The past few years have brought us several farmland investing platforms which has been great for wealth protection as well as our investment portfolios. And while farmland is a sound investment, how you do it can make a big difference to your bottom line.
We go a lot more in-depth about why you should invest in farmland in Farmland Investing | 5 reasons it’s the secret sauce for your portfolio and the easy way to invest but let’s review the basics.
Table of Contents
Farmland Is For Wealth Protection.
As your investment portfolio grows, you want some recession protection and inflation protection.
- Farmland may offer recession protection because it doesn’t move up and down with the stock market. It’s completely uncorrelated, meaning if there’s a major market crash, your farmland investments should not be badly affected.
- Farmland may offer inflation protection because inflation is heavily correlated with the price of food. As food prices go up, so do farmland revenues and value.
Farmland values also have low volatility and have only been going up over the past 60 years. There’s also a growing population all of whom kind of rely on farms to sustain themselves. It’s pretty clear to say that farms are not going anywhere.
There are also feel-good factors about investing in farmland.
Generally, I don’t care about feel-good factors when it comes to my money. But when they align with high growth and wealth-protection, I’m pretty happy to pat myself on the back.
A lot of the companies on this list focus on sustainability and environmental factors, allowing farms to “modernize.” They also partner with generational farm owners, letting them expand on their own terms and build their own wealth.
Farmland Investing Platforms
While many investors recognize the potential behind farmland, until recently we couldn’t exactly get involved unless you want to buy a farm for yourself or strike up some sort of direct partnership with a farmer.
Hence the rise of farmland investing platforms. Many of these are actually founded by farmers who recognize that farms need funds to grow, expand, and produce. We put in our investment (generally $10-$25K although there are many exceptions) and then we receive returns – either annually, at the end of the term, or both.
So today we’ll look at the top 5 farmland investing platforms and what you should expect from your investment.
How Are Farmland Returns Generated?
In general, your returns will come through farm income and appreciation. The income comes from lease payment, farm operations, and crop sales. The appreciation is the change in value, and is often realized upon sale.
Platform Selection Criteria
Minimum investment size.
Farmland investing is mostly about protecting your wealth, so you should have a decent chunk to invest. Anything under $25K is reasonable.
Accredited investors vs not accredited.
Whether the company deals with only accredited investors isn’t a dealbreaker, but it’s nice to know.
Some investment platforms only deal with “accredited investors” which means among other things that you have to prove that you:
- You are an individual with gross income exceeding $200,000 in each of the two most recent years or joint income with a spouse or partner exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
- You are a person whose individual net worth, or joint net worth with that person’s spouse or partner, exceeds $1,000,000, excluding the person’s primary residence.
This is for wealth protection, and to ensure that they’re not taking money from long-term investing from someone who doesn’t have it.
Online presence.
This may not seem like a make or break criterion, but having a nice platform and online presence gives you peace of mind that you’ll have someone help you figure things out if you get confused. (Or is it just me?)
Due diligence.
We people with traditional finance backgrounds don’t really know how farms work, but I like to see some assurance that a company deals with proper farms that are up to safety standards. Many farmland investing platforms on this list undergo strict reviews including environmental sustainability.
Fees. You know me – I don’t like fees.
Top Pick:
1 – AcreTrader
AcreTrader is my top pick in farmland investing platforms because of their solid and transparent track record.
You can have an overview of some of their farms on their website, but you really get to really dive into the numbers once you create a free account (you don’t have to fund it to get access to the deals.)
They work to screen out any potential issues with farms, so you know you’re investing in something that is expected to yield revenue or appreciate. In fact, many farm applicants don’t pass the screening tests – which means they try to weed out the duds. (So to say.)
Aside from the historical 11% annual returns, I like that they don’t carry debt which makes them a low-risk investment. (While I’m all for leverage when it comes to my personal investments, I don’t want that uncertainty in my investment platform.)
Once you create your account, you can amp up your farmland investing learning curve with very informative reports, blogs, and webinars.
About this farmland investing platform:
| Founded in | 2018 |
| Accredited Investors only? | Yes |
| Minimum investment size | Approx. $10K |
| AcreTrader Returns | 11% |
| AcreTrader Fees | Reimburesement of startup costs fee up to 2.5%, annual management fee of 0.75%, and up to 5% property saleclosing fee when farm is sold |
I do want to especially let people know that AcreTrader does give a kickback to me if people sign up with them. They didn't pay me to write this post, and I wrote it because I do truly believe in the digital platform they set up and the general idea of investing in farmland, although I don't have any opinion about any specific type of farm...that’s what they are for, farms all look the same to me. However, due to financial regulations, I need to put an extra disclaimer.
This is a sponsored promotion for the AcreTrader platform. FiveYearFIREescape may have investments in companies represented on the AcreTrader platform. This informational post is by no means a promotion, solicitation, or recommendation of any specific investment.
Farmland Investing Platforms – The Best Of The Rest
2 – FarmTogether
FarmTogether is another big name among farmland investing platforms, but it has a bit less of a track record. Actually, one of their pitches is that you can buy an entire farm all by yourself and co-manage the farm if you want?
What’s that all about? I’m using an investing platform for the exact opposite reason!
They undergo an extensive screening and analysis, and review factors including soil and water quality. They do their due diligence.
But back to their investments. They’re pretty upfront about the farms that they’re investing with, though you have to sign up to view more specific details. They’ll share the minimum investment, the target hold, and the expected returns.
They also have a “Sustainable Farmland Fund” – an investment of $100,000 with 8-10% expected returns, and 4-6% expected annual payouts.
Some other pros to this farmland investing platform is that you can invest your pension fund, as well as through LLCs and other entities.
About this farmland investing platform:
| Founded in | 2017 |
| Accredited Investors only? | Yes |
| Minimum investment size | Generally $15K for a farm investment (and $100K for their “sustainable farmland fund” |
| FarmTogether Returns | These depend on the farm, but a typical farm can have 7.6% annual cash payouts and a 2.5x net equity multiple after 11 years. This means that a $15,000 investment should yield $1140 in cash per year, and net returns of $37,700 at maturity. |
| FarmTogether Fees | FarmTogether claims to offer lower fees than standard managed investments, though they are not transparent about the numbers. In general there is an upfront fee of 1-2%, and then a 1-2% annual management fee, but you will not know the exact numbers until you buy in. |
3 – Steward
Steward does farmland investing a little differently. Their pitch is that the minimum investment is quite small, and you don’t need to be accredited. Yay? BUT their main business model is to give crowdfunded loans to farmers – and even if it has feel-good points, private debt is NOT a great form of wealth protection.
One of their main selling features is that they do not charge investors any fees “at the moment” which makes this a great way to dip your toes in farmland investing.
While they do their due diligence in partnering with farmers who can pay up, they cannot guarantee a return – although the farmers have to use their assets as collateral, and those assets would have to be used to repay the loan should they default. (Which I’m sure is very motivating.)
What I do like is that they’re very transparent before you sign up. You can peruse the individual farms that are crowdfunding, view the exact numbers and even choose something that appeals to you. (I’m kind of tempted by this Bison farm, actually.)
The farmers give updates about how they’re using your loans, which let’s you “keep tabs”. Also, their term lengths are a bit shorter than other farmland investing platforms, if that appeals to you.
You can also put your money into their “Steward Regenerative Capital Fund” which lets Steward create bridge loans for regenerative agriculture farmers. The minimum investment is only $100, the annual returns are 4.5%, and they’ve already raised over $5M.
About this farmland investing platform:
| Founded in | 2017 |
| Accredited Investors only? | No |
| Minimum investment size | As low as $100. |
| Steward Returns | The individual farm returns promise 6-8% per year. |
| Steward Fees | None |
4 – FarmFundr
FarmFundr is much like the other farmland investing platforms except they also directly manage certain farms. Compared to the other platforms, they lack transparency until you begin investing with them. You can’t view the farms they’re partnered with and their fees are hidden. I don’t like hidden fees.
The biggest red flag for me is that they only target 10% returns (unless you’re VIP with a half-million-dollar investment – in which case they target 20% returns.
About this farmland investing platform:
| Founded in | 2015 |
| Accredited Investors only? | Yes |
| Minimum investment size | $10,000 – 15,000 depending on the farm |
| FarmFundr Returns | A target of 10% per year, with some going as high as 13-15% |
| FarmFundr Fees | The fee structure is not transparent, especially as there are two investment models – annualized returns and appreciation upon sale. |
5 – Farmland ETFs, REITs, And The Stock Market
If you’re not an accredited investor or none of these options appeal to you, there’s another way. You could always partake in farmland investing via the stock market through your own investing platforms.
Of course, there’s a downside to this – farmland ETFs and REITs move up and down with the stock market, which doesn’t protect you from volatility and recessions the way that farmland investing is supposed to. So I prefer the crowdfunded route.
TL;DR – Best Farmland Investing Platforms
- Our top pick is AcreTrader due to their strong track record, low fees (under 1% for management) and historical high returns (8-12%) compared to general farmland as per NCREIF.
- If you’re not an accredited investor, you can dip your toes into farmland investing with loan-based Steward which allows for much smaller investments (as low as $100) and returns of 6-8% with no fees for investors.
