8 Best Farmland REITs for Agriculture Investing

Investing in farmland REITs can be tricky if you don’t know where to start. This article explores some of the best farmland REITs we have around to help you make that wise investment decision.

The land is arguably the most stable asset class in the market and has been for centuries. Whether you buy land to resell, farm, or bring up some rental properties, land rarely disappoints.

Farmland investments are a great way to grow your wealth, especially since you are almost certain of the return on investment. In addition, it’s one sure way of hedging your finances against unpredictable inflation.

However, investing in farmland hasn’t been easy in the past. In fact, it was normally seen as an investment for the rich and mighty. Mainly, this is because it required a lot of upfront investment, which most new investors couldn’t afford.

But, this is not the case anymore. Farmland REITs and various farmland crowdfunding companies make everything easy. There are now numerous low-cost agricultural investing platforms that allow anyone to invest in farmland.

So, what are some of the best farmland REITs you can rely on?

All that in a bit! But first;

What are Farmland REITs?

A REIT stands for a Real Estate Investment Trust. And it’s a trust formulated to hold and manage real estate for investors. So, when we talk of farmland REITs, we are referring to companies that own or finance income-generating real estate assets related to agriculture.

These companies tend to focus on farmlands and offer investors an indirect way of profiting from owning farmland. Typically, investors will raise the money required to buy farmland or other agricultural commodities. On the other hand, the REIT will manage these farmlands and properties and pay the investors the agreed dividends.

The good thing about farmland REITs is that the investors don’t have to do anything except investing their money. The REIT company does all the logistics and management. As for you, you just sit back and enjoy that stable passive income.

Besides this, REITs are quite attractive for several other reasons. For instance, you can easily buy or sell them on the same stock exchange you trade stocks. This means that they are pretty easy to acquire and dispose of.

Types of Farmland REITs

Like any other REITs, farmland REITs are categorized into two. These include equity REITs and debt REITs.

Farmland equity REITs usually invest in the ownership of farmland. Here, the companies buy farmland properties and equipment and lease them to farmers. The money generated here is used to pay the investors.

On the other hand, debt REITs invest in loans that are secured by farmland properties. The companies lend money to farmers, who use it to improve their farm operations. They then pay the loans with interest, which in return reaches the investors as dividends.

These two types of REITs offer different benefits to investors. For instance, equity REITs tend to have higher risks but also offer high potential returns.

On the other hand, debt REITs offer more stability and predictable cash flows. They also have lower risks but might not offer as high potential returns as equity ones.

The best farmland REITs usually invest in a mix of both types. This helps to mitigate the risks while still offering investors excellent returns.

Buying a Farmland REIT

So, how do you invest in REITs? As we’ve said, REITs can be bought from various stock exchanges. And, within just a few minutes, you’ll be a proud investor in the farming sector.

Even better, you don’t need much money to invest in farmland REITs. For example, $100 or less is enough to start your investment journey.

However, you’ll need a good trading app to make this purchase. And one that supports trading of REITs. Platforms like Robinhood and Diversyfund are excellent options you can start with.

With Robinhood, you can access the best REITs without any brokerage commissions. And it allows you to buy fractional shares.  

Best Farmland REITs

Now that we know what farmland REITs are and how they work, let’s explore some of the best farmland REITs in the market. Which ones are best to invest your money in?

1. Gladstone Land

With around 25 years in the market, Gladstone Land is the oldest REIT. It was established in 1997, and as of 2021, its total portfolio had grown to over $876 million in assets.

As I write this, this REIT has over 127 farms to its name, all located in the United States. The company focuses on over 45 crops, including berries, vegetables, and tree nuts, on its over 94,000 acres of land. With such a huge variety, investors are well cushioned if one or two crops fail due to diseases or even price shifts.

Generally, this company uses the traditional equity REIT model. First, the investors will inject money into the company. After this, Gladstone buys farmland and rents it out to farmers to generate income used to pay the investors. 

Additionally, it might purchase agricultural-related properties and equipment such as

• Packaging facilities
• Cooling facilities
• Distribution centers
• Processing building

All these contribute to its income, which investors get part of as dividends. Since its 2013 public offering, the company boasts of having made over 90 monthly dividend distributions to its investors.

Pros of Buying REITs with Gladstone Land Corporation

If you are thinking of investing with Gladstone Land Corporation, here is why you are on the right track;

• The company has a large and diversified portfolio with over 127 farms in the United States.
• The firm focuses on more than 45 crops, which gives it some immunity to diseases or price shocks affecting specific crops.
• It’s been around for a while, having been established in 1997
• The company makes monthly dividend distributions to investors

It is certainly one of the best farmland REITs to start your investment in agricultural land.

2. FPI – Farmland Partners

This is another great farmland REIT company that you can put your money in. FPI was established in 2013 and is based in Denver, Colorado. The firm focuses on owning, operating, and leasing high-quality farmland located in primary agricultural markets across the United States.

So far, FPI has assembled a vast farms portfolio, spanning over 155,000 acres of land. These are spread out across 17 states in the country. The company views the increased food demand in the country, coupled with the decreasing availability of farmland, as great indicators for investing in farmland.

Currently, Farmland Partners focus on around 26 crop types in its over 100 pieces of land. This diversification helps cushion investors’ money against any unforeseen loss caused by crop failure or price changes.

Farmland Partners aim at lowering input costs and improving the farms for the farmers. This results in more profits, which encourages both the investors and farmers. The company takes advantage of the increased demand for human food, animal feed, and fuel.

Why Invest with Farmland Partners?

Here are the top reasons why you should consider investing in Farmland Partners – one of the best two farmland REITs.

• It owns, operates, and leases high-quality farmland located in primary agricultural markets across the United States.
• The company has a vast farms portfolio –  155,000 acres of land in over 100 pieces of land.
• Has a huge crops variety which cushions investors against losses
• It has an attractive dividend yield

Grow your passive income streams with Farmland Partners.

3. Farmland LP (Private REIT)

With Farmland LP, it’s all about organically enriched soil. For investors who want to invest sustainably in farmland, this is the platform to go for. As they’ve put it, organically enriched soil is the foundation of impressive returns for investors, farmers, and the environment.

Established in 2009, Farmland LP is a leading farmland investment fund that has transformed agricultural investing. It works to covert traditional farmland into an organic one. And it uses the best and most modern tools and technology to ensure that each party gets its rightful share.

Farmland LP focuses on several issues, including:

• Converting farmland into organic
• Increasing crop diversity
• Investing in infrastructure
• Active management of farmland

In addition, the company has an array of options, which investors can choose from. These include;

• Organic Dairy Farms
• Pasture-based Livestock Farms
• Specialty Crop Farms (fruits, vegetables, nuts)
• Timberland

ESG issues are an integral part of Farmland LP’s investment strategies. The platform does more than just invest. It cares for the environment.

See related: How to Become an Impact Investor [Step-By-Step Guide]

Farmland REITs Alternatives

The truth is, when it comes to Farmland REITs, investors have limited options. In fact, we have only two publicly-traded Farmland REITs in the US.

However, this doesn’t mean that you can’t find other options to invest in farmland. You can still invest through farmland crowdfunding platforms.

Some of the great options here include:

1. FarmTogether

Unlike the above-mentioned companies, FarmTogether uses a different approach in its investments. It doesn’t buy the farmland outright and lease it to farmers. Rather, it helps investors to finance the purchase of a farmland property.

First, FarmTogether identifies an agricultural land, does all due diligence, and negotiates the best deal. It then lists this property on its site, where interested investors can raise money to make the purchase. Investors will then earn dividend yields from the land’s cash flow or capital gain from its sale.

This means that as an investor, you are not investing in a blanket project. Your money goes into financing the purchase of a specific property.

The only disadvantage with farmland is that you have to be an accredited investor to invest with the platform. This is usually a blow to the non-credited ones.

This firm was established in 2015 and is based in San Francisco, California. Currently, FarmTogether has enabled the funding of over 40 deals worth more than $170 million. And this makes it a reliable company to invest in.

2. AcreTrader

AcreTrader is another online marketplace that allows investors to invest in farmland without having to deal with the hassles of ownership.

The company buys, owns, and operates the farmland on your behalf. All you have to do is choose a piece of land that you want to invest in and make your investment. Once the harvest is done, you will start receiving your share of the profits.

Generally, AcreTrader’s offerings are in the form of shares, which allows you to own part of the farm. The platform usually requires you to purchase at least 10 shares, which range from $3,000 to $10,000 per share. Each share represents an acre of land and your legal ownership of that piece of farmland.

AcreTrader promises a stable investment, which allows you to earn around an 11% annual return.

3. FarmFundr

This is another crowdfunding platform that helps interested investors grow their money with farmland. The equity crowdfunding platform is farmers-owned and focuses on growing specialty crops in the US. It allows investors to acquire fractional farmland, making investing in agricultural land pretty easy.

The good thing about this farmland investment platform is that it’s easy to join and make money with. All you need to do is sign up, invest, monitor your investment, and receive your dividends when they are due.

FarmFundr has been in the market for some time now. It was founded over 20 years ago by a 4th-generation farmer and has grown to be a great vehicle in farmland investing. Its management prides itself on an excellent track record of purchasing, improving, and managing properties for the best returns.

Currently, it promises its investors an 11.5% average annual farmland return.

4. Steward

For eco-conscious investors, Steward is another great sustainable farmland investment platform. Established in 2016, it’s a unique farmland lending platform designed to offer to finance to small-scale sustainable farmers. It helps these farmers to improve their farms, fisheries, and even ranches.

The great thing about this platform is that it deals with small farmers and investors. This helps to bridge the gap created by the larger platforms that only focus on heavyweight investors.

With Steward, an investor can participate in lending deals even with as little as $100. The amount is way lower than that of other platforms, which average $10,000.

Even better, Steward caters to all investors, whether accredited or not. So, if you are looking for a sustainable way to invest in the agricultural sector, you have yourself a winner here.

5. Harvest Returns

Last on our list is Harvest Returns. It might not be one of the best Farmland REITs, but it’s certainly an excellent crowdfunding one. 

The platform offers a wide array of agricultural deals for investors to choose from, although for accredited ones. The major difference between Harvest Returns and other platforms is that it offers significantly smaller funding deals. Subsequently, it requires just as lower minimums when you want to invest.

As I’ve mentioned, this platform is meant for accredited investors. However, not exclusively. It offers a few investment chances for non-accredited ones in every deal.

Another good thing here is that the platform is present beyond the US borders. For this reason, it has become one of the best farmland platforms for international investors.

Up to now, Harvest Returns has enabled around 23 deals, having raised over $11 million. 

Pros and Cons of Farmland REITs

Like any other investment, farmland REITs have their own pros and cons. This means that before you dive all in, it’s prudent to understand what this type of investment entails. With that, you’ll be able to know whether it’s the right investment choice for you or not.

Pros

Some of the benefits of investing in Farmland REITs include;

• Diversification: Farmland REITs offer investors an excellent way to diversify their portfolios. Usually, these REITs are not affected by the same economic conditions as other investments, such as stocks and bonds. For instance, when the stock market is struggling, farmland prices might not necessarily drop.
• Inflation hedge – Farmland also provides an excellent inflation hedge. This is because as prices go up, so does the value of farmland and food prices.
• Consistent cash flows – Farmland REITs offer investors more consistent and predictable cash flows. As the demand for food will always be there, it means that farmers will always need to lease farmland.
• You don’t manage the farm yourself, but you still earn from its operations. 

Cons

Nothing is free from drawbacks – even if it’s just one. Here are some reasons that make Farmland REITs not so appealing;

• If farmers mismanage the farms, the investors will also feel the resulting loss.
• REITs are treated as normal income during taxation instead of capital gains. Subsequently, they attract higher taxes.
• You don’t have a say in choosing who to lease the farmland to. The REITs management has the sole responsibility of doing that. And, even the best farmland REITs might not always be right on this issue.

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