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When you want to make your money work for you, many people turn to investing. Investing, whether in stocks, real estate, farmland or other methods, allows you to generate passive income. AcreTrader is an investing platform that allows people to buy shares of farmland. Whether you’re looking for a hot new investment plan or simply want to diversify your investments, this AcreTrader review will tell you everything you need to know.
Read on to discover how AcreTrader works and what it takes to get started.
What is AcreTrader?
AcreTrader is an online investment platform that allows investors to buy shares of farmland in the United States. Whether you want to invest in a California almond orchard or a Midwest row crop farm, you’ll be able to choose individual parcels.
Investors need just $10,000 and 10 minutes to get started on the AcreTrader website. Because the underwriters thoroughly vet the land, it’s a low-risk form of investment with average returns of about 11%. AcreTrader accepts less than 1% of applicants.
Best of all, you don’t need to be a farm and agriculture expert to start investing in farmland. You won’t need to manage anything: the farms are managed by the AcreTrader team, from farmer relations and sustainability checks to insurance premiums. The farms are rented out to individual farmers or businesses, who pay up front to lease the land. That means that your dividends won’t depend on external factors, like weather conditions or crop yield. Instead, AcreTrader collects their flat rental fee and pays out dividends in December.
The pros and cons of AcreTrader
AcreTrader is a great investment platform, but it may not be right for every investor. These pros and cons will help you get a better idea whether it’s a good platform for you.
Pros
- Consistently high returns: While AcreTrader is a newer platform, they target an internal return rate of about 6-10% on annual crops like wheat and corn, and 6-14% on permanent crops like almonds and apples. At this time, the platform has made about 500 investor distributions that were over the predicted yield. Many investments offer the same returns as an apartment building or REIT.
- Easy-to-use platform: The website is simple and easy to use. Would-be investors sign up online, then fill out a survey to start the accreditation process. Once verified, you can browse parcels of land and make your investments.
- Educational material: No need to worry that you don’t know what you’re doing, especially if you’re new to farmland investing. The site provides guides to investing, as well as in-depth information about different types of farmland, locations, crops and more. While you might not need to know some of this information, it gives investors the opportunity to become familiar with how their money is supporting specific farms.
- Low fees: AcreTrader has some of the lowest fees in the business. They charge 0.75% of the individual farm’s value, charged against the annual income generated. Then the fee is split pro-rata for the shareholders, depending on how much acreage they own.
- Great underwriting practices: The underwriters at AcreTrader are committed to thoroughly vetting their farms. The fact that they only accept less than 1% of applicant farms ensures investors will not take any unnecessary risks.
Cons
- Only accepts accredited investors: AcreTrader currently only accepts accredited investors, which means it’s not suitable for someone brand new to investing. This can be disappointing to anyone who is not yet accredited.
- Minimum investment is $10,000: Each 1/10th acre parcel is, at minimum, $10,000. The cost can go up more, depending on the type of farm and crops available. This can be cost-prohibitive for newer investors.
- Parcels go fast: Because so few farms are accepted, there aren’t always shares to purchase. You’ll need to act quickly when a farm offers a buy-in, or risk waiting until the next investment is available.
Ultimately, AcreTrader is a strong investment platform with good returns, low fees and plenty of educational material. If you have a minimum of $10,000 and are an accredited investor, you can start generating passive income today.
AcreTrader vs. FarmTogether
So, how does AcreTrader stack up against FarmTogether? Both sites let accredited investors buy shares of farmland, which is then rented out to farmers. Both sites give investors the opportunity to receive dividends, paid early. However, FarmTogether offers a secondary market if investors need to sell their shares early, whereas AcreTrader does not.
The minimum investment on AcreTrader is $10,000, but it’s $15,000 on FarmTogether. FarmTogether also charges a 1% upfront fee with a 1% management fee, and the fee structure can vary from deal to deal. AcreTrader’s flat 0.75% fee applies to all deals.
FarmTrader’s returns are usually in the seven to 13% range, and average cash yields of 3-9%. AcreTrader’s returns are on average of 11%.
Both sites have similar research and vetting processes, and intuitive websites that require little technological skill to use. The overall process and concepts are very similar—the biggest difference is the minimum investment amount, the secondary market and fee structures.
Is AcreTrader right for me?
If you want to generate passive income and are an accredited investor, AcreTrader is a great option. Investing in farmland is a relatively low-risk way to diversify your investment portfolio, especially if you primarily invest in stocks or other traditional assets. Because it’s a passive investment, you don’t need to spend your time researching farmland and farm management practices. AcreTrader’s team does the heavy lifting for you.
AcreTrader is also a good choice for real estate investors, and those who can withstand multi-year investment payouts. Over time, your farm investments with AcreTrader can provide excellent returns—and because the company gets the rental fees upfront, you won’t need to worry about climate disasters or other Acts of God affecting your rate of return.
If you’re not an accredited investor or have the minimum startup capital, AcreTrader isn’t the right choice. It’s also not a good investment scheme for anyone hoping to make fast profits.
Farmland investments are a great option for generating passive income
When you want to make your money work for you, investing in farmland is a great way to generate passive income. AcreTrader and similar investment services offer low-risk investment opportunities, which yield returns on par with other real estate or REIT investments. Because AcreTrader handles the hard work, you can be as involved as you’d like to be. With their educational resources, relatively low buy-in and low risk, you can learn all about farmland and farmland investing—but you don’t have to.
In our AcreTrader review, we found the platform helps investors find and invest in farms, which are a crucial part of our economy. Anyone looking for a safe investment, or who wants to diversify their investment portfolio should consider giving AcreTrader a try. It might just be the easiest investment you’ll ever make.