How it Works

Learn about how farmland investing works on AcreTrader

Farm Selection & Entity Creation

We select less than 5% of the parcels we review. Each farm and its legal title are placed into a unique entity (usually an LLC).

  • The unique entity establishes a real estate contract with the land owner and is provided time to complete due diligence, legal work and raise funds on AcreTrader. The typical time period for this is 30-90 days.

Investment

You purchase shares in the entity that owns a farm, starting with as little as $1,000.

  • Each entity is divided into shares equivalent to 1/10 of an acre. So, if you buy 20 shares, your ownership represents the equivalent of 2 acres of land and the associated dividends.
  • Our online process can be completed in just minutes, and you can invest 100% electronically. Or, if you prefer, feel free to contact us for help through the investment process.

Farm Management

AcreTrader Management will handle all aspects of entity administration and property management, from insurance and accounting to working with local farmers and improving soil sustainability.

  • We work closely with our farmers and external managers to help with best practices, technological improvements, sustainability, and immediate access to capital. Our goal is to improve our farmers’ lives and ease of doing business in every way possible.
  • AcreTrader farmers pay cash rent, a highly common relationship between farmers and landowners (nearly 40% of all U.S. farmland is rented or leased).
  • The unique entity usually receives the rent in advance of planting season, so you take virtually no crop risk, weather risk, etc. The rent is kept in a unique bank account held by the entity to reserve against any taxes owed or potential capital improvements until payout in December.
  • We charge a flat annual administration fee of 0.75% (of overall farm value) that is typically deducted from the income of the farm.

Dividends

AcreTrader will disburse excess annual income. We would typically expect an unlevered gross yield of 3% - 5% for lower risk properties. Note that this cash yield is in addition to expected annual value appreciation.

  • We pay out cash dividends each December to investors in each farm. We will provide any necessary tax documentation by February of the following year, well in advance of tax season.
  • Including value appreciation, our typical target unlevered IRR goals are 7%-9%. This compares to historical a farmland IRR of 12% due to:
    1) currently depressed commodity prices, and
    2) some conservatism in our underwriting (for example, we don’t build in commodity cost improvements despite growing global demand and a favorable historical trend).

Please see additional details on historical farmland returns and how we calculate IRR.

Sell Your Land

Should you wish to sell some or all of your shares, you may do so on the AcreTrader marketplace. You may also hold ownership until the terminal date (typically 5 years for value-added properties and 10 or 20 years for yield-focused properties).

  • At the terminal date, the subject farm will be sold and all net proceeds will be distributed, at which point you should realize any additional gains from appreciation in farmland value.
  • We will use our affiliate brokerage, AT Real Estate, and work with other potential brokerages, funds and farmers to work towards the best outcome for investors in each entity.

Need More Details?

Feel free to contact us at any time

Additional resources available below or in our FAQ section

I am an investor

See additional information about farmland investment performance.

Historical Farmland Returns

I am a farm owner

See additional information about partnering with AcreTrader.

Farm Partner Information