Acretrader is built by investment professionals and agriculture professionals who have historically invested in land among other assets. We have sought ways to make farmland a more approachable investment, and believe that AcreTrader is finally a way to provide investors with direct and easy access to this attractive asset class. To learn more, please visit the About Us page.
Frequently Asked Questions
Who is AcreTrader?
What is the AcreTrader platform and how does it work?
AcreTrader has created an online platform for investing in farmland real estate. Through our portal, investors who want to invest in farmland can do so in a secure environment without facing many of the traditional challenges of owning and operating farmland. Investors can browse potential farm offerings, review due diligence materials of the farms, and if interested in investing in a farm, may transfer money and sign legal documents securely online. Investors may access information on their investments via our investor dashboard 24/7.
What are the benefits of using AcreTrader?
AcreTrader makes it easy for investors to invest in farmland without being required to do all of the work to conduct due diligence and without even knowing how to operate a farm. We spend countless hours reviewing potential farmland listings, and allow individuals to invest in the asset without having to buy an entire farm. We make investing easy by allowing you to review potential offerings online, sign legal documents online, and have access to all your documents in one place on your investor dashboard.
What is the track record of your executive management?
At the core of AcreTrader is a highly qualified team, combining decades of experience in financial services and agriculture alongside billions of dollars in revenues and investments. Prior to AcreTrader, our CEO was an investment professional at a $1 Billion investment fund and our VP of Farm Operations co-managed over $200 Million in farmland investments.
Please see About Us for more information.
Who are your land managers and what are their qualifications?
In addition to our staff, AcreTrader works with several leading land management companies that collectively manage hundreds of thousands of acres. They help ensure our farming partners are adhering to best practices.
Are you a Broker-Dealer?
AcreTrader is not a broker-dealer and is not a member of FINRA | SIPC. In the event that we encounter a situation where it is appropriate to utilize the services of a broker-dealer, AcreTrader has a pre-existing relationship with North Capital and would have no trouble engaging their services.
Who is eligible to invest on AcreTrader?
Anyone can create an account on AcreTrader to receive updates and learn about investing in farmland. However, our current offerings are only open to accredited investors. To qualify as an accredited investor, you must meet certain thresholds as defined by the Securities and Exchange Commission under rule 501 of Regulation D. Specifically, you must meet one of the following criteria:
- Earn an annual income per individual of over $200,000 per year ($300,000 per couple) with the expectation of maintaining such level of income in the future.
- Have a net worth of more than $1 million (individually or jointly), excluding the value of a primary residence.
- Be a bank, insurance company, registered investment advisor, business development company, or small business investment company.
- Be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered.
- Be a business in which all the equity owners are accredited investors.
- Be an employee benefit plan, a trust, charitable organization, partnership, or company with total assets in excess of $5 million.
Please see also accredited investors on the SEC website for the full text.
AcreTrader is actively working to open the platform to allow investment by all U.S. investors, subject to certain limitations. Register here to open an account.
Can non-citizens invest?
Yes, if they are legal residents of the United States.
If I invest on AcreTrader, do I own the actual property?
Yes. While you don’t own a specific location on the subject property, you do have ownership in the LLC that holds legal title to the land.
Is there a minimum to invest on AcreTrader?
The minimum investment amount varies between each individual listing. Many of our offerings require a minimum initial investment of 10 shares, or the equivalent of 1 acre. Given that most farmland sells for $3,000 to $10,000 per acre, we would typically expect this to be the minimum required on the initial investment. You can see the minimum investment required for each individual listing on our current offerings page here.
How do I get started investing in farmland on AcreTrader?
Is AcreTrader secure?
We have taken extensive steps to ensure that all personal data entered into AcreTrader is safe and secure. We use 256-bit encryption, the highest level of encryption commercially available, to ensure that every transaction, financial or otherwise is processed securely.
What do you do with my financial information?
The staff at AcreTrader never sees your personal financial information such as bank account numbers, logins, or accreditation documents. For bank account linking, none of your login information is captured by AcreTrader or its systems. This information is processed by our third-party provider Plaid. Plaid provides similar services to companies such as American Express and Venmo.
What do you do with my accreditation documents?
Accreditation documents go directly to a third-party, North Capital Investment Technology, for review. North Capital has reviewed thousands of these accreditation documents for our company and many others. The staff at AcreTrader never sees your accreditation documents.
How is money transferred?
We typically use ACH or wire transfers to a reputable bank for escrow, so that AcreTrader never touches your money. For specific transfer instructions, please refer to individual listing documentation and/or feel free to contact us at any time with questions here.
How are legal documents handled on AcreTrader?
All legal documents can be sent and signed electronically through our website. This allows for efficient and seamless transfer of documents between you and AcreTrader, while maintaining the authenticity and security of your information. Investments are finalized once proper legal documentation is accepted, funds are confirmed received, and the overall offering is fully closed.
How does the actual investment process work?
An investment is not final until all legal documents are signed and funding has been contributed and cleared. When an investor makes their investment, the money is held securely in escrow at North Capital Investment Technology. Once the fundraising target is met and the real estate transaction is completed, the money is transferred to the title company for the sole purpose of closing on the specific property that is being invested in.
How do you determine whether or not to proceed with an offering for a Property?
We conduct a thorough due diligence on each Property we consider listing on the Site and if we discover anything during the diligence process that causes us to believe an investment in the Property would not be prudent, we will not list it on our Site. While we try to eliminate any potential problems during our diligence process, there could be cases where we discover an error in the information provided to us by a Seller or a problem arises during the pre-closing process (such as a problem with the title) in which case we would not close on the Property.
Often, we will also gauge interest with our investors before listing a Property. Typically, if a property has passed due diligence and fits our parameters, we would expect to list the offering for 30-90 days on the site. If the offering does not become fully subscribed, we will remove it from the site and will not close on the purchase of the Property.
What happens to my funds if a farm sales contract is not closed?
Funds are held in escrow by North Capital, which will refund the investors and send out proper notifications in the event a deal doesn’t close. You can also cancel your commitment any time prior to closing, and they will refund your money.
Do I earn interest on my funds while they are in escrow?
When will I get my investment back?
Different properties have different expected hold periods, typically either 5, 10, or 20 years. A “hold period” is the anticipated time investors will be involved with the investment until the underlying property is re-sold. However, we are currently exploring a secondary marketplace that would allow investors to sell their shares pending an initial 1-year lockup period. There is no guarantee this marketplace will be established, and it is important that you are able to hold your investment for the intended hold period.
How does the hold period work?
The estimated hold period for each Property is not a hard and fast rule, providing some “wiggle room” on the sale of the Property. The actual hold period will depend on market conditions and opportunities at the time of sale. If the right buyer comes along, a Property could sell sooner than the estimated hold period. Conversely, prevailing market conditions may encourage waiting a bit longer.
Why do deals have a maximum ownership duration?
Each offering includes a hold period, typically 3, 5, 10, or 20 years. For most investors, it is important to provide a realization date versus having money tied up perpetually or “evergreen.” We may explore offering some evergreen-type investment options in the future.
What are the costs for using the platform?
Joining AcreTrader and browsing the marketplace requires no payment obligation. For those who choose to invest, there are some pass-through closing fees associated with each initial investment, typically 2% of the total offering value. In addition to these standard administrative and legal fees, there is an annual servicing fee of 0.75% of the value of the land paid to our Affiliate, AcreTrader Management, LLC. This pays for AcreTrader Management, LLC to manage the land, farmers, accounting, reporting, communications and administration. Our primary revenue source is the fee we charge to the seller of the farm, similar to that charged by a real estate broker. This fee is typically charged to the selling farm owner and is expected to be charged at a 5% rate when the entire Property is sold during or after the hold period. Note that neither AcreTrader nor its affiliates charge a carried interest fee on offerings, as we believe these returns should accrue to the investor. We believe in transparency and keeping fees low; you can find the specific fee structure for each deal when you browse through our listings and review offering documents.
Does AcreTrader take a carried interest in each farm’s upside?
No. Gains accrue to the investor, so that they capture the upside potential in the Property. In some specific cases, we may allow 3rd parties (i.e., the local farmer with dirt-moving equipment) to participate in carried interest. However, we have not to date completed any offerings with this feature, and we will make very clear to investors any circumstances where it may apply in the future.
General Investor Questions
What happens if AcreTrader has business problems?
Each farmland entity (typically an LLC) is purposefully bankruptcy remote, so that you will retain your legal ownership regardless of any potential business issues with AcreTrader, Inc. In the unlikely event of our insolvency, the entity has instructions to assign reputable external management and counsel administration, and ultimate liquidation per the existing lifetime schedule of the farmland in question. Additionally, this external management and counsel shall become responsible for management and distributions. Please consult the Operating Agreement documentation for additional details.
How do I receive my crop income from investments in farmland?
We will typically send your allocated portion of the excess cash flow to your AcreTrader wallet, though we can accommodate changing a distribution bank account by request if needed. Distributions, if any, will typically be distributed once a year in December. Distributions are never guaranteed in amount or timing and you should carefully read the offering documents on the specific deal you are interested in to fully understand projected distributions and what risks are involved.
How quickly can I resell my investment?
While we strive to provide liquidity should you need it, we urge you to view farmland as a long-term investment. For accredited investors purchasing land in a 506(c) offering, you should be prepared to hold your investment for at least a year. After that, generally speaking, these shares may be sold to others in a private transaction.
Are the investments secure?
Although no investment is guaranteed, one benefit of investing with AcreTrader is that you are investing in physical assets around the United States. Your investment is in an entity that holds actual property as opposed to a stock or bond or other non-physical assets.
Can I invest using a self-directed IRA?
You can invest with a Self-Directed Individual Retirement Account (SDIRA), and we can work with most SDIRA providers. If this is your intent, please contact us before you commit funds to an offering so that we may help set this up for you.
How will investors be updated about their investment status?
Investors will be able to view any updates about their investments when they login to the AcreTrader site and view their investor dashboard. Additionally, Investors are sometimes notified by email of updates to their investment, including, but not limited to when distributions are made.
Is my investment liquid?
No. The real estate investments found on AcreTrader are private transactions in physical properties around the United States. The investments are not traded on public stock exchanges and cannot be easily sold or traded. You may be able to resell your investment security in a private transaction subject to restrictions that are specific to each investment and under the Securities Act of 1933. Since the resale restrictions on AcreTrader can be very limiting, you should not invest with the expectation of reselling your investment.
Are these investments risky?
Yes. There are no guarantees when you are investing in real estate. The farmland and real estate markets have economic cycles and it is difficult to know how and when the economy will change.
What are the risks associated with investing in farmland?
All investments carry risks and those on our platform are no different, so it’s important that you understand them. No investment process is free of risk; no strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Investing involves risk of loss that you should be prepared to bear and there is no guarantee that investments in farmland will be profitable. The value of your investment can fluctuate—in both directions. Past performance is not a guide to future performance. The value of investments, as well as any investment income, is not guaranteed and can fluctuate based on market conditions. Diversification does not assure a profit or protect against loss. Please see additional risk disclosures here and the documentation accompanying specific offerings.
How do you find land?
We have many sources that include website visitors, real estate brokers, land funds, land managers, industry contacts, and a large network. We have a comprehensive due diligence process and only accept less than 5% of the land parcels we review.
How do you conduct due diligence on land?
We have a thorough process of reviewing land on a state, county, and local level. This includes both a comparable approach and income-based approach. We use a myriad of advanced software tools and in-depth valuation techniques to account for all the unique aspects of each piece of property. A member of our team will almost always conduct an on-site visit, or, at the very least, we have a local manager go out for us.
Who actually farms the land?
AcreTrader, via our wholly-owned subsidiary AcreTrader Management, LLC, will lease your farmland to reputable local farmers who typically pay a predetermined cash rent, a practice common throughout the farming industry. We typically collect the annual rent before crops are planted, thus greatly decreasing default risk. The local farmer/tenant takes care of planting, monitoring, harvesting, marketing and selling crops, and AcreTrader Management often works with these tenants to ensure that the Property is well maintained and that best practices and sustainability remain priorities. See the article in the Learning Center on our Site for more information on farm ownership here
Who are your land managers and what are their qualifications?
In addition to our staff, AcreTrader works with several leading land management companies that collectively manage hundreds of thousands of acres. They help us make sure our farming partners are adhering to best practices.
What can you tell me about the farm management contracts?
The contract is there to protect our investors. Investors sign the Company’s Operating Agreement that governs the management of the Company. The Company enters into a Farm Management Agreement with AcreTrader Management, LLC, our Affiliate, to manage each Property on behalf of the investors to ensure maximum cash yield and value are sought from the farm. AcreTrader Management, LLC may in some cases subcontract the management of the farm to a third-party land management company.
What is the process for dealing with farmers who don’t pay their rent?
Cash rents are typically paid annually in advance prior to the planting season, so if the farmer doesn't pay, we simply identify a new tenant. For some farms we may collect part of the rent post-harvest and should have a first lien on the crop.
Selling Farmland on AcreTrader
How do I sell farmland on AcreTrader?
We would love to take a look at your land and discuss our marketplace with you. Our quality standards are high, and should your land be a good fit for AcreTrader, listing it on AcreTrader is free to you. Sellers of farmland will pay our Affiliate, AT Real Estate LLC a fee similar to what they would pay to a real estate broker if the Property transacts. Should the investor bids meet your requirements, the land sale process on AcreTrader is easy, transparent and low cost. Please use the form here to contact us.
What fees does acretrader charge to sell my land?
Our fees are very straightforward: we charge 2.5% of the transaction value should your land successfully sell on AcreTrader. Customary real estate closing costs for 3rd party vendors like title, survey and legal also apply.
What happens if you don’t get the price I want for my land?
If you list your land on AcreTrader and the bids don’t meet your requirements, we will simply remove the listing and you owe us nothing. No harm. No foul.
What if I just want to sell part of my land?
I’m a farmland broker or real estate agent. Can I use AcreTrader to place a listing?
Yes. Our quality standards are high, and should your land be a good fit for AcreTrader, listing it on AcreTrader is free to you. Should the investor bids meet your requirements, the land sale process on AcreTrader is easy, transparent and low cost, with our affiliate, AT Real Estate, LLC acting as a traditional buyer’s agent. Please use the form here to contact us and learn more.
How are my distributions taxed?
We intend that the Company will be classified as a partnership for Federal income tax purposes, rather than as a corporation. For Federal income tax purposes, a partnership is generally not a taxable entity. Instead, a partnership is generally a conduit through which all items of partnership income, gain, loss, deduction and credit are passed through to its members and are taken into account by the members on their individual income tax returns. In addition, cash distributions from the Company to Members generally are not taxable to the Members, except to the extent the amount of the distribution exceeds such Member’s adjusted tax basis in his, her, or the entity’s interest in the partnership. Cash distributions that exceed a Member’s adjusted tax basis would usually be taxed as ordinary income.
What is a K-1?
A K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Partnerships are generally not subject to federal or state income tax, but instead issue a K-1 to each investor to report his or her share of the partnership’s income, gains, losses, deductions and credits. The K-1s are provided to investors on an annual basis so that each investor can include K-1 amounts on his or her tax return.
When will I receive my Schedule K-1?
A farmland K-1 is usually very simple, so you can expect this to be one of the first tax documents you receive. Our goal is to send all K-1s electronically to Members early each year, but each Property may rely on outside reporting, or require additional time to furnish the forms in a way that is to the investor’s best advantage. You may possibly be required to obtain one or more extensions for filing federal, state and local tax returns.
Where do I report the information contained in my K-1?
The information provided to each investor on his or her K-1 is included on the investor’s federal tax return. Typically, an investor must also file state tax returns in the states in which the Private Offering owns property. In many cases, a composite tax filing may eliminate the need for an investor to file at the state level. Please consult with your tax advisor for more information.
Do I need to mail in my K-1 to the IRS?
No, the Company will submit a Form 1065 (informational return) to the IRS that will include a copy of each individual investor’s K-1.
If a Company suffers a loss, can I claim that loss as a deduction on my individual tax return?
Yes. You may report your allocable share of any net losses reported by the Company on your individual tax return (Form 1040 or other applicable tax form). The amount that you are entitled to claim as a deduction on your tax return may be less than the total loss amount reported on your K-1. Limitations that apply to deductions include IRS basis rules, at-risk limitations, and passive loss limitations. Generally, you are not allowed to claim your share of the Company’s loss if it exceeds your adjusted basis in the Company for the applicable tax year. Please consult the IRS or your tax advisor for more information.
What is my tax basis in my investment in the Company?
The capital account reflected on your K-1 should approximate your tax basis in your investment. Your capital account is calculated based on your initial investment(s) in a Company plus any allocable net income, less any net losses and/or cash distributions as reflected on your K-1 each year. You may want to keep your own running record of your cost basis in each Company for tax purposes because there are certain instances where your tax basis may differ from your capital account balance. For additional details on how to calculate your basis, please ask your tax advisor.
Will I have to file state income tax returns for each Property in which I own Units?
Not in most cases. Wherever possible, AcreTrader Management will file the Company’s return for the state in which the Property is located. If the Property is located in a state where you file returns, you will likely need to include your K-1 on your state income tax return. Please consult your tax advisor about your specific situation.
How much money will it cost in accounting fees to include your K-1 with my tax returns?
This depends on your accountant, but typically any additional cost is nominal if you are already filing a long form 1040 tax filing with other schedules.
How are capital gains treated for a LLC holding farmland?
Similar to any other investment with capital gains. If the Property is sold within the first year, they are taxed at the (short-term) ordinary income rates. Otherwise they are taxed at long-term capital gains rates which may vary depending on an investor’s income.
What is the annual depreciation on my farmland investment?
Interestingly, there is no depreciation on the land itself. It simplifies farm investing accounting for all holders and seems to be an accurate assessment. However, if a farm has improvements (e.g., a dwelling, barns, sheds, underground infrastructure) there may be annual depreciation expense. While residential and commercial real estate often require constant repairs, improvements, and other maintenance in order to preserve or increase value, farmland does not for the most part.
What happens when I sell shares in one property and then buy more of another?
Your investments will be treated the same as buying or selling shares of an individual stock or ETF.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
These FAQs contain certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “outlook,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, or state other forward-looking information.
The forward-looking statements contained in these FAQs are based on our current expectations and beliefs concerning future developments that are difficult to predict. We cannot guarantee future performance, or that future developments affecting us will be as currently anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
You should not place undue reliance on any forward-looking statements and should not make an investment decision based solely on these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.