Investing in farmland can be a lucrative opportunity for those looking to diversify their portfolio. However, the high cost of purchasing land and the expertise required to manage it can be a barrier for many investors. That’s where AcreTrader comes in. AcreTrader is an online platform that allows investors to purchase shares in farmland, making it accessible to a wider range of investors. In this article, we’ll take a closer look at AcreTrader’s minimum investment requirements and what you need to know before investing.
What is AcreTrader?
AcreTrader is an online platform that connects investors with farmland opportunities across the United States. The company was founded in 2018 by Carter Malloy, a former investment banker and fifth-generation farmer. AcreTrader allows investors to purchase shares in farmland, giving them access to an asset class that was previously only available to large institutions and wealthy individuals.
Minimum Investment Requirements
AcreTrader has a minimum investment requirement of $10,000 per farm offering. This means that investors must invest at least $10,000 in each farm offering they choose to participate in. The reason for this minimum investment is to ensure that investors have a meaningful stake in the farm and are incentivized to monitor its performance.
Investors can choose to invest in multiple farm offerings, but each investment must meet the $10,000 minimum. This means that if an investor wants to invest in two different farm offerings, they must invest at least $20,000 ($10,000 in each offering).
How AcreTrader Works
AcreTrader works by sourcing farmland opportunities from across the United States and conducting due diligence on each opportunity. Once a farm has been vetted and approved, AcreTrader creates a special purpose entity (SPE) for that farm. Investors can then purchase shares in the SPE, which gives them ownership in the farmland.
AcreTrader manages the day-to-day operations of the farm, including leasing the land to farmers and managing any necessary maintenance. Investors receive quarterly updates on the performance of their investment, including information on crop yields and any expenses incurred.
Benefits of Investing in Farmland
Investing in farmland can provide a number of benefits to investors. First and foremost, farmland has historically been a stable and reliable asset class. According to a report by the National Council of Real Estate Investment Fiduciaries (NCREIF), farmland has outperformed other real estate asset classes over the past 25 years, with an annualized return of 11.5%.
In addition to its historical performance, farmland can also provide diversification benefits to a portfolio. Farmland has a low correlation with other asset classes, meaning that it can help to reduce overall portfolio risk.
Finally, investing in farmland allows investors to support American agriculture and rural communities. By investing in farmland, investors are helping to ensure that farmers have access to the resources they need to produce food for the country.
Risks of Investing in Farmland
While investing in farmland can provide a number of benefits, it’s important to be aware of the risks involved. One of the biggest risks is weather-related events, such as droughts or floods, which can have a significant impact on crop yields and farm profitability.
Another risk is commodity price volatility. The prices of crops such as corn and soybeans can fluctuate significantly based on factors such as supply and demand, weather conditions, and government policies.
Finally, there is the risk that AcreTrader may not be able to find suitable farmland opportunities or may experience operational difficulties that could impact the performance of investors’ portfolios.
Conclusion
Investing in farmland can be a great way to diversify your portfolio and support American agriculture. AcreTrader makes it easy for investors to access this asset class with a minimum investment requirement of $10,000 per farm offering. While there are risks involved, the potential benefits of investing in farmland make it a compelling opportunity for many investors. As with any investment, it’s important to do your due diligence and understand the risks before investing.
