Rental Property Investor · CO · Member since 2018 · 8 posts · 7 votes
Anyone have any experience investing on the AcreTrader platform? It looks quite promising, being able to invest in farmland, and reap returns on both the income from it, as well as potential appreciation. I think the only thing for me might be the long term holding period, but it looks like they're creating a secondary market for shares on their platform. Would appreciate any feedback from anyone that has used it. Gonna separate the words acre trader in case someone is searching for it here. Thanks!
Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
4y
None with AcreTrader, but we have done an offering through Harvest Returns, which is similar. HR does farms and agribusinesses though, so a bit more diverse.
I am curious to see how they are calculating their net annual return, seeing 8-11% on row crop farmland seems very high unless they are assuming a certain amount of appreciation, a certain hold period, and a sale. All of those factors are speculative. I can see 8%+ on specialty or permanent crops though. Also some agribusinesses.
Take a close look to see if that's how they are calculating their returns. I typically can't get row crop AG to pencil out any better than maybe 3-6% annual CoC return as leased farmland even if I held it directly, not much meat on the bone there to bring in investors unless you are factoring in big appreciation and a sale. Could be different in areas outside of my own I suppose.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
4y
I don’t know what area this would work in. It really wouldn’t succeed for farm land. In places like MN and Iowa. The person that lives within 2 miles of a farm parcel will pay 10% more than people who live 5 miles away, and They will pay 20% more than anyone else. So you have to pay 30% more than people who live within 10 miles of the property to get your offer accepted. And then you have to rent to those people who live within 5 miles and you outbid at the price they thought they could make money.
Ps. Farm land that costs you $7-8,000/acre will rent for $200-$250/year. About a 3% return before any expenses.
Pps. All these numbers are in my very limited experience with farming near the MN/SD border.
Specialist · Midland, TX · Member since 2018 · 198 posts · 148 votes
4y
None with AcreTrader, but we have done an offering through Harvest Returns, which is similar. HR does farms and agribusinesses though, so a bit more diverse.
I am curious to see how they are calculating their net annual return, seeing 8-11% on row crop farmland seems very high unless they are assuming a certain amount of appreciation, a certain hold period, and a sale. All of those factors are speculative. I can see 8%+ on specialty or permanent crops though. Also some agribusinesses.
Take a close look to see if that's how they are calculating their returns. I typically can't get row crop AG to pencil out any better than maybe 3-6% annual CoC return as leased farmland even if I held it directly, not much meat on the bone there to bring in investors unless you are factoring in big appreciation and a sale. Could be different in areas outside of my own I suppose.
Rental Property Investor · CO · Member since 2018 · 8 posts · 7 votes
4y
I think you guys are both right about having very limited returns annually, just from leasing the land to local farmers. The gross cash yield on their offerings seems to be around 3-4%. with net cash yield being a percentage point or so lower. I think they're able to use economies of scale in some areas, and have developed relationships to acquire the land at reasonable enough prices. But their estimated IRR seems to include land appreciation over time, with an estimated hold period of 5-10 years, and an eventual sale when they feel the time is right.
It's somewhat speculative for sure, and farmland prices would have to continue to appreciate for it to be a good investment. Plus the underlying crop would have to continue to fare well price-wise. But other than that, I haven't seen any major red flags with it. They're very responsive, and I think just raised a Series B round of additional funding, plus, their offerings get subscribed to very quickly, most of them I've seen fill up the same day. Gonna keep an eye on it for awhile, before investing, but it might be worth getting into a few of the offerings at some point....
Atchison, KS · Member since 2018 · 28 posts · 7 votes
3y
@Vik V. From what I've read on AcreTrader, one has to be an accredited investor ($1M net worth at least, primary residence not included). Since I don't qualify, I buy shares of LAND instead. It's a REIT with diversified ag holdings, pays a dividend monthly.