AcreTrader is a real estate crowdfunding platform that allows accredited investors the opportunity to purchase farmland and make money through rental income or land appreciation.
Is this real estate investing platform really a go-to spot for investing in farmland? Read our AcreTrader review and decide for yourself!
AcreTrader Review: Overview
AcreTrader is a real estate investing platform that offers income-generating farmland shares.
The Arkansas-based real estate crowdfunding platform was founded by Carter Malloy in 2018 and gradually built its track record in the industry.
AcreTrader prompts investors to purchase farmland shares that are then leased out to farmers or farm owners.
AcreTrader Investors Must Be Accredited Investors
AcreTrader investments are only available to accredited investors, who can acquire farmland plots, then earn returns via annual cash rent payments from farmers or increased land appreciation over time.
Non-accredited investors cannot sign up for the service or invest in farmland.
In relation to the real estate investments that you can make, all farms being offered are based in the U.S.
However, U.S. farmland has outperformed most asset classes among other real estate types, partly because of land value.
According to the website, farmland returns have generated positive results each year since 1990.
AcreTrader management consists of experienced financial services and agriculture experts who strive to help income investors yield the best possible ROI.
According to its website, investors are provided with several options to maximize their money, including a simplified investment portal, low management fees, and the ability to diversify farmland holdings nationwide in a short time.
Any accredited investor who uses the investment platform is assured of transparency and full security when using it.
Plus, investors can access potential liquidity through the marketplace.
AcreTrader prides itself on doing due diligence to ensure investment professionals get the best number of opportunities to boost their investment portfolio.
How Does AcreTrader Work?
AcreTrader allows investors to buy a fractional interest in farmlands, making income from the rent farmers pay to use the land.
The income comes from the rent that the farm operator must pay to use the land.
Then, investors can benefit from any capital appreciation in the land while making dividends from the rent payments.
Depending on the offering, hold periods last anywhere from five to 10 years, meaning that this is one of those long-term investment platforms.
However, if you’re not willing to play the long game, AcreTrader is currently developing a secondary market so investors can sell shares before the holding period ends.
This is set to launch by the end of this year.
Minimum Investment Requirement
The minimum investment for the AcreTrader platform is $5,000, with investments ranging to $50,000.
This is a fairly common minimum investment cost compared to most other real estate investing platforms.
The AcreTrader platform operates like a real estate brokerage to purchase properties.
The company also employs a dedicated vetting process as each bit of farmland undergoes a detailed underwriting process.
AcreTrader also works with farmers to ensure the farmland has strong soil sustainability and is in the best condition before it’s available for accredited investors.
How to Start Making AcreTrader Investments
After you’ve created your account and linked the appropriate accounts, you can start buying farmland shares on AcreTrader.
You’ll need to complete your accreditation during the investment process.
Afterward, you can start with an initial investment in one farm, with new ones becoming available each week or every other week.
You get a short description of each farm with every listing in the AcreTrader marketplace.
The AcreTrader platform also provides you with details on what is being grown on the property, the gross cash yield, crop yield, and what the net return each year will be.
You will also get the expected duration for your investment.
AcreTrader Review: Who Owns AcreTrader?
As mentioned, Carter Malloy founded AcreTrader in 2018.
An Arkansas native who comes from a farming family, Malloy was previously part of an equity investment firm and was also a Managing Director at Stephens, Inc.
AcreTrader management consists of a board of advisors, six senior managers, and a (growing) team of 30 employees.
So far, the real estate investment company has raised over $5 million in investment capital thanks to its focus on farmland investments.
The VP of farm operations, Garrott McClintock, also has deep-rooted connections as a fifth-generation family farmer.
He has co-managed a portfolio exceeding $200 million in active farmland.
The real estate investing platform also has a contractual affiliation with North Capital Private Securities, a broker-dealer that is registered with the Securities and Exchange Commission (SEC).
Is AcreTrader Legit?
Yes, it is.
As mentioned, AcreTrader goes through a deep underwriting process, accepting just one percent of the offers it receives from farm owners.
The real estate investing platform evaluates farms using an extensive checklist that includes looking at the quality of land and overall property, how well the farm performs, among other criteria.
AcreTrader uses software and deep valuation techniques to identify legitimate offerings before publishing on its website.
AcreTrader has received significant investments from a small investment group to substantiate its crowdfunding platform.
Most real estate crowdfunding platforms need this kind of investment to succeed in the longer term.
BBB Rating and More
AcreTrader is a member of the Better Business Bureau (BBB).
The farmland investing platform became accredited by the BBB in March 2019 and has an A+ rating.
The safety levels of farmland as an asset class are relatively good, especially when compared to other asset classes.
The only real worry is whether or not you’ll be able to maximize your farmland shares.
Being a farmland investor means you’re consistently playing the long game.
This type of real estate investment requires a holding period that lasts anywhere from five to 10 years.
Is AcreTrader Safe?
You’re in safe hands, as each deal with AcreTrader is set up as a stand-alone legal entity.
Placing each farm into its own unique LLC limits the risk for investors.
Should anything happen to AcreTrader, your investments are still protected and would simply transition to new management.
This could cause a delayed tax return or interrupted distribution payments, forcing you to wait until a new asset manager comes in.
But your investments are safe.
The investment platform accounts for any risks by ensuring cash rents are paid prior to planting season.
Though, like any other real estate deal, your investment is at risk if there is mismanagement on the farm site, which could lead to the farmland being sold.
It’s important to understand how your investments are structured so your shares are in good hands and cash flow remains optimal.
AcreTrader investors can preview farms before the offers are listed, allowing them to make a more calculated decision before you invest in farmland shares.
What Does AcreTrader Include?
- Farm Selection
- Farm Management
- Selling Your Land
AcreTrader reviews each farm comprehensively, before placing each farm offering in a unique legal entity like an LLC.
This entity then creates a legal contract with the farm owner, allowing around 30–90 days to do its due diligence as well as legal work and raising funds.
Then, it offers shares to those interested in real estate investments through its site.
According to its terms and conditions, AcreTrader reserves the right to change/correct information or materials on the website.
AcreTrader Review: Investment
Through AcreTrader, you get to purchase shares in the unique entity that owns the farmland you’re looking to invest in.
The entities are divided into shares that represent 1/10 of an acre.
So, if you’re buying 40 shares, that means you have access to four acres of land and any distributions associated with the farmland.
You can use a self-directed IRA as an investment vehicle to boost your farmland investing.
The self-directed IRA is a tax-advantaged investment account that is used to boost funding for retirement and allows investors to put their money into an asset that is different from a traditional asset class like the S&P 500 or commercial real estate.
Investments on the Acretrader platform typically range from $15,000 to $25,000.
Farm Management and AcreTrader Fees
AcreTrader charges a flat annual asset management fee of 0.75%, which covers administration, communication, and all other responsibilities associated with managing the land for investors.
Because the company operates as a real estate brokerage, it can earn real estate commissions whenever farmland is sold.
This constitutes a fee of five percent of the property’s selling price, which is split in half between the buyer’s agent and the selling agent.
There are also individual project closing costs during the initial investment.
The annual management fee and other fees are never paid out of pocket by farmland investors.
They are taken away from the investment management costs from the rental income that is received from farmers.
While other investing platforms will charge a performance fee, AcreTrader does not.
Expect an annual income from an expected, unlevered cash flow ranging from around three to five percent for low-risk properties.
The cash yield is an addition to the expected land appreciation that occurs throughout the year.
Accredited investors usually have to wait until December to see the money from their farmland investing, as most payments are usually distributed during this time.
This is because farmers typically pay their rent upfront.
For example, the Northland Organic Farm’s anticipated distribution payments happen on December 15 each year.
Selling Your Land
AcreTrader is developing a secondary market that will launch by the end of 2021.
However, the company recommends that you wait until the terminal date of the holding period (after five to 10 years have passed) so you get maximum return on your shares.
AcreTrader Cancellation Policy
You can cancel your account on AcreTrader at any time.
However, if you have active investments, you need to sell those first.
If someone is flagged for security reasons, then AcreTrader can suspend or deny website access without giving prior notice.
How Much Does AcreTrader Cost?
You don’t have to pay to use the farmland investing platform and there are no fees for using it.
Review of AcreTrader: Pros and Cons
- A Strong Asset Class – You get a different way to build your investment portfolio considering that farmland is a one-of-a-kind asset class that doesn’t get great exposure through traditional channels. You can make money from agriculture and capitalize on benefits that the broader public doesn’t have access to. And it offers diversification.
- Money Every Year – You get annual payments either through cash rent payments made by tenant farmers or you reap the financial benefits of long-term land appreciation.
- Due Diligence – AcreTrader invests a lot of resources to vet every deal, seeing hundreds of farms but only selecting one percent of the deals it gets.
- Low Minimum Investments – As an accredited investor, you can participate in deals with minimum investments of $5,000 for farmland.
- You Must Be an Accredited Investor – Unless you’re earning $200,000 a year (or $300,000 if married) or are an investor who’s worth seven figures, you’ll have to look at other stock market options.
- Limited Track Record – AcreTrader doesn’t have realized deals considering that farmland investments are for the long run, and it’s a growing entity. But, in 2020, AcreTrader made over 500 distributions to investors through row crop investments, so there is some promise.
- Income Distributions – This takes place once a year, usually around December, so you’ll have to wait a while to see money from it.
Is AcreTrader a Good Real Estate Investment?
If you’re an accredited investor who wants to invest in property that isn’t as dense or sought after that will diversify your portfolio, then it’s worth your time.
There are risks as with any other investment, as extreme weather conditions like heavy rain or natural disasters can cause a lot of damage to farmland or wipe it out completely.
Water access problems can also diminish land appreciation, as some regions rely on underground water pumping for irrigation.
However, as mentioned previously, the Farm Team at AcreTrader employs stringent due diligence to limit these risks.
With that said, farmland shares will continue to grow in value as more farmland property gets developed and the population increases, forcing increased crop production as a result of growing demand.
The market for this asset class is viable.
Most deals that AcreTrader has offered so far have been low-risk and don’t use debt.
All capital used for funding is featured within the initial capital raise.
Is AcreTrader Right for Me?
It is right for you if you’re willing to wait it out and are interested in an asset class that appears to be quite profitable.
It helps to gather more information on how investing in farmland works if you’re new and need to know the particulars.
Though, non-accredited investors cannot join, so if you fall in this category, you might want to find another platform.
However, be careful, there are many real estate investing platforms on the market that aren’t as safe to use as AcreTrader.
Where Can You Find More Information on AcreTrader?
Accredited investors can browse the AcreTrader website and explore the learning center to find out more details about farmland investing and how a real estate investing platform works.
The company has videos, blogs, and more content that also delves into the agriculture sector, commercial real estate, and other real estate investment opportunities.
There are no apps for the investing platform.
However, the website is highly optimized for mobile-friendly surfing.
AcreTrader Investor Reviews
“AcreTrader makes access to a great asset class easier than ever before. The AcreTrader team is world-class and this company is a real disruptor.”
– Jeff A, Technology Entrepreneur
“I’ve invested in farmland for much of my career, but AcreTrader makes it easy and has high-quality land.”
– Margaret M, Real Estate Investor
“A safe way to invest in land. If you’re looking to diversify your portfolio, this is it.”
– Brett A, Venture Investor
“AcreTrader is positioned for tremendous success. The entire team at AcreTrader is the real deal.”
– Michael T, Financial Investor
Final Review: Is AcreTrader Worth It?
AcreTrader makes it easy to invest in one of the most promising asset classes, so we think it’s worth checking out — despite the fact it is a relatively new company.
The company is certified, goes to great lengths to vet the farms being offered, and has a strong legal backing.
Deals are more sophisticated here because real estate investing platforms only catered to accredited investors.
Keep in mind that investing in farmland requires consistent mitigation of risks like troublesome weather conditions, soil sustainability, etc.
Regardless, AcreTrader has proven to be a legitimate and increasingly popular outlet to invest in farmland.
The Stock Dork offers in-depth, real-world assessments of stand-out investment platforms and software options.
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