For years, the idea of purchasing a farm has been to many prospective buyers a daunting prospect. It involved hunting for quality land that was for sale, driving there to see it in person, speaking with other farmers in the area and researching USDA records. An interested party then had to scrape together a great deal of capital or financing, and possibly even take on a partner or partners.
That is no longer the only option out there for those who want to invest their money in farmland.
AcreTrader, an online farmland investment company based in Arkansas, now makes it possible to make a direct investment without ever having to leave your home. With a reasonable amount of capital (often $10,000 or less), investors can become a part of a quality farming operation without having to manage the farm throughout the investment, known as the farm holding period.
The farm investments are done through the establishment of single-purpose limited liability corporations (LLCs.) A new LLC is established for each new farm. An investor can buy as little as 1% of an LLC. Farm holding periods typically last from five to 10 years but there are other more flexible options available. The LLC investors, known as members, receive biannual reports on the farm’s progress. The members also collect annual distributions of their share of the net rental income. These distributions are normally issued in December.
AcreTrader, highlighted at the last American Farm Bureau Convention, has raised over $80 million to date and manages a network of over 100 farms across the nation. The farms themselves grow a wide variety of crops, including soybeans, corn, wheat, peanuts, cotton, potatoes, onions, beets and timberland.
In addition, the company is working in over a dozen U.S. states to locate farm investments and currently is increasing its holdings at a rate of about one new property per week.
The day-to-day administration of the properties is overseen by the joint efforts of AcreTrader’s 100 employees as well as contracted property managers. AcreTrader is able to facilitate farmland transactions through its own online real estate brokerage firm AcrePro. AcrePro is licensed in 16 states.
AcreTrader uses existing relationships with the tenant farmers on its current properties as the primary source of information for new farm investment opportunities. The company has new tools in development including online farm investment analysis, which can assist potential members in the general make better informed investment decisions.
For those in agriculture looking to expand, or even just begin, looking to AcreTrader for a helping hand may be an option. Learn more at acretrader.com.
by Enrico Villamaino