Farmland has been a popular alternative asset class among the wealthy investors because it provides slow, steady and stable returns over time and isn’t particularly correlated to any other index. However, Farmland’s services are not easily accessible if you don’t meet certain restrictions. You’ll need knowledge of the market, rural locations, pricing and much more.
FarmTogether’s aim is to simplify the investment process by opening up fractional share farmland investing to accredited investors. Keep reading to go over our review of FarmTogether.
Table of Contents
|Target Hold Period||5 – 10 years|
|Annual Fees||Varies by investment|
|Account Types||Taxable, IRA, Trust|
FarmTogether sources and manages institutional-quality farmland for crowdfunding and bespoke investment offerings.
- Crowdfunded farmland: These offerings are available to accredited investors with minimums starting at $10,000. Hold periods start from five years with annual liquidity windows for earlier exits.
- Bespoke sole ownership: These offerings are for individual investors who are willing to invest $1,000,000+ in equity per farm. The legal, tax and capital structure are fully customizable, along with hold period, risk-return profile and cash yield profile.
Investors are paid out from farmland operations and capital gains from selling the farmland at the end of the holding period. Income is generated from crops and land value appreciation.
FarmTogether’s services are hassle-free, including fund administration, accounting and tax reporting. Investors have secure access to relevant documents and investment performance, such as projected and actual payout comparisons, distributions history, historical distributions and K-1 tax forms.
It’s important to examine the firm’s legitimacy, management, sourcing and returns for all investments.
Legitimacy: FarmTogether has raised millions of dollars from angel and venture capital investors. The company has closed on a few deals and formed partnerships with successful farm investors and operators.
Management: FarmTogether was founded by Artem Milinchuk, who is the CEO and largest investor in the company. He boasts more than a decade of experience in farmland and agriculture, particularly in finance. FarmTogether consists of numerous executives that have agribusiness finance and investing experience.
Sourcing: FarmTogether identifies investment opportunities, then vets them to determine if they meet company standards. The process evaluates the crop, valuation of the farm and the capabilities of the prospective operator. FarmTogether also considers ways to invest in the farm to raise its value, like adding infrastructure or turning it organic.
Returns: FarmTogether only closed its first deal in late 2019, and that deal is expected to be held for five years. So, there’s no real history of returns to go off of. However, farmland has an excellent track record of delivering strong returns with minimal losses. FarmTogether claims their investors can expect returns of 7% to 13%.
There are two different fees charged on FarmTogether:
- 1% of your total investment upfront for each investment you make
- 1% per year for asset management
Partner deals might incur additional fees, for example a share of the profits paid when the farm is sold or an annual onsite per-acre management fee. It is important to take the time to review every deal and understand the fee structure before you invest.
You must meet the following minimum qualifications in order to invest with FarmTogether:
- Earn an annual income of at least $200,000 for the past 2 years, or $300,000 per household.
- Have a net worth of at least $1 million, individually or jointly.
- Expect that your income will continue to meet the $200,000 threshold, or $300,000 per household, for the foreseeable future.
Banks, insurance companies, registered investment advisors, business investment companies, employee benefit plans, trusts and charitable organizations with a net worth of up to $5 million can also invest with FarmTogether.
Before you begin investing, here are a few things to keep in mind when it comes to FarmTogether:
It’s open to accredited investors only: You must be worth $1 million or more and earn at least $200,000 per year to invest with FarmTogether.
FarmTogether is new: FarmTogether has only funded a few deals, so it’ll take a few years before the company establishes a track record.
Its investments are illiquid: Once you’ve invested, your capital is tied up until the holding period is over. In most cases, this will be at least five years.
There’s also inherent risk to investing in farmland real estate, as the farm may not produce as expected, due to things like pests or disease, drought, catastrophic weather and mismanagement.
FarmTogether makes it easy for accredited investors to gain exposure to farmland as an asset class. The platform has a decent projected return and relatively low fees that make them a compelling choice if you’re looking to diversify your portfolio outside of stocks and bonds.
If you’re interested on more investment opportunities, you can check out HustlerMoneyBlog’s best brokerage bonuses & investment promotions for this month as well as our archive on other investment promotions! Alternatives to FarmTogether include CrowdStreet, Fundrise and Origin Investments.