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AcreTrader is an investing platform that makes it easy to buy shares of U.S. farmland and earn passive income, starting in just minutes online. The platform features actual parcels of farmland where investors can choose offerings to participate in based on their investment preferences.
Farm types range from Midwest Row Crop Farms to California Almond Orchards, but you don’t need to be an agriculture expert to get started. They have a very thorough underwriting process to vet the offerings, and present information in an easy-to-understand offering page on their website where you can get started with as little as $10k and 10 minutes.
- Investors looking for diversification away from stocks and other traditional assets
- Real estate investors interested in new opportunities
- Accredited investors with multi-year investment horizons
- Real, uncorrelated asset class with a history of consistently strong returns
- Highly qualified team with best-in-class underwriting practices
- The platform has some of the lowest fees that you'll find in real estate investing
- Investment minimums are typically $10,000+
- Only open to accredited investors at this time
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If you walked into a supermarket and asked people a hypothetical question about what kind of real estate they would invest in if they had unlimited funds, you’d get a variety of good answers. Some shoppers would say they’d invest in apartment buildings, while others would tell you they would put their money into commercial properties like the one they were shopping in.
The irony here is that they would all be overlooking an obvious answer: farmland. Without farms and farmland, there wouldn’t even be a supermarket for them to shop at. The same holds true for a lot of industrial facilities that process agricultural products. Although farmland is not as glorious as a gleaming office tower in the city, it can be just as profitable. Yet few people think of it as an investment.
Maybe that’s why farmers have historically struggled to access the kind of capital they need to buy farmland and the equipment they need to expand their operations. That’s where AcreTrader steps in. This groundbreaking alternative investment platform focuses on bringing agricultural opportunities like farms to the larger investing public.
How Does AcreTrader Work?
At its core, AcreTrader works in a manner similar to other online real estate investment platforms. The platform is run by a highly experienced team of professionals who offer an income-generating portfolio of investments offerings. The difference is, of course, that AcreTrader offerings are all farmland as opposed to apartment buildings or other income generating real estate.
AcreTrader’s founder set up a management entity that buys individual farms, but only after a thorough due diligence process that accepts less than 1% of applicants. Then AcreTrader offers investors the chance to buy shares that equal 1/10th of an acre in the offering, which means that investors who buy 10 shares own a full acre of the farm.
The farm itself is managed by AcreTrader’s team, who takes care of it from top to bottom. Its management includes everything from paying insurance premiums, farmer relations and even keeping a watchful eye on soil sustainability. Then these farms are rented out to individual farmers (or larger farming operations) that pay cash upfront to lease the land.
The up-front lease arrangement means the dividends for share owners are not dependent on external factors like crop yields or friendly weather conditions. AcreTrader collects a flat rent from the farms and pays out shareholder dividends every December.
Whenever it comes to investor fees, the lower and more straightforward they are, the better. AcreTrader charges an annual flat fee of 0.75% of the individual farm’s value against the annual income generated by the farm. That fee is then split on a prorata basis among the shareholders based on how much acreage they own. It really doesn’t get any simpler and more concise than this when it comes to fees. The fee is reasonable and very easy to understand. That’s why AcreTrader gets a strong 4.5 star rating.
Most companies that go through the trouble of setting up an on-line investment platform know that investors won’t trust a platform that’s hard to use or understand. Acretrader certainly fits into that “most companies” category. Its platform is straightforward and easy to use.
Signing up is a breeze, and Acretrader deserves a tip of the cap for enabling sign-ins through Google (NASDAQ: GOOGL) or other social media accounts. After all, the fewer passwords one has to remember, the better. In a nod to security, Acretrader also allows members to select a 2-factor authentication process, another thing that earns it high praise.
After sign-up, you take a brief survey and verify your accreditation status before being able to actually buy shares. The entire process is pretty simple, and even investors with minimal computer literacy can walk through it. Browsing investments is easy, and the platform puts all the relevant information right at the top of the page. This set-up will be especially comforting to anyone who is new to investing in farmland.
Investor education is mission critical for any online investment platform and that goes doubly so for a platform that trades in non-traditional investments like AcreTrader does. It is very clear in using AcreTrader that the company founders get this, and it deserves credit for designing its site accordingly. For many AcreTrader investors, this platform represents their first foray into buying farmland as passive income.
It’s encouraging to see a Resources tab at the top of AcreTrader’s landing page. Better still is the fact that the first tab under this resources page is titled “How it Works.” Potential investors will be welcomed with a short video explaining the history of farmland as an investment and why buying it works as an investment. Right next to this video is a tab titled “Reach Out” that takes investors to an email query section where they can ask, and then get answers, for any questions they still have that are not explained in the video.
Investors who like what they see in the video can scroll down further and get a complete primer on how AcreTrader works, when it pays dividends and how their money will be safeguarded. All of this information will be reassuring to potential investors.
Additionally the “Learning Center” tab includes a vast wealth of information in the form of excellent articles written by AcreTrader staff. The valuable content there is in stark opposition to many sites that put out generic “learning content” that hardly rises above the level of “meh” when it comes to quality of information. The articles in the learning center come under 2 headings: Investment Fundamentals and Farming Fundamentals.
In particular, the Farming Fundamentals section includes great articles that cover a range of topics like “What to Know about Delta Land” (Mississippi Delta) and “U.S. Organic Vegetable Market Overview for 2021.” Finally, the “Farm Value” tool is a unique simulator that allows investors to plug in zip codes to view the average price per acre and annual return by state all across America. Add that to a solid frequently asked questions (FAQ) page and the end result is a robust investor education section.
Again, this level of investor education is a must for an alternative platform like AcreTrader, and the site deserves plaudits for delivering.
AcreTrader is very discerning about accepting applications from farms to appear on the platform as an offering. In fact, the AcreTrader due diligence is so rigorous that less than 1% of farms who apply will have their application approved. As a result, new offerings are typically funded within hours or days, meaning there aren’t always available opportunities. However, the platform typically adds a new offering each week.
Its upcoming offering is a soybean and cornfield farm in Illinois with a $11,990 buy-in and a targeted 7.6% net annual return. That’s not too different from the net return one might expect on a well-managed apartment building or high-performing REIT. More offerings would be better, but all things considered, the current offering is certainly worth a long look.
AcreTrader is a relatively new platform, so new in fact that most of its closed offerings have not reached the end of their hold periods. That means there isn’t any historical data on returns for an entire deal cycle. With that said, AcreTrader targets an internal rate of return of 6% to 10% per year on annual crops (wheat, corn) and 6% to 14% per year on permanent crops (almonds, apples). To date, AcreTrader has also made 500 investor distributions that were above the predicted yield. It will be interesting to see what the returns are on full deal cycles. Until then, there isn’t enough information to make a grade here.
AcreTrader brings an incredibly unique focus to online investment platforms, and it deserves a lot of credit for that alone. Overall, AcreTrader makes a compelling case for farmland as an alternative investment, and the user-friendliness of the platform only encourages potential investors to dive in. The platform’s admirable investor education efforts also work strongly in its favor.
Perhaps the only question about AcreTrader is whether the investor community outside of the heartland is ready to buy into farmland. One thing is for certain, if you are looking for an alternative investment and decide to buy farmland, AcreTrader is a great place to do it. It’s a good platform with a good concept. The verdict: 4 stars
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