better than any other real estate asset. Historically, it simply has not lost value.
There will always be a need for farmland. The population is rising and so is the need for agricultural products. The demand for food increases every year, and this will never change; people will always need to eat. At the same time, the available land for farming shrinks as it is developed for other commercial usage.
Another new and exciting twist in the world of investing is the opportunity for people to buy fractions of shares, rather than a whole share itself.
Fractional investing is a great way for smaller investors without deep pockets to buy into high-quality stocks and ETFs even if they can’t fund the entire ticket price.
Your minimum FarmTogether investment of $10,000 (bigger check sizes are also welcome) will give you fractional ownership of U.S. farmland.
The FarmTogether farmland real estate platform is new and thus the team is still building out a proven track record. However, they already have 100’s of clients and over a dozen deals, with one of their recent deals having closed in less than 7 minutes. The platform offers you a chance to get in from the ground up.
Here are the specific details of the two new projects:
Click here to view the current projects on FarmTogether!
Another factor that has discouraged people from putting money into farming projects is that they lack experience or the basic knowledge about its day-to-day operations.
Would you know how to grow corn, harvest hay or raise cattle? FarmTogether will do all this work for you, so you will never need to wake up in the middle of the night wondering if it’s time to milk the cows.
The FarmTogether founders and partners are professionals across many industries, with more than 70 years of experience in farmland investing, agriculture and real estate in the US and globally.
At their core is the belief that farmland is a safe, stable and attractive long-term investment for everyone. Their mission is to radically democratize farmland investing.
The FarmTogether team meticulously reviews all the available investment opportunities and only moves forward with the properties they find to be the cream of the crop. Their criteria is to unearth projects that they would buy into as individual shareholders, and they do. The FarmTogether team personally invests in every single deal they launch on the platform. They use proprietary technology and their combined decades of experience to sort through possible projects to select only those that meet their expectations for growth.
Its investment committee, that includes the executive board, selects the top projects from among hundreds of investment opportunities.
They pore through stats including a thorough industry analysis, the site’s soil efficiency, water rights, equipment already on the farm, and the farm’s potential for capital improvements.
Then, they partner with top quality local farmland specialists to lead the project, from managing the land to revolutionizing its operations.
Farmland is considered to offer higher returns at lower risk than other asset categories. It is known for its stable growth even during various economic cycles including adverse market conditions. This is due to the fact that it has low volatility as compared with many other asset classes.
Historically, farmland has brought better returns than almost every other type of asset, including stocks, bonds and precious metals.
In fact, the NCREIF farmland index that measures the value hasn’t had a negative year since 1991.
Farmland has continually demonstrated strong returns over the past several decades. It averaged 10% total annual returns (income plus price appreciation) from the years 1992 to 2018.
The land generates income from various ways, including the sale of crops as well as land value appreciation.
FarmTogether works with local operators, draws up service agreements and makes sure sustainable farmland practices are being carefully followed. This is done to ensure long-term, healthy and predictable income for investors.
At the end of the project’s holding period, the financial experts behind the platform will sell the land at highly competitive prices to offer maximum return on investment for everyone who’s part of the project. Hold periods start at 5 years, although there are annual liquidity windows for earlier exits.
It goes without saying, but we will say it nonetheless, that investors have the choice to back projects that support sustainability, diversity and are eco-friendly.
The majority of the platform’s creators and top executives are female and people of color.
There is a goal in place to develop farming operations with as small a carbon footprint – or even carbon-negative – as possible.
FarmTogether follows the United Nations Principles of Responsible Investment for Farmland Investing.
One of the most important questions for investors is: when will I receive any returns?
You will receive returns from your investment via price appreciation at the end of the hold period, as well as ongoing income payments and crop harvest. They make income payouts on a quarterly, semi-annual or annual basis. The platform will automatically deposit these into your bank account. The size of distributions depends on the income for those years. Investors can track upcoming payments and distributions to date through the FarmTogether platform.
According to company literature, FarmTogether typically targets investment opportunities that offer 7 to 13% returns with 3 to 9% cash yields, all net of fees. However, they currently have a deal on their platform (mentioned as well above), Galaxy Organic Apple Orchard, with a 15.0% net target IRR and 19.6% target cash yield.
There’s a crucial caveat in place for FarmTogether investors, at least right now: You must be an accredited investor.
What does this mean?
As defined by the U.S. Securities and Exchange Commission's Regulation, you must have:
As an accredited investor, you can find business ventures that specialize in just about any type of real estate. Some of these types of properties include the following:
FarmTogether founders launched the platform with hassle-free service in mind, ranging from fund administration and accounting to tax reporting.
You can invest via several methods, including individual funds, self-directed IRAs, solo 401(k) accounts, corporations, LLCs and other venues.
As an investor, you will have secure access to all documents about investment performance, including:
Platforms like FarmTogether make it easier than ever to invest in the alternative asset class of farmland.
Check out the current projects on FarmTogether here!
