If you’re into investing, then you’ve likely familiar with a variety of different asset classes. As sophisticated investors know, there’s nothing like a diversified portfolio to up the odds of increasing your net worth. Like most of us, your portfolio probably contains various stock market offerings, from dividend stocks to ETFs, bonds, and mutual funds.
You may have some money tucked away in a real estate investment trust or even generate rental income from real estate properties that you own. But what about farmland investing? Yep, you read that right. Agricultural real estate is actually becoming a popular new asset class among accredited investors.
While farmland investing may not be one of the hottest topics on Wall Street, it makes a lot of sense if you think about it. After all, if there’s one thing you can count on, it’s that food will never go out of style. But how would you even go about adding farmland investments to your portfolio? That’s where trading platforms like FarmTogether come in.
What is FarmTogether?
FarmTogether is a real estate crowdfunding platform that offers investors the chance to invest money in agricultural real estate. The investment platform was founded in 2017 by Artem Milinchuk and is currently run by a small but knowledgeable staff based in San Francisco.
The FarmTogether platform offers accredited investors easier access to farmland investing than ever before. Best of all, it offers several different options for adding a unique asset class to your portfolio. FarmTogether, investors can choose from a variety of different options, including everything from partial ownership in crowdfunded farmland to sole ownership bespoke offerings.
The FarmTogether platform also offers investors the chance to invest through their Sustainable Farmland Fund. The fund offers a diversified investment opportunity, sort of like an ETF that’s composed of institutional-grade US farmland. While we can’t provide professional financial advice, we can give you a good overview of the FarmTogether platform to help you decide whether or not it’s a good investment opportunity for you.
How FarmTogether Works
While the idea of farmland investing may sound intriguing, you may also be wondering, is FarmTogether Legit? Rest assured that it is indeed. FarmTogether operates with a number of different agricultural, tech, and financial partners to offer legitimate real estate investment to accredited investors.
FarmTogether is also all in when it comes to sustainable farming practices. 100% of their acreage has been certified by Leading Harvest to guarantee that it’s managed sustainably. They also understand that, just like other real estate assets, the better the property you invest in, the more money you’re likely to make.
That’s why the investing platform has rigorous due diligence standards when it comes to choosing the best farmland properties. Their management team uses both technology and their strategic partners to identify potential properties in prime production regions across the US.
FarmTogether then reviews everything from the local climate and soil conditions of each area to the market demand for the permanent crops produced on each individual farm. At the end of the day, only 2% of all the deals they consider actually make the cut.
It’s these chosen few that you’ll find presented as potential Farmland investment options. From farms and orchards to vineyards, Farmland investors can then browse through the different real estate investments available on the platform.
Each of the investment opportunities is listed alongside information such as the target holding period, Target Net IRR, Net Cash Yield, initial investment requirements, and more. When FarmTogether investors choose to invest in US farmland, they enjoy the perks of passive investments as their cash yield grows throughout the holding period.
FarmTogether makes money for investors by generating capital gains during the holding period and then ultimately selling the farm for a profit. Once the holding period has run its course, investors will reap their rewards in the form of capital gains, price appreciation, and the return on their principal investment.
Still not sure if FarmTogether investments are for you? No worries. Let’s take a closer look at some of the pros and cons of the real estate crowdfunding platform.
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Pros of FarmTogether
If you’re looking to invest in farmland, then FarmTogether seems like a pretty solid way to go about it. Farmland investing is a unique asset class that offers the opportunity to create passive income while reaping the long-term investment rewards of capital appreciation. Here are some of the pros of considering farmland investments through FarmTogether.
Variety of Investment Opportunities
Whether you’re looking to invest money in crowdfunded farmland offerings or diversify your real estate investments by owning an entire farm, FarmTogether has an option for you.
Easy to Use Investing Platform
FarmTogether’s platform makes investing in farmland a surprisingly simple and straightforward process. When you click on a property you’re interested in; you’ll be provided with a thorough breakdown of the property’s specs, risk, and target returns.
Eco-Friendly Sustainable Investment Opportunities
Everyday investors who are looking to make the world a better place can invest their own funds into creating a more sustainable future. FarmTogether is very picky when it comes to farmland values and exclusively features properties managed sustainably.
Pre-Vetted Properties
While lease payments and capital appreciation have always been perks of investing in commercial real estate, agricultural investment is a new concept for many investors. When you invest with FarmTogether, you’ll be able to save yourself hours of searching the NCREIF farmland index for solid leads. If a property is listed on the FarmTogether platform, you know it’s been through intense scrutiny.
Educational Resources
Branching out to explore other asset classes for the first time can be a nerve-wracking process. That’s why FarmTogether offers plenty of resources like podcasts, webinars, white papers, and more to help walk you through the process. If you do choose to invest with FarmTogether, you’ll enjoy the ability to track your investment right from the platform.
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Cons of FarmTogether
As with any other investment, FarmTogether comes with its own set of cons. No FarmTogether review would be complete without pointing out the fact that it doesn’t offer any opportunities for non-accredited investors. That, plus the fact that even a minimum investment is in the five-figure range, makes FarmTogether unrealistic for many everyday investors.
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High Minimum Investment Requirements
While high net worth individuals or institutions may find some great opportunities on FarmTogether, other investors are pretty much out of luck. Even though crowdsourcing options are available, even a minimum investment could easily run you $15,000.
Low Liquidity
FarmTogether invests in properties that generate income distributions as well as capital appreciation through their final sale. So it’s no surprise that the venture may not be for you unless you’re looking for a long-term investment.
While FarmTogether has traditionally offered illiquid assets, the company recently announced that they were exploring integrating a secondary market option. Nonetheless, FarmTogether does emphasize that the type of investments they offer tend to perform much better long term.
If you have questions about exploring FarmTogether’s secondary market, then it’s definitely worth reaching out to their team to get a solid overview of your options.
Only Accredited Investors are Eligible
Considering the minimum investment con above it will probably come as no surprise that only accredited investors are eligible to trade on FarmTogether. But what exactly is an accredited investor? Read on to find out.
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What is an Accredited Investor?
Accredited investors can be either companies or individuals that are allowed to independently trade certain securities. How do you know if you qualify? It all comes down to meeting certain qualifications, most of which are designed to make sure you’ll be able to recover financially if an investment goes wrong.
Individuals must either:
- Have earned an annual income of over $200,000 (or $300,000 in join income) for at least the last two years, with an expectation to earn the same amount the next year.
- Have a net worth of over $1 million.
- Work for a company that issues unregistered securities as either a director, general partner, or executive officer.
Entities Must:
- Have assets that exceed $5 million
- Be owned by accredited investors
If you don’t happen to have any venture capital funding laying around as an individual, but work at a financial institution, insurance company, charitable organization, or any other business, it may be worth talking to corporate about the possibility. FarmTogether also offers investments in the form of employee benefit plans, trusts, and partnerships.
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How To Sign Up for FarmTogether
If you’re interested in checking out FarmTogther, then the good news is that you can sign up for a free account, whether you’re an accredited investor or not. While non-accredited investors won’t actually be able to use their accounts to invest, it’s still possible to log in and see what the platform offers FarmTogether investors.
Creating an account is incredibly easy and only takes a few minutes. Just fill in basic info, such as your name and email address, and then answer the questions on the brief questionnaire. It will ask about things like your investing goals and establish whether or not you meet the qualifications of an accredited investor.
If you don’t, simply be honest and just specify that you may be interested in investing at a later date. Then you’ll be able to complete the signup process so you can access the platform and look around.
If you do want to invest as an accredited investor, then you’ll need to enter some additional information, such as your contact information and SSN. You’ll also need to link your account to your financial institution so that you can fund it.
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FarmTogether Review: Key Features
Now let’s take a look at FarmTogether’s key features and how they stack up. Along the way, we’ll also rate each feature on a scale of 1 to 5.
Ease-of-Use: 5
One of the first things that new FarmTogether investors are likely to notice is that the platform is incredibly easy to use. As mentioned, the signup process is incredibly straightforward, and the investing platform itself is sleek and organized.
Both current and past investments are available to peruse, complete with handy information included right on their profile links. There are also various sections that tell you more about each type of investment option in order to help you figure out which is the best for you.
Features: 4.5
FarmTogether’s platform isn’t incredibly complex, but that may end up being a pro for some investors. The fact that it’s incredibly straightforward and easy to navigate goes a long way towards ensuring it’s not overwhelming, especially to newcomers.
That said, FarmTogether does feature several great resources that investors can use throughout every stage of the process. Included in each investment profile, you’ll find an investment size calculator that allows you to estimate your potential net returns based on how many acres you’re interested in purchasing.
FarmTogether also has plenty of great resources that can make things a lot easier for first-time agricultural investors. In the FarmTogether learning center, you’ll find everything from white papers and blog posts to webinars and podcasts that can help familiarize you with the process. You can also subscribe to a number of resources, such as the FarmTogether newsletter, deal announcements, new launches, and more.
Customer Service: 4
In all fairness, it’s a bit hard to judge FarmTogether’s customer service without having $15,000 to consider dropping on an investment. The platform’s contact section is pretty straightforward and lists the company’s contact email and phone number. While there’s no live chat option, there is a contact form where you can reach out to customer service anytime.
Value for Money/Transparency: 4
This category tends to be a bit subjective, as what looks like a great deal to one investor may not appeal to another. In order to gauge the value of farmland compared to other investment opportunities, you’ll have to take a look at the fees associated with each property.
Unfortunately, this information is only available to accredited investors. It would be nice if the fees were a bit more transparent, but no matter which investment you choose, you can expect to pay annual management fees. This is fair enough, given that FarmTogether handles the acquisition and sales of the properties themselves.
As far as how much the FarmTogether fees will cut into your investment, the company’s website has this to say: “Our fee structure is aimed to be lower than the industry average. We achieve this by designing an online self-service platform and embracing technology in finding and acquiring farmland. Our fees vary for every deal and are listed on each investment opportunity’s page.” The real question of value can only be settled by taking a closer look at the potential of FarmTogether returns.
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How Profitable Is Farmland Investing?
As wealth managers everywhere will tell you, there’s not really any such thing as a low-risk, high-reward investment. Like any other real estate investment, farmland investing comes with risks of its own.
Common risks include things like natural disasters, overpaying for land, or ending up with partner operators who don’t pull their weight. FarmTogether does appear to have a pretty solid risk mitigation strategy, however, which includes intensive research and partnering exclusively with high-vetted farmers with proven track records.
Nonetheless, you should never invest money you can’t afford to lose, so this is not the type of opportunity to fund with a second mortgage on your primary residence. The upside, of course, is that if everything goes as planned, FarmTogether can generate some nice returns.
One of the reasons it tends to be such an intriguing asset class is that it’s even more inflation resistant than stock market investments, bonds, or gold. According to information from FarmTogether, “Historically, the value of US farmland has been about 70% correlated with the CPI.”
FarmTogether also reports that “Farmland has demonstrated strong absolute returns over the past several decades. It averaged ~11% total annual returns (income + price appreciation) from 1992 to 2021.”
The bottom line is that if things go well, they have the potential to go really well. But, of course, there’s always a measure of risk involved.
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The Final Verdict: Is FarmTogether Legit?
We’d give FarmTogether a solid 4.5 stars out of 5 based on several factors. The biggest downside of the platform is that it’s only available to accredited investors, but given the nature of the investments it offers, this isn’t super uncommon. The same can also be said for many other investments that require a large minimum investment and a respectable measure of risk. AcreTrader seems to be only viable alternative for FarmTogether.
If you are a non-accredited investor, then you may want to start out by investing in a solid Real Estate Investment Trust (REIT). While a REIT offers anyone the chance to invest in crowdfunded real estate offerings, FarmTogether investors actually own the parcels of land they invest in.
For accredited investors, this comes with perks such as being able to select the location of the farm you want to invest in and even the type of crop it yields. This provides investors with much more control over exactly how they want to invest their money.
Among the other potential downsides of FarmTogether is the fact that, at least at the moment, there doesn’t appear to be a very large number of offerings to choose from. Given that FarmTogether is still a relatively new company, however, this may change over time, especially if the company is successful in incorporating secondary market offerings.
It’s also not necessarily a bad thing, given that it shows just how picky FarmTogether is when it comes to their due diligence process. After all, it’s better to have three excellent choices than 50 subpar options.
On the upside, FarmTogether has put together a sleek, unintimidating platform that presents potential investors with all the information they need in order to decide if they’re interested in moving forward. Unlike some platforms, which hide all the important details in miles of legal jargon, FarmTogether is about as straightforward as it gets.
Whether or not FarmTogether is the right platform for you will largely depend on how seriously you’re considering investing in farmland in general.
Frequently Asked Questions (FAQs)
Are there other farmland investment sites similar to FarmTogether?
At the moment, among FarmTogether’s only real competitors is a site called AcreTrader, which also offers similar investment opportunities in US farmland. Both are certainly worth looking into, as it’s never a bad idea to check out all your options before making such a large long-term investment.
What’s the FarmTogether Team’s Track Record?
FarmTogether is made up of a small but mighty team of agricultural and investment professionals with extensive experience. Together they boast a collective $1.2B+ of deployed capital. You learn more about members of the FarmTogether team, their experience, and their vision on the company’s website.
Does FarmTogether Invest in the Properties They Offer?
They do, indeed. FarmTogether puts its own money where its mouth is by investing right alongside investors in each of its offerings. Not only does their reputation, but their own financial future depends on offering the best possible properties on the market.
You Don’t Actually Have to Farm the Farmland, Right?
Definitely not! Part of the reason you’ll pay an annual management fee is that FarmTogether covers all the aspects of property management. Even and especially hiring the farmers.
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