There are many different ways to invest in real estate - from single family homes to commercial real estate. But one area that has been growing in popularity is investing in farmland. And that's where AcreTrader comes in.
AcreTrader is a crowdfunded investment platform that allows you to buy shares in farmland and potentially see gains either through the appreciation of the land, or through rents received by the farmers who use the land.
Read our full AcreTrader review below and let us know what you think. Also consider looking at these real estate investment alternatives that could be of interest.
- Crowdfunded investment platform for farmland shares
- Must be an accredited investor
- 0.75% annual management fee plus individual project closing costs
0.75% AUM + Other Fees
Traditional, Self Directed IRA
What Is AcreTrader?
AcreTrader is a crowdfunding platform with a unique offering. Instead of residential or commercial real estate, you can buy farmland shares. Farmland shares provide yet another way to diversify a portfolio.
The company was created in April 2018. They are located in Fayetteville, AR. They are also a member of the Better Business Bureau with an A− rating and no reviews. They’ve been BBB-accredited since March 2019.
The people behind AcreTrader consist of four board advisory members and six employees for a total of 10 team members. It looks as though the company may be hiring as you can submit an email to join their team. The team’s experience is spread across financial services and agriculture.
The founder and CEO of AcreTrader is Carter Malloy. He grew up in a farming family and spent most of his career in financial services.
Investing In Farmland
AcreTrader offers the opportunity to invest in farmland shares. There are two ways to make money from your investment:
- Land appreciation
- Annual rent payments (dividends)
Returns are expected to be unlevered yield of 3% to 5% for lower-risk properties. While dividends are generally paid annually, the timing and amounts are not guaranteed.
AcreTrader selects less than 5% of the parcels they review. Selected parcels are placed into a legal entity that is separate from AcreTrader. This legal entity is what you are actually buying shares in. The legal entity owns the land. By proxy, you also own the land.
Each share costs from $1,000 to $10,000, representing 1/10 of an acre. Holding periods for properties are 5, 10, and even 20 years. However, some properties have minimum investments of an acre or more.
You can sell shares that you bought before the expected holding period ends in the AcreTrader marketplace. However, this part of the platform is not yet available but expected to be online in the latter part of 2019. Selling your shares doesn’t mean you’ll get more than what you paid for them. You could get less.
You don’t have to worry about managing farmland. You only own shares. AcreTrader handles all of the accounting, insurance, and working with farmers to ensure soil sustainability.
There are currently three offerings listed on the website. Since AcreTrader started last year, it doesn’t have a track record. The performance of buying farmland shares is unknown.
You can check out the offerings on their site pretty easily here: AcreTrader >>
Yes — there is a 0.75% annual management fee. Additionally, there are closing fees associated with each investment.
How To Open An Account
You can open an account online at AcreTrader.com. AcreTrader offerings are “private placement,” Regulation D investments. This means one must be an accredited investor to purchase any farmland shares.
AcreTrader is planning to offer Regulation A+ investments, which will open the platform up to the general investing community. There isn’t a set date at this time on when that might occur.
Is My Money Safe?
When you buy shares, the money goes into escrow at North Capital Private Securities Corporation, a registered broker-dealer and a member of FINRA and SIPC. Once the funding target is met, funds are transferred to the legal entity holding the farmland.
If AcreTrader goes out of business, your invested money isn’t lost. Remember that the entity holding farmland shares is separate from AcreTrader. A different management team will be put in place to run the entity in the event AcreTrader goes out of business. But what exactly happens thereafter isn’t well known since AcreTrader owns the crowdfunded platform.
Just like any investment, you can lose some or all of your investment.
If you are an accredited investor and want to try something completely new, AcreTrader may be worth it. Although, you might want to wait for them to build up a track record.
Investing in farmland shares does offer diversification, which is different from performance. In comparison to equity investing, farmland shares offer low volatility. Farmland shares don’t use leverage and they have the potential to be an inflation hedge.
A few drawbacks are that the platform is unproven and the investment is illiquid. And with the current political climate creating a very negative impact on farmers, it could be tough in the short term.
The 0.75% annual fee and closing cost will impact returns. Also, once the platform is available to general investors, more will be known about the performance of investments since there should be more people investing.