3 Quick Ways to Easily Invest in Farmland
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Farmland is an unique asset class to invest in. Famous investors such as Bill Gates and Michael Burry (from the Big Short) have been investing in farmland. Investing in farmland is similar to real estate in that supply is limited, but also differs from typical real estate since it produces crops. It is definitely an asset class to consider as the world population continues to grow and inflation continues to be a global concern.
Below are the 3 quick ways to invest in farmland. With all 3 methods you don’t have to actively manage the farmland.
AcreTrader
AcreTrader is a crowdfunding platform that allows you to directly invest in farmland. The platform has a strict vetting process and only accepts 1% of deals it reviews. Here are some of the key points:
- Minimum investment is usually $10,000
- Must be an accredited investor to invest
- Fees include an annual administration fee of 0.75% and closing fees of approximately 2% when a deal is closed.
- Target unlevered IRR of approximately 7% to 9% and aims for additional cash yield of approximately 3%-5%
- Investment horizon generally 5 to 10 years
- Each share you buy represents 1/10 of an acre.
- There is currently no secondary market so investments are illiquid
Steward
Steward is another crowdfunding platform that provides loans to sustainable farmlands owners. Some key points on Steward
- Minimum investment amount is only $100
- Non-accredited investors can invest
- 1% annual loan service fee
- Returns varies depending on the interest rate
- Investment horizons can be as short as 9 months to a few years
- These are often special situations, such as farms that have trouble accessing traditional capital.
- There is currently no secondary market so investments are illiquid
Publicly Traded Farmland REITs
Publicly traded farmland REITs are also a good way to get diversified exposure to farmland . Two examples below include Gladstone Land (Nasdaq: LAND) and Farmland Partners (NYSE: FPI). Here are some key points when investing in farmland through REITs:
- Minimum investment is low and will be the per share price the REIT is trading at
- Non-accredited investors can invest in
- Management fees vary depending on the REIT (0.6% for Gladstone Land)
- Since these REITs trade on the stock market, there will be some exposure to stock market beta.
- High liquidity you can sell shares of these REITs in the stock market
Summary
In summary, three quick ways to invest in farmland are:
- AcreTrader: a crowdfunding platform that buys and manages farmland (open to accredited investors only)
- Steward: – a crowdfunding platform that makes loans related to sustainable farming (open to non-accredited investors)
- Publicly Traded REITs: Accessible to non-accredited investors that you can buy through your broker
