Farmland hasn’t always been the easiest asset class to add to your portfolio. Traditionally, the asset class costs several million to enter, with low liquidity. As a result, many investors overlooked this asset class with a history of strong returns. Easing these pain points that prevent people from investing in farmland is one of the main aims of FarmTogether.
We aim to provide transparency, security, and liquidity for people wanting to invest in farmland. Additionally, FarmTogether removes the headaches traditionally associated with land ownership by handling all aspects of administration and farm management, from insurance and accounting to working with local farmers and improving soil sustainability.
While no two investments are identical, there are four different ways to invest in farmland, each with their own set of pros and cons and potentials for return.
Purchasing a farm is the most direct way to become a farmland investor. This consumes the most time and energy out of all the investment options. For starters, the complexity of purchasing a home is nothing compared to buying a commercial farm. In addition, the buyer has to find an operator to farm the land. Passive income is one of the main attractions to farmland investing, but a direct ownership investment can easily become a full-time job.
Another big challenge with direct ownership of farmland is that investors have to invest hundreds of thousand dollars--or more--before securing ownership, as opposed to investing smaller amounts and only owning a fraction of the farm. Because of the headache involved in direct ownership, many potential investors in farmland wouldn’t find this option to be worth their time.
FarmTogether is a new way to invest in farmland that not only removes the headache associated with full ownership but also leverages on this asset class’ stability. Anyone interested in investing in farmland can browse through the investment offerings, all of which have been carefully curated with due diligence by the FarmTogether team.
With FarmTogether, investors own a fraction of the land itself, as opposed to shares in a fund. Because these pieces of ownership aren’t publicly traded, investments on FarmTogether don’t come with the same risk as investments made with REITs. Investors also don’t have to throw down hundreds of thousands of dollars to purchase an entire farm or shares in a private equity fund. Instead, investors can get started with $10,000.
Investing with FarmTogether capitalizes on all of the farmland’s potential and offers investors an easy, painless means to do so.
Private Investment Funds
Private farmland investment funds function much like any other equity fund in a portfolio: they typically come with a fixed 10-year maturity date and have high investment minimums, often in the millions. It’s estimated that between $10 to $25 billion has been invested in private equity funds for farmland, and this number is expected to double or triple in the future thanks to the sheer promise of the asset class.
REIT stands for Real Estate Investment Trust. With REITs, publicly-traded companies purchase real estate and sell shares of it to investors as stocks. A fraction of REITs are privately held, but the overwhelming majority of investors buy into those that are publicly traded.
Though REITs were signed into law in the 60s by President Eisenhower, it’s only in very recent years that a subset of this asset class specific to farmland emerged. This occurred in 2013 with the IPO of Gladstone Land Corporation (LAND) for $50 million. REITs often pay handsome dividends, but this doesn’t come without risk. They’re subject to the same whims of the market like any other stock.
We believe farmland is a promising asset class for the majority of high net worth individuals. If you'd like to learn more, we have a new offering live right now! Chester Farm is a beautiful orange and almond farm in Tulare County, CA. With 11.4% target cash yield and average lifetime 11.3% cash yield, this is an attractive opportunity to add some high-quality farmland to your portfolio. It is rare that permanent tree properties come to market - we were fortunate to secure this one thanks to the hard work of our investment team.
You can arrange your commitment via our simple secure online process. Have questions? Shoot us an email or schedule a call with us. We look forward to welcoming you to our FarmTogether community of investors
Download our free Farmland Investment 101 White Paper to learn more about farmland as asset class