Farmland is a popular alternative asset class for the super wealthy since it offers: slow, steady, and stable returns over time. It’s not particularly correlated to any other index either. However, it’s not easy to invest in farmland. You’ll need knowledge of the market, rural locations, pricing, and more to be able to do this.
With FarmTogether, it aims to simplify the process, opening a fractional share farmland investing to accredited investors.
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Read below for more information on what they have to offer.
FarmTogether Features
| Product Name | FarmTogether |
| Minimum Investment | $10,000+ |
| Target Hold Period | 5 – 10 years |
| Annual Fee | Varies by investment |
| Account Type | Taxable, IRA, Trust |
| Promotions | None |
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FarmTogether sources and manages institutional-quality farmland for crowdfunding and bespoke investment offers.
- 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.
Income is generated from crops and land value in appreciation. Investors are paid out from farmland operations and capital gains from selling the farmland at the end of the holding period.
With FarmTogether, it offers hassle-free services which includes: fund administration, accounting, and tax reporting. Investors have secure access to relevant documents and investment performance like projected and actual payout comparisons, distributions history, historical distributions, and K-1 tax forms.
Like all investments, it’s important to look over the firm’s legitimacy, management, sourcing, and returns.
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. A number of other FarmTogether executives 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%.
FarmTogether Fees
FarmTogether says they will charge investors two different fees. These fees are:
- 1% of your total investment upfront for each investment you make
- 1% per year for asset management
Partner deals might incur extra fees. For example, a share of the profits paid when the farm is sold or an annual onsite per-acre management fee. Be sure to take some time to go over every detail and understand the fee structure before investing.
FarmTogether Requirements
If you want to invest with FarmTogether, you have to meet all of the qualifications listed below:
- 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 adivsors, business investment companies, employee benefit plans, trusts, and charitable organizations. All of these with a net worth of up to $5 million can even invest with FarmTogether.
FarmTogether Limiations
Before investing with FarmTogether, be sure that you remember:
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.
It’s 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 invest with FarmTogether, your capital is tied up until the holding period is over. In most cases, that’s going to 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.
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Conclusion
FarmTogether’s platform makes it easy for accredited investors to get exposure to farmland as an asset class. Its decent projected return and relatively low fees make FarmTogether a compelling choice if you’re looking to diversify your portfolio outside of stocks and bonds.
