When many think of real estate investments, they imagine commercial properties or residential homes. However, there’s another valuable asset to consider: agricultural land. U.S. farmland not only plays a crucial role in producing food for our communities but also offers a unique investment opportunity.
But how does one invest in this sector without purchasing an entire farm? Enter FarmTogether, a platform designed to simplify investing in farmland, orchards, and other agricultural properties. But what is FarmTogether exactly? Continue reading this FarmTogether review to dive deeper to understand how FarmTogether is changing the game for potential investors.
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What is FarmTogether?
FarmTogether, headquartered in San Francisco, is an investment platform founded in 2017 by Artem Milinchuk. Its main focus is providing accredited investors an opportunity to invest in U.S. farmland.
With this platform, investors can explore various avenues such as crowdfunding, the 1031 exchange, sole ownership, bespoke investments, and even the Sustainable Farmland Fund.
Their dedication to sustainable farming is noteworthy. In 2021, FarmTogether’s entire portfolio received certification from the Leading Harvest Farmland Management Standard. This recognition emphasizes their commitment to managing farmland both sustainably and responsibly.
But how does the FarmTogether platform work? Much like other real estate crowdfunding sites, FarmTogether allows investors to buy fractional shares of farms and other agricultural properties.
Through their user-friendly platform, investors can browse and select from pre-vetted farmland investments. They can access due diligence materials, sign legal documents online, and manage their accounts easily.
FarmTogether stands out due to its diverse offerings. They have active properties in seven states and have explored over a dozen crop types. Their strategy involves selecting locations with a good supply of water and high-quality soil, working closely with their trusted network of farm operators.
How Does FarmTogether Work?
FarmTogether offers a distinct approach to farmland investments through three primary methods:
- Crowdfunded Farmland Offerings: This is where multiple investors collaborate to invest in farmland. The minimum investment starts at $15,000. For those looking to take advantage of the 1031 tax-saving exchange, you’ll need to invest a minimum of $1 million in a single offering. These offerings generally last between 8 to 12 years.
- Sustainable Farmland Fund: This is a collection of different agricultural lands. The starting investment for Class I shares is $5,000. Once you invest, there’s a 2-year lockup period. After that, you can request a redemption, which FarmTogether processes quarterly. However, they limit redemptions to 2.5% of the net asset value each quarter, with an annual cap at 10%.
- Sole Ownership Bespoke Offerings: This option allows investors to wholly own certain assets. It’s a more personalized choice, where you can decide on the hold durations, yields, and risk-return profiles. This requires a heftier investment, typically starting at $1 million, and is eligible for 1031 exchanges.
FarmTogether focuses on areas with good water availability, high-quality soil, and proximity to their preferred farm operators. Their investments often target tree nuts and citrus crops on the West Coast and annual crops like corn, wheat, and soy in the East.
The company is proactive in upgrading and modernizing its farms, emphasizing sustainable farming practices. They also strategically use financial leverage to improve investment returns.
When you invest with FarmTogether, you’re essentially buying into a special LLC that owns and manages the farmland. FarmTogether oversees the management and operation of these assets.
Each investment offering comes with detailed information, including risk profiles, ownership structures, and legal documents. Investors are kept updated through sustainability reports and can track their investments’ performance on FarmTogether’s online portal.
- Comprehensive Property Analysis: Artem Milinchuk, alongside the dedicated team, ensures that every potential farmland opportunity undergoes thorough review. FarmTogether leverages its proprietary technology to consider factors like consumer preferences, valuation trends, and long-term views of market opportunities, ensuring that their farm products are well-positioned in the market.
- Diverse Investment Offerings: FarmTogether provides a range of offerings, catering to both accredited and non-accredited investors. Whether you’re inclined towards fractional ownership, sole ownership, or even a diversified portfolio that encompasses both permanent crops and row crops, this platform has you covered.
- Returns and Income: Aimed at delivering stable returns, FarmTogether projects strong returns on both an annual basis and over the target hold periods. Their diligence process ensures that investors receive potential passive income from lease payments and rental payments, enhancing the appeal of this asset class.
- Learning and Education: The Learning Center stands as a testament to FarmTogether’s commitment to educating its user base. From diving deep into the nuances of farmland investments to understanding the dynamics of agricultural products, investors can stay informed and up-to-date.
- Flexibility and Transparency: Whether you’re considering investments on an individual property basis or through a sustainable farmland fund, transparency is paramount. Every investment opportunity is presented with detailed diligence materials, from property analysis to financial projections.
- A Niche in Real Estate: As a unique alternative to traditional real estate investments, FarmTogether focuses exclusively on farmland offerings. This distinct niche in real estate allows investors to benefit from both capital appreciation, especially in land appreciation, and annual income, distinguishing it from other types of investment in the sector.
The fees fluctuate based on the type of investment you’re considering, whether it’s crowdfunded, sole ownership, or the Sustainable Farmland Fund. While their website provides a general idea by stating fees are “dependent on product offering,” here’s a more detailed breakdown:
- Expect a one-time admin fee that ranges between 1-2%.
- There’s also an annual management fee, which can be anywhere between 1-2%.
- Additionally, a 5% net operating income fee is in play.
Each farmland opportunity on FarmTogether is unique. They set specific targets like IRR, hold period, net cash yield, and net equity multiple for each one. Fortunately, the platform champions transparency. Detailed documentation backs up every target, ensuring investors have clarity.
The investment specifics you should be aware of include:
- A one-time setup fee that usually sits between 1%-1.5%.
- Hold periods for investments typically span from five to 12 years.
- Minimum investments range between $15,000 and $50,000.
FarmTogether offers a distinctive way to dive into farmland investments. Though it’s tailored for accredited investors, its transparency stands out.
For those keen on adding a sustainable asset to their portfolio, FarmTogether is worth considering. Interested in venturing into farmland investing? Click here to learn more.
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