August 13, 2020

How Does Investing with FarmTogether Work?

by Sara Wensley

Director, Growth and Marketing

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How Does Investing with FarmTogether Work?
FarmTogether's El Nido Almond Farm - Crowdfunding Property
On FarmTogether, investors have an all-in-one technology-powered platform to browse investments, review due diligence materials, and sign legal documents – all online through our secure portal. In this post, we’ll provide an overview of how our model works.

On FarmTogether, investors have an all-in-one technology-powered platform to browse investments, review due diligence materials, and sign legal documents – all online through our secure portal. In this post, we’ll provide an overview of how our model works, and what farmland investing might mean for your portfolio.

Where does my investment go?

With your investment, you can actively contribute to the agricultural economy by providing farmers with the capital they’ll use to elevate their practices.

When you invest with us, you’re buying shares of an LLC. You become a partial owner of a farm of your choice, thereafter becoming entitled to proportionate returns.

As farms push forward towards more sustainable practices, they look towards investors to fund the new technology they need to advance. Your investment provides the capital to build and maintain healthy, environmentally sound farmland for years into the future, that will also contribute to a more sustainable world.

Investing with FarmTogether is unique because our clients have complete visibility into their investment throughout every stage in the investment process, as well as complete control over where their investment goes: you choose the farmland, its location, and the crop.

How does FarmTogether generate returns on my investment?

FarmTogether generates income from land value appreciation, crop yield, and lease payments. Our team relies on local analysts to provide accurate appraisals of farmland each year, and we work hard to acquire land listed below market. When we buy land with the help of your investment, you’ll watch the value of your stake rise as the value of the land appreciates. And, farmland is an investment with historically low volatility: over the past ten years, American farmland has risen in value over 6% each year. Your profit margin grows gradually over time as the land itself increases in value.

Meanwhile, you earn returns from standard farm operations and rent payments. You’ll receive quarterly or annual payouts directly to your bank account with your share of profits from your selected farm. Payouts from farmland are generally very consistent as farmland is one of the most reliable markets, and investors in agriculture tend to benefit from inflation. While prices of corn, wheat, and other crops rise, the cost of production stays consistent, especially for permanent crops, maintaining or increasing profit margins. In times of financial crisis, even during a recession, farmland investments are resilient, providing stability for investors.

Is farmland really profitable?

Farmland is one of the most stable investments you can make. Historically, trends in farmland value move independently of trends in the stock market. Even in times when the value of the S&P 500 has dropped, investors in agriculture across the country have continued to reap returns. In the past forty years, the National Council of Real Estate Investment Fiduciaries (NCREIF) Farmland Index has consistently reported higher and more consistent earnings than all stocks and bonds.

Farmland returns have a low correlation with national economic trends and have low volatility in general. For almost two decades straight, investors in farmland have seen positive returns, with farmland earning an average annual return of 11.5%. Due to the relative stability, investing in farmland is a strong addition to build a diverse portfolio. When you invest with FarmTogether, you choose a reliable, long-term investment.

Contributing to the security of farmland investments is the low vacancy rate of the properties. Due to its scarcity, quality farmland is always competitive, making farmland a unique property investment. In particular, due to the relatively high fixed costs associated with farming operations (including equipment, labor, and knowledge), many farm operators will rent additional available land. This gives farmers the option to farm that land in future periods when profitability is higher, thereby making their farming operations more profitable on a per-acre basis.

What does FarmTogether do for me?

Farmland is a compelling opportunity; it is a safe, stable, and attractive long-term investment, which is why we created a platform to finally make it accessible. Every deal we offer has been evaluated, analyzed, and specifically selected by our team of experts. Once you select a farm and decide how to invest, we provide you the ability to closely monitor your portfolio through your account.

We manage all properties to maximize farm productivity, and we send you regular updates on key performance indicators. You’ll have access to all due diligence documents, project financials, proposed deal structures, and investment documents including operating agreement, private placement memorandum, and subscription agreement, as well as detailed information on the operating partner. We also confirm water rights and quality, environmental compliance, and title, along with testing soil and crop production.

With FarmTogether, we have a variety of investment options available to suit your needs and tailor your farmland investment experience to you. We’ll work with you to make sure you find the right farm and provide you with opportunities to track your investment at every step.

Interested in Learning More About Farmland as an Asset Class?

Click here to see farmland's historical performance, visit our FAQ to learn more about investing with FarmTogether, or get started today by visiting ways to invest.

Disclaimer: FarmTogether is not a registered broker-dealer, investment adviser or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.

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