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Investing with FarmTogether
What is FarmTogether and how does it work?FarmTogether is an online marketplace for farmland investing. We provide investors access to institutional quality US farmland investments. Through the FarmTogether platform, investors have a single platform to browse investments, review due diligence materials, and sign legal documents, all securely online. Prefer personal touch? We’re just one call away.
Who is the FarmTogether team?We are a team of professionals with experience in farmland management, technology, and finance. Our team and partners are cross-industry professionals with over 70 years of experience across farmland investing, agriculture, and real estate in the US and globally. You can learn more about us here.
Who are your partners?We work with a variety of experienced investment managers, farmland brokers, appraisers, and advisors to bring you the best deals. One of our key partners is Farmland Opportunity, a farmland investment company with over $400 mln assets under management and a 10-year track record. While Farmland Opportunity works only with larger clients, it chose to partner with FarmTogether to allow more flexible transaction size via our online investment platform.
What are the benefits of using FarmTogether?FarmTogether makes it easy for investors to invest in farmland without having to do their own due diligence and farm management. We utilize cutting edge tech and hundreds of hours of professional time to source only the best farmland investments and allow investors to invest in farmland with affordable investment bites.
Does FarmTogether function as a Real Estate Investment Trust (REIT)?FarmTogether is not a Real Estate Investment Trust (REIT). With FarmTogether, you select the farmland, its location, and the type of crops. You pick and choose. The investor has full control of where their money gets invested. You own units of an entity solely devoted to the ownership and operation of an asset. REIT shares, on the other hand, do not classify as physical ownership of a piece of real estate. You are not only at the mercy of that company management decisions, but you are also bound to their strategy, the properties they purchase, and ultimately to the stock market's constant instability.
How are FarmTogether's deals structured?Investments will typically be structured as interests in a special purpose entity (typically an LLC) that directly owns the farmland. Investors thus would be the ultimate beneficial owners of the farmland itself. A day-to-day operator chosen by FarmTogether will be responsible for oversight, reporting, and overall management of the LLC operation.
Who is responsible for decisions in an entity?Each investment offered by FarmTogether is managed by our 100%-owned subsidiary FarmTogether Management LLC. These rights include, but are not limited to, decisions regarding the sale and leasing and operational decisions. The rules regarding profit/loss distributions, minimum sale price, and financial reporting are always outlined upfront in the operating agreement of the entity.
How liquid are my investments on FarmTogether? What if I need to sell early?Every portfolio or property has its estimated liquidity horizon at the end of which the portfolio or property will be sold on a best efforts basis using experienced advisors and brokers. If for any reason you should need to sell early, FarmTogether will assist you on a best efforts basis in locating a buyer should the need for liquidity arise before the end of the target hold period. It may, however, be at a discount to the initial investment amount or subject to transaction fees. We are planning to introduce a secondary liquidity market in 2021.
What diligence materials are provided?For each investment offering FarmTogether provides Project Information, Private Placement Memorandum, Operating Agreement and Subscription Agreement.
How do you perform due diligence on investment?FarmTogether is looking for row and permanent crops well-managed farms in prime production regions across the United States. Extensive due diligence process includes confirming water rights and quality, environmental compliance, and title, along with testing soil and crop production. Read more in our blog.
Will FarmTogether invest alongside investors?Yes. FarmTogether principals will invest alongside investors in each offering.If it is a good enough offering for you, it surely is good enough for us.
Under what regulatory framework does FarmTogether offer these investments?
What types of investments will I see on FarmTogether?FarmTogether features direct investments in farmland. We typically target permanent crops in California and the Pacific Northwest (e.g. tree nuts, citrus), focusing on locations with the strong water availability, high-grade soils, and within the networks of our preferred operators. However, we review properties across the country and across different commodities in order to provide an array of opportunities to meet our clients' diverse preferences and needs.
Who can invest through FarmTogether?FarmTogether serves accredited investors worldwide. To qualify, you must meet the SEC's Accredited Investor definitions:
- Earn an annual income of over $200,000 per year for the last two years ($300,000 per household) with the expectation of maintaining such level of income this current year.
- Have a net worth of greater than $1 million (individually or jointly), excluding the value of a primary residence.
- Invest as a bank, an insurance company, registered investment advisor, business development company, or small business investment company.
- Invest as a business in which all the equity owners are accredited investors.
- Invest as an employee benefit plan, a trust, charitable organization, partnership, or company with total assets over $5 million.
How do you verify investor's accreditation?
Do you offer services for non-accredited investors?
Do you offer investments to international investors?Yes.
How does investing with FarmTogether work?How does investing with FarmTogether work?
How are farmland returns generated?Farmland produces returns in two ways: income and appreciation. Income comes either from rent paid for leased land or revenue generated by farming operations. Appreciation will be realized upon sale of the property - the difference between the purchase and sale prices. Gains generated from property improvements and long-term trends driving rising land prices.
How do I make my first investment?First, you'll need to set up your FarmTogether account. To begin, click the "Sign Up" button on the homepage. After completing your investor profile, you'll be able to participate in an investment offering. To make your first investment, log in to your FarmTogether account, visit the offering page, and then click the "Invest" button. Following that, choose your desired investment amount and then click "Invest". Then you will be asked to sign an electronic agreement. After that, you will receive payment instructions.
Why is my investment pending?Your investment will be marked pending in your portfolio until FarmTogether receives and clears your funds. Your investment will become active in up to 5 business days from the date funds are debited from your account.
What is the minimum investment size?
What are your fees?Our fee structure is aimed to be lower than the industry average. We achieve this by designing an online self-service platform and embracing technology in finding and acquiring farmland. Our fees vary for every deal and are listed on each investment opportunity's page.
When and how will I receive returns from investments?You will receive returns from farmland price appreciation at the end of the hold period. Lease payouts are typically made on a quarterly, semi-annual or annual basis. and are automatically deposited into investors' bank accounts. The size of distributions depends on the negotiated lease payments every year. Investors can track upcoming lease payments and distributions to date through our platform.
Do I need to be involved in any aspect of property management?This is a fully managed investment that requires no involvement on your part. FarmTogether Management, LLC a 100% owned FarmTogether Inc. company, manages the investment properties on your behalf.
How will I handle my tax accounting once I have invested?All tax and financial documentation related to your investment are uploaded to your investor account overview on FarmTogether.com
How is income from farmland treated?There are currently no tax incentives for cash rent farmland. For individual accredited investor rental income is taxed on a Schedule E, IRS Form 1040. Capital gains are taxed when farmland is sold above the purchased price. Occasionally, a property will have a pass-through of depreciation and other tax deductions, in which case that will be clearly outlined in the offering documents. This material has been prepared for informational purposes only, as FarmTogether does not provide tax, legal, or accounting advice. You should consult your advisors before engaging in any transactions.
How are legal documents handled on FarmTogether?All required legal documents can be signed electronically through FarmTogether platform to provide maximum security of our investors' information. Investments are finalized as soon as legal documents are accepted, funds are received, and the overall offering is closed.
What if I want to invest in a portfolio of farms?We generally offer a single property option on the platform. If you're looking for a portfolio that provides diversified allocation across multiple properties, please contact us at firstname.lastname@example.org.
Are investments on FarmTogether risky?Like all forms of investing, farmland entails risk. As an investor, you must be prepared for the potential loss of all of your investment. Please review the risks under the associated disclosure documents. If the potential loss will render you unable to survive financially, or you are unwilling to accept the potential loss of capital you have invested, we do not recommend you invest with us, or anyone else. With that fact established, we understand the value of total due diligence, deep underwriting of potential investments, and other basics that control our risk. We are committed to offering only investments that meet our stringent criteria.
What are the risks and how are they mitigated?The most common risks are overpaying for land or selecting the wrong operator-partners. We mitigate these risks by being conservative in our underwriting and partnering with highly experienced farmers and farmland investment managers. At the same time, the allocation of substantial amounts of capital for investment in farmland and farming-related properties or significant competition for income-producing real estate may inflate the purchase prices for such assets. If we were to acquire properties in an inflated environment, it is possible that the value of the properties may decrease in value, perhaps significantly, to below the amount we paid. Other unforeseen factors, like extreme weather changes, government regulation and policy shifts or consumer demand shifts, could impede our ability to resell the property at a profit. See below for additional information on further risks.
Market LiquidityFarmland is a buy and hold proposition where the liquidity is tied to the sale of an asset. The investments may be difficult to sell quickly. As a result, our ability to promptly sell properties in response to changing economic, financial, and investment conditions may be limited. Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinancing of the underlying property. FarmTogether may be unable to realize investment objectives by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy.
Market LeaseIn our experience, quality farmland in the United States has a near-zero vacancy rate and we believe that farm operators will continue to compete for farmland even during periods of decreased profitability due to the scarcity of farmland available to rent. In particular, due to the relatively high fixed costs associated with farming operations (including equipment, labor and knowledge), farm operators often will rent additional acres of farmland when it becomes available in order to allocate their fixed costs over more acres, thereby making their farming operations more profitable on a per-acre basis. Furthermore, because it is customary in the farming industry to provide the existing tenant with the opportunity to re-lease the land at the end of each lease term, many farm operators will rent additional land that becomes available in order to control the ability to farm that land in future periods when profitability is higher. As a result, in our experience, many farm operators will aggressively pursue rental opportunities in close proximity to their existing operations when they arise, even when the farmer anticipates lower current returns or short-term losses.
Financial LeveragingLeverage adds risk for the same reason it increases the reward. If a property cannot meet its future debt service obligations, investors will risk losing to foreclosure the farm that may be pledged to secure the obligations. An increase in the degree of leverage also could make an investment offering more vulnerable to a downturn in business or the economy generally.
Weather ConditionsAnnual row crops and permanent crops are vulnerable to adverse weather conditions, including windstorms, tornados, floods, drought and temperature extremes, which are quite common but difficult to predict. Unfavorable growing conditions can reduce both crop size and crop quality. Seasonal factors, including supply and consumer demand, may also affect the crops grown by our tenants. In extreme cases, entire harvests may be lost in some geographic areas. Also, crops are vulnerable to crop disease, pests, and other contaminants. Damages to tenants' crops from crop disease and pests may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions. The costs to control these infestations vary depending on the severity of the damage and the extent of the plantings affected. These infestations can increase the costs and decrease the revenues of our tenants. Tenants may also incur losses from product recalls, fines, or litigation due to other contaminants that may cause foodborne illness. It is difficult to predict the occurrence or severity of such product recalls, fines, or litigation as well as their impact upon our tenants.
What happens to my investment if FarmTogether goes out of business?Each investment is a unit in a separate Delaware LLC that owns the title to the land.. All investors retain their legal ownership in this LLC independent of FarmTogether. In the event of our bankruptcy, we will aim to secure an external manager to continue to operate the LLCs per the existing agreements.
Geographic RiskWith FarmTogether, you choose which deals to invest in and with that, where those properties are located. The geographic concentration of your portfolio could cause it to be more susceptible to adverse weather conditions and economic or regulatory changes. These could materially and negatively affect the value of your farms or FarmTogether’s ability to favorably lease those properties. We do ensure FarmTogether properties have industry-standard insurance coverage to account for weather events and purchase properties in prime agricultural areas across the country.
Crop Type RiskFarmTogether aims to provide investors with a range of farmland investment opportunities, giving you room to diversify your portfolio by crop type. You’ll see offerings with farmland that is suitable for annual crops, which include grains (such as corn, wheat and rice), oilseeds (such as soybeans and rapeseed), forage crops (such as alfalfa, grass hay and corn silage) and cotton, as well as farmland suitable for permanent crops, such as citrus (oranges, mandarins, lemons), nuts (almonds, pistachios, pecans, hazelnuts), and tree fruit (apples and peaches). With all of our deals we provide potential investors with FarmTogether’s view of market trends for the relevant crops to highlight both the advantages and risks we see.
Market PricesCrop prices are impacted by many factors and can change year-to-year. Weather, crop disease, government regulations & policy, trade, and consumer preferences are just some components of supply and demand that ultimately lead to different commodity prices. Ultimately, this is why we conservatively underwrite our deals and engage in an extensive due diligence process as we purchase properties and choose which commodities to work with.
Farming OperationsFarmland investment opportunities depend on profitable operations. In leased-models, this requires tenants generating revenues sufficient to allow them to meet their obligations to FarmTogether, including their ability to pay rent and real estate taxes, maintain certain insurance coverage and maintain the property generally. In revenue-sharing or directly-operated models, a portion or all of the farm’s profits will be distributed as income to shareholders, thus operator efficiency, expertise, and cost-effectiveness directly impact investors. We select experienced operators familiar with the locations and crops specific to any particular property, in order to mitigate these risks. Additionally, the overall profitability of farming operations can be adversely impacted by, among other things, weather, crop prices, disease, pests, contaminants, and unfavorable or uncertain political, economic, business or regulatory conditions. We can provide no assurances that, if a tenant defaults on the obligations to us under a lease, we will be able to lease or re-lease that farm on economically favorable terms in a timely manner, or at all. Also, we may experience delays in enforcing your rights as a landlord and may incur substantial costs in protecting your investment.
Water RightsSufficient water is essential to farming. Accurately evaluating the water sources and rights to a potential purchase is a key step in our due diligence process. FarmTogether expects to acquire properties with sufficient water access or negotiate the purchase price accordingly and budget for the required development. However, there may be a need to develop an additional water source in the future, like drilling a well. State and county permits to drill wells may be difficult or costly to obtain, particularly in areas where there is a limited supply of water. Furthermore, a property may be subject to governmental regulations relating to the quality and disposition of rainwater runoff or other water to be used for irrigation. We may incur costs to retain this water and comply with such regulations. If we are unable to obtain or maintain sufficient water supplies for our properties, or the costs incurred to obtain or maintain the water supplies cause the farming operation to be less profitable, this could have a materially adverse impact on the results of operations and value of the property. Ultimately, impeding FarmTogether’s ability to make distributions to investors.
Ways to fund your investments
What cash payment methods are available?FarmTogether allows you to fund your investment via ACH or wire transfer.
Can I invest through my LLC, LP or Trust?Yes. For each investment, you will be able to select which entity will be used to make the investment, which bank account the investment will come from, and which bank account will receive distributions.
Can I use my pension funds to invest?Yes. You can use your custodian or our fully integrated partner Alto IRA. You can transfer funds from an existing IRA or roll over assets from a current 401(k) to an AltoIRA in just a few easy steps. Alto lets you invest in FarmTogether while protecting the tax-advantaged status of your retirement account.
Do you facilitate 1031 exchanges?Yes. If you are considering a 1031 exchange for your commercial property or farmland, FarmTogether provides the accommodation services compliant with Internal Revenue Code Section 1031 and can source investment opportunities that meet your requirements. Get in touch with us via email@example.com.
Selling farmland through FarmTogether