Given its tangible nature and global demand, real estate would be a more stable form of investment relative to the stock market, increasing wealth through appreciation in land value and rental income.
However, there are still segments in this asset class with different sensitivities to market volatility. Commercial real estate, for its part, has been hit hard since the start of the pandemic and is currently experiencing a patchy recovery. At the same time, single-family rentals have grown into a $ 4 trillion market as rents and land values have skyrocketed due to record demand. Over a decade ago, the housing market experienced a total collapse fueled by subprime mortgages that triggered a global recession.
While real estate can provide a hedge against inflation and long-term growth, buying any category of property without research may not generate a return and may even result in losses. It is therefore important to remember that different real estate asset classes have unique demand drivers.
With this in mind, the growth of agricultural land is directly related to the intrinsic nature of the growing food supply chain. It is estimated that Earth will be home to nearly 9.7 billion people by 2050, and over time, the need for good quality and abundant food and water is likely to result in a high demand for fertile farmland in the world. whole world.
Farmland weathered the recession of the 1990s, the recession of 2008, as well as the dot com crash, and shares a negative correlation with the stock market providing a hedge against market volatility. In addition, the value of agricultural land rises during periods of high inflation, as rising food prices lead to the growth of the farms that produce them.
How technology is reinventing investment in farmland
Agricultural areas in the United States have shrunk due to climate change and rapid urban developments at a time when the population has grown at a rapid rate. In order to meet the growing food demand, farmers will need to adopt sustainable practices and use modern equipment for increased efficiency, which is possible through innovation and capital investment. Decreasing area of agricultural land and long-term concerns about food and water scarcity are expected to increase the price of fertile land in the future.
Although farmland appears to be a relatively stable investment option, the highly fragmented state of the agricultural sector without widespread awareness of the benefits of investment has not attracted many investors. In addition, high initial investment requirements and inaccessible markets have kept farmland out of reach of many investors until now.
With the advent of advanced technology and artificial intelligence, real estate-focused financial technology companies have found ways to create and maintain online marketplaces that allow individual investors to directly own single-family rentals, commercial spaces and even farmland entirely online. These fintech companies are bridging the gap between homeowners and buyers by using technology to reduce fees and minimum investment capital, as well as by assigning licensed property managers to take care of the day-to-day upkeep of the property. the property.
FarmTogether: An Online Marketplace for Farmland Investment
Farm Together is an online marketplace where investors from around the world can directly access investment opportunities in premium farmland in the United States. Their intuitive all-in-one platform combines cutting-edge technology, data science, and a highly experienced team with over 70 years of cross-industry experience.
FarmTogether follows its comprehensive 120-point checklist for focusing on farmland and appoints approved property managers for farm management, making it easier for potential investors to review transaction documents, inspection reports and to execute legal agreements from the comfort of their home. In the process, FarmTogether is also able to reduce the initial capital investment to just $ 15,000.
Unlike real estate investment trusts (REITs) which don’t always necessarily give physical ownership of real estate units, investors on FarmTogether actually have physical ownership of the land. FarmTogethers direct investments are in farmland that cultivates permanent crops in the Pacific Northwest and California. Keeping in mind the scope of long-term investments and investor preferences, FarmTogether seeks locations with fertile soil, abundant water levels, and reliable operators within their network.
Their proprietary technology which bears the Terra name enables their team to locate, underwrite and close real estate transactions in various landscapes and types of cultures. Investors are able to increase their wealth through regular income and appreciation of the land.
While monthly income may come from farms and rents, gains from land appreciation are realized when a property is sold based on the pre-trial period for each investment offer. Keep in mind that holding periods can range from five years to over ten years depending on the transaction. Their institutional grade offerings could offer absolute returns in the range of 7-15% with average cash returns of between 3-9%, excluding fees.
How does FarmTogether review and invest in farmland?
Farm Together claims that only three percent of all open transactions go to the online platform. Their extensive checklist takes into account area coverage, location, crop type, soil quality, long-term water availability, title inspection, infrastructure agricultural, climatic effects and workers’ wages, among other parameters to find the agricultural lands that are preferred to function during recessions.
After the preliminary screening, their team takes an in-depth look at macroeconomic trends, price and industry trends, regional and trade dynamics, and farm yield data to create future projections of investment returns and risk. associated market. If the data and results appear to match the investor’s goals and preferences, an internal inspection is organized to verify water rights and quality, title and ownership, as well as the operational capacities of water systems. irrigation and pumping.
Farm Together makes sure to work with established operators like TriNut Farms and Farmland Opportunity, keeping costs and even their distance from farmland in mind. Once the operator and FarmTogether reach a mutual agreement, the process of closing the investment opportunity begins. The operator will then take charge of the rental management and the collection of rents on behalf of the investors.
How to register with FarmTogether
Farm Together currently offers farmland crowdfunding offers for a minimum investment of $ 15,000 and bespoke wholly owned offers for an investment greater than $ 1,000,000 to accredited investors. According to the United States Securities and Exchange Commission, an accredited investor must have an annual income of more than $ 200,000 ($ 300,000 for joint income with a spouse) or a net worth of more than $ 1 million to l exclusion of the value of the main residence.
The first step in establishing a relationship with FarmTogether is to create an account and complete the investor profile. To verify accreditation status, you can share certificates from InvestReady or Verifyinvestor or provide documents to substantiate your income or net worth.
Upon successful account registration, investors can visit the offer page, review expected returns, investment amount, holding period, legal documents, title, and prior inspection reports. to complete the transaction. You can also contact their dedicated support team for a walkthrough. The investment will require the electronic signature of both parties’ legal documents via an encrypted medium before payment options are displayed.