Acretrader Reviews 2022: Best Farmland Investment Or Scam?

Acretrader. Investing in farmland

Wonder what it feels like to own and earn from farmlands without actually being a farmer? Unusual right? Not with Acretrader. Investing in farmlands with AcreTrader gives you an opportunity to earn from your investments without farming.

According to the United States Department Of Agriculture’s Land Value 2019 Summary, an acre of farmland cost about $3,160 in 2018. This figure places an acre of land in $201960 higher than its price in 2017.

However, the price might vary according to the location of the land. Land valuation is usually affected by the things that grow on the farmland. And like I said before, its location is a factor too.

California for example has arable soil for almonds, grapes (which are used to produce wine), and other higher cash crops. So the price of an acre of land there might differ from another city.

However, owning farmland doesn’t come easily to a lot of people. To create an exception, you can now own an acre just by investing with Acretrader

This article will be taking you through the processes involved in investing in farmlands with Acretrader.

Also, it’d be looking at what Acretrader is all about, how it works, how you can get started, and lots more.

Meanwhile, take a look at our table of content for what to expect in this article.

What Is Acretrader?

AcreTrader is an online farm investment company based in Arkansas United States. It was established in 2018 and the online portal was launched in March 2019.

It raised $5 million in a seed round with investment from RZC Investments, Revel Partners, and other Angel investors, in April 2020.

Through the online portal, accredited investors can select potential farm offerings, review due diligence, and invest in the land.

Meanwhile, the investors must have completed the monetary transaction and legalities on the portal.

The company charges a management fee to investors and also owns a real estate brokerage.

AcreTrader buys less than 1% of the total parcels considered. Then places each farm offering in a unique limited liability company (LLC).

Then they offer shares to investors through its online platform that uses some aspects of crowdfunding.

Each LLC is divided into shares equal to one-tenth of an acre.

Is Investing In Farmland A Wise Investment Plan?

Farmland is an asset that will remain valuable for billions of light-years to come. And its prices are not easily affected by other factors.

No doubt, there are other more conventional forms of real estate investment other than farmlands, like commercial and residential properties. But Investing in farmlands still has its charms and perks and has remained a profitable investment since 1990.

Additionally, when you look at the world’s population that is definitely still growing and then look at the shortage of food, farming becomes even more attractive.

The world’s population will continue to grow and provisions must be made for the existing population and the incoming billions of people.

To do this, more people must engage in farming arbitrarily or otherwise. For those who may not find farming practicable, they can invest with Acretrader and have them help them own a farm.

No doubt, technological improvements have helped us over the years to produce, process, and preserve more food, but to grow this food, the land is still crucial.

Land, after all, and farmland, in particular, is the most basic of all commodities.

There are other reasons why farmland is a veritable investment they include:

  • It’s an investment that’s outside the financial system.
  • Farmland produces a real, necessary commodity – food. That will never go out of style.
  • It has low historical volatility, which limits price declines even in bad years.
  • Farmland is a true alternative investment because its price levels are not tied to movements in other assets.

So to answer your question, Yes!! Invest in farmlands, it’s a wise and profitable thing to do.

However, we do not advocate that you pull all your other investments, and re-invest them in farmlands.

People who read this content, end up reading
How To Buy Farmland For Investment In 2022 | Expert Guide

How Acretrader Works

Acretrader is a real estate crowd-funding platform that connects farmers and investors.

They create an LLC company that owns each investment they make on any land. Afterward, they rent out the farmlands to farmers with reputable character.

There are risks encountered by the company in terms of collecting their rent; nonpayment risks. To eliminate these risks, the company collects their rent in advance. Any farmer who can’t afford to pay his or her rent will be replaced by another farmer.

To get started with Acretrader, you must become an accredited investor.

These are the requirements you must meet to become an accredited investor with Acretrader?

  • As a potential investor, you must have an individual income in excess of $200,000 in each of the two most recent years. Or joint income with your spouse in excess of $300,000 in each of those years. Additionally, you must have a reasonable expectation of reaching the same income level in the current year, OR
  • An individual net worth, or joint net worth with that person’s spouse, in excess of $1 million not including your primary residence.

SEE ALSO: Invest $100 make $1000 a day | 21 Sure Investments in 2022

Acretrader makes all the farm selections for you. You don’t have to select any farmlands nor do you need prior experience in farming. They conduct thorough due diligence on each parcel and will exclude any properties that don’t meet their standards. Only 5% of farm properties reviewed are accepted for investment purposes.

Investment:

As an investor, you share in the entity (LLC) that owns a farm and this is how it goes down;

  • Each entity is divided into shares equivalent to 1/10 of an acre. So, if you buy 20 shares, your ownership represents the equivalent of 2 acres of land and the associated distributions.
  • Our online process can be completed in just minutes, and you can invest 100% electronically. Or, if you prefer, feel free to contact us for help through the investment process.

Farm Management:

AcreTrader management handles all aspects of entity administration and property management, from insurance and accounting to working with local farmers and improving soil sustainability.

They do this by;

  • Working closely with farmers and external managers to help with best practices, technological improvements, sustainability, and immediate access to capital. AcreTrader’s goal is to improve the ease of doing business for their investors and improve the lives of their farmers.
  • AcreTrader farmers pay cash rent, a highly common relationship between farmers and landowners (nearly 40% of all U.S. farmland is rented or leased).
  • The unique entity (LLC) usually receives the rent in advance of the planting season. They withhold the money until December when they pay it out.
  • Acretrader charge a flat annual administration fee of 0.75% (of overall farm value) that is typically deducted from the income of the farm.

Distributions

  • AcreTrader will disburse excess annual income. We would typically expect an unlevered gross yield of 3% – 5% for lower-risk properties. Note that this cash yield is in addition to expected annual value appreciation.
  • AcreTrader payout cash distributions each December to investors in each farm. They provide necessary tax documentation by February of the following year.
  • Including value appreciation, our typical target unlevered IRR goals are 7%-9%. This compares to a historical farmland IRR of 12% due to:

#1.Currently depressed commodity prices, and

#2. some conservatism in our underwriting (for example, we don’t build in commodity cost improvements despite growing global demand and a favorable historical trend).

Selling Your Land

  • Should you wish to sell some or all of your shares, you may be able to do so on the AcreTrader marketplace. However, you should plan to hold ownership until the terminal date (typically 5-10 years).
  • At the terminal date, the subject farm will be sold and all net proceeds will be distributed, at which point you should realize any additional gains from appreciation in farmland value.
  • We will use our affiliate brokerage, AT Real Estate, and work with other potential brokerages, funds, and farmers to work towards the best outcome for investors in each entity.

Is AcreTrade Scam Or Legit?

Acretrader is a legit crowd-founded real estate company that gives retails investors access to an asset class very few people have an exposure to, and that is farmland.

The organizational leadership of AcreTrader is filled with experienced farmers. Both at institutional investing levels as well as farm operations, ranging from multi-generation farm ownership to operating large commercial farms.

Acretrader has acquired six farms on its platform since launch, with funding from some private equities.

However, there’s a caveat: AcreTrader only closed its first transaction in 2019, and no deals have fully realized. But this can easily be attributed to the fact that they are still a very young platform.

I can’t say in all certainty that AcreTrader will become a very profitable platform. But they seem to be on track for that, and only time can tell how far they can go.

How to Sign Up On AcreTrader

To invest in Acretrader you must be a citizen of the United States or a legal resident.

Additionally, you must have qualified as an accredited investor.

If you’re sure you meet these criteria, then you can sign up with your email address, Facebook, LinkedIn, Or Google credential. You must also provide your full name.

After the first phase, you will need to provide some personal information like your bank account for funding purposes and accreditation documents. Acretrader does not retain your bank information, because they use a third-party provider Plaid.

All necessary documentation is both signed and sent electronically through the website. Your investment account will be funded by ACH transfers from a linked bank account.

However, note that your investment doesn’t become final until the fundraising target is met for a particular investment. A property will be offered for between 30 and 90 days. If it isn’t fully subscribed, it’ll be removed and any funds you’ve invested, refunded. (Funds are held in escrow by North Capital, pending closing.)

Conclusion:

Acretrader might be a new platform, but it’s already showing promises. Investing with them is an opportunity that should be grabbed with two hands if you can afford it.

However, make sure you have a strong financial background. Regardless of the promises of a low-risk rate, chances are that the investment can encounter risks and losses. So, be on your toes.

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