AcreTrader is a crowdfunding platform that allows accredited investors the opportunity to purchase farmland and make money through rental income or land appreciation.
Is it really a go-to spot for investing in farmland? Read our review on this real estate crowdfunding platform 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.
This investment opportunity is open only 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 it.
In relation to the real estate investments that you can make, all farms being offered are based in the United States.
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 been 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 their 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, you can sell shares before the holding period expires.
The minimum investment for the real estate crowdfunding platform is $5,000, with investments ranging to $50,000.
AcreTrader operates like a real estate brokerage to purchase properties. They also employ a dedicated vetting process as each bit of farmland undergoes a detailed underwriting process.
They also work with farmers to ensure the farmland has strong soil sustainability and is in the best condition before it’s available for accredited investors.
After you’ve linked your bank, talked with your accountant, and created your account, you can start buying farmland shares on AcreTrader.
You can start by investing 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.
You will also get 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 previously owned a global equity investment firm and also managed Stephens, Inc.
AcreTrader management consists of a board of advisors of five people in addition to five senior managers. They are also looking for additional team members.
So far, the real estate investment company has raised over US$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 USD$200 million in active farmland.
Furthermore, AcreTrader is a member of the Better Business Bureau (BBB). The investing platform became accredited by the BBB in March 2019 and has an A- rating.
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 they get from farm owners.
They evaluate farms using an extensive 96-point checklist that includes looking at the quality of land and overall property, how well the farm performs, among other things.
They use software and deep valuation techniques to identify legitimate offerings before publishing on their 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.
The safety levels of farmland as an asset class are relatively good. 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.
Seeing the kind of benefits you yearn for in this kind of venture to give your investment portfolio a big boost takes time and patience.
Is AcreTrader Safe?
You’re in safe hands as each deal with AcreTrader is set up as a stand-alone legal entity.
This means that your investment won’t be at risk should they mess up. Farms have different operators, so the farm’s operations won’t suffer if AcreTrader doesn’t do what it’s supposed to.
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 in good hands.
The investment platform accounts for any risks by ensuring cash rents are paid prior to planting season.
Like any other real estate deals, 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.
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.
They then offer shares to those interested in real estate investments through their site.
According to their terms and conditions, AcreTrader reserves the right to change/correct information or materials on the website.
They also warn that some offering information may come with typographical errors.
AcreTrader Review: Investment
Through AcreTrader, you get to purchase shares in the unique entity that owns the farmland you are 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 platform typically range from $15,000 to $25,000.
AcreTrader charges an asset management fee ranging from 0.75%. to 1% each year depending on what the asset value is.
Because they are also a real estate broker, they 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.
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.
Though some crowdfunding platforms will charge a performance fee, AcreTrader does not.
Expect an annual income from an expected, unleveraged 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
You can sell your shares using the AcreTrader marketplace.
However, they recommend 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, though they don’t provide any data that specifies what happens to your investment if you decide to pull the plug.
They can also suspend or deny website access at any time without giving prior notice if they suspect you’re doing something suspicious.
How Much Does AcreTrader Cost?
You don’t have to pay to use the 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 – They invest a lot of resources to vet every deal, seeing hundreds of farms but only select that one percent of the deals they get.
- Low Minimums for Investors – 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 are an investor who’s worth seven figures, you’ll have to look at other stock market options.
- Limited Track Record – They don’t have realized deals considering that farmland investments are for the long run and they’re 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.
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 it 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 to it and need to know the particulars.
Where Can You Find More Information on AcreTrader?
Accredited investors can browse their website and explore the learning center to find out more details about farmland investing and how a real estate investing platform works.
They have videos, blogs, and more content that also delve into the agriculture sector, commercial real estate, and other real estate investment opportunities.
There are no apps for the investing platform. However, their website is optimized for mobile-friendly surfing.
AcreTrader Investor Reviews
Jeff A, Technology Entrepreneur:
“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.”
Margaret M, Real Estate Investor:
“I’ve invested in farmland for much of my career, but AcreTrader makes it easy and has high-quality land.”
Brett A, Venture Investor:
“A safe way to invest in land. If you’re looking to diversify your portfolio, this is it.”
Michael T, Financial Investor:
“AcreTrader is positioned for tremendous success. The entire team at AcreTrader is the real deal.”
Final Review: Is AcreTrader Worth It?
Considering farmland has become one of the most promising asset classes as well as the ease of access that AcreTrader provides, it’s worth checking out despite the fact it’s still a relatively new company.
They are certified, go to great lengths to vet the farms being offered and have a strong legal backing.
Deals are more sophisticated here because they are only catered to an accredited investor. But, it’s a smart choice will add some variety to your investment portfolio.
Investing in farmland requires consistent mitigation of risks like troublesome weather conditions, soil sustainability and other things. But, AcreTrader has proven to be a legitimate and increasingly popular outlet to invest in farmland.
If you found our AcreTrader review helpful, take a look at some of our other reviews. The Stock Dork offers in-depth, real-world assessments of stand-out investment platforms and software options.
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