FarmTogether is an alternative investment company based in San Francisco, enabling people to invest in American farmland. Launched in 2017, FarmTogether gives investors access to the steady returns that farmland traditionally provides.
The company chooses attractive farms, works with local farmers to manage them, and offers different investment ways, from group land purchases to custom ownership. With leaders with over 70 years of extensive experience in tech and agriculture, FarmTogether aims to change how regular investors can benefit from the farming industry.
Through the platform, investors may diversify their portfolios, gain passive income, and support sustainable agriculture. Are you still on the fence about FarmTogether? Here is a detailed FarmTogether review weighing its pros and cons.
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The Pros of Investing in Farmland with FarmTogether
Investing in farmland through FarmTogether offers some solid benefits.
- First, farmland provides steady demand and income. People always need food, fuel, and fiber, so the permanent crop demand is constant. Farmland investments can provide stable cash flow and income over the long run.
- Farmland also acts as an inflation hedge. When inflation goes up, the value of farmland usually increases as well. So, your investment may hold up better against inflation than other assets.
- Diversification is another pro. Farmland investments are not closely tied to the stock market, so adding farmland to your portfolio can help reduce risk through diversification.
- Farmland is also a resilient investment. During economic downturns, farmland values have historically remained stable. While the values of stocks and other assets may decline, farmland provides a steady anchor for your portfolio.
- Finally, farmland investing aligns with sustainable and impact investing goals. By investing in farmland, you’re supporting sustainable food production and contributing to environmentally-friendly agricultural practices.
The Cons to Consider When Investing With FarmTogether
While FarmTogether offers some attractive benefits for investors, there are a few downsides to consider before investing.
- FarmTogether charges an annual asset management fee for each investment based on the total amount invested. On top of that, FarmTogether charges acquisition and disposition fees when Farmland properties are bought or sold.
- Publicly traded farmland REITs offer the benefit of daily liquidity, professional Farmland Investment Managers, and diversification across properties and geographies. While FarmTogether aims to provide attractive risk-adjusted returns, there’s no guarantee they will outperform a reputable farmland REIT.
- To invest with FarmTogether, you must be an accredited investor, meaning you have a net worth of over $1 million or an annual income of $200,000. If you are a non-accredited investor, you won’t be able to access FarmTogether’s investment Farmland opportunities.
FarmTogether Fees & Plans
The fees and investment options with FarmTogether can be complicated to navigate. As an accredited investor, you have three main choices: crowdfunding, sole ownership, or their Sustainable Farmland Fund.
For crowdfunding, you’ll pay a 1-2% one-time admin fee and an ongoing 1-2% annual management fee. The minimum investment to get started is $15,000. If you want to own farmland outright, be prepared to invest at least $1 million. For their fund, the buy-in is $100,000. FarmTogether takes 5% of the farm’s net operating income in all cases.
The wide range of fee structures and investment levels means there’s an option for many interested in farmland investing. However, for small investors or those new to this alternative asset class, the crowdfunding option may be most appealing and accessible.
Who is FarmTogether Best For?
FarmTogether is ideal for certain types of investors looking to diversify their portfolios.
- Long-term Investors: With investment periods of 8-12 years, FarmTogether offers Farmland Investment opportunities for investors to commit their funds to long-term investments. The illiquid nature of farmland means investors must be willing to tie up their capital for the duration of the investment.
- Diversification Seekers: Farmland has little correlation with the stock market and other traditional asset classes. Adding farmland to an investment profile can help reduce overall risk through diversification.
- Stable Positive Return Targets: Farmland has historically generated steady annual returns and outpaced inflation. Farming can be attractive for average investors looking for consistent income and capital appreciation.
- Socially-Conscious Backers: FarmTogether focuses on sustainable farming practices, eco-friendly operations, and sound environmental stewardship. For impact potential investors and those concerned with social issues like climate change, FarmTogether offers a way to invest in line with their values.
- High Net Worth/Institutions: FarmTogether’s custom investment offerings provide direct ownership in farmland, suitable for investors wanting more control and access. Bespoke deals can be tailored to the specific needs of high-net-worth individuals, family offices, and institutions.
- Investors Interested in Agriculture: FarmTogether is ideally suited for individual investors interested in supporting sustainable agriculture. If you care about food production and want to invest in environmentally friendly farming
Is FarmTogether Right for You? Our Final Verdict
For accredited institutional investors seeking passive farmland exposure and willing to pay higher fees for turnkey management, FarmTogether can be an attractive choice. They provide a simple way to invest in an asset class that is typically difficult to access.
However, the model won’t suit investors wanting more hands-on involvement or a lower investment minimum. As with any private REIT, go in with realistic average return expectations and an understanding of the risks. But for the right investor, FarmTogether offers an appealing way to grow your diversified portfolio with U.S. farmland. Click here to sign up for FarmTogether today.
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