Why A Growing Number of Investors Are Adding Farmland To Their Portfolios

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

This growth in demand along with the shrinking supply has more individual and institutional investors turning to this asset class for the anticipated growth in value over the next several years. 

The latest farm offering on AcreTrader, a farmland investment platform that utilizes crowdfunding, was fully subscribed within 31 minutes of going live on the platform earlier this week, demonstrating investors’ growing appetite for agricultural land. 

The increased demand can also be seen when looking at the growth of farmland REITs. Gladstone Land LAND has seen a 75% increase in its share price since the beginning of 2020 and a 55% increase year-to-date.

Similarly, Farmland Partners FPI has seen an increase of 74% in its share price since the beginning of 2020 and a nearly 36% increase year-to-date.

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Consistent Historical Returns: Farmland has proven to be a stable investment over the years with very little correlation with the stock market. According to research conducted by AcreTrader, this asset class has provided an average annual return of 12.2% over the past 20 years with very little volatility. 

Investors earn a return with farmland through appreciation and rental income paid by the farmers using the land. Land values and average rental rates have more than doubled in the past 20 years. The average value per acre in 2001 was $2,048 compared to today’s value of $4,442, and rental rates per acre have increased from $60 to $125 over the same period.

Farmland Attracts Big Investments: Bill Gates has made a lot of headlines over the years, but very few people were expecting to see the news earlier this year that Gates had become the largest private owner of farmland in the U.S. 

However, that doesn’t seem that odd when you look at the amount of money several large funds have invested into this asset class, including Hancock Agricultural Investment Group, which has $3.7 billion in farmland assets under management.

Farmland Investment Options: There are several options available to invest in farmland. The most traditional option is to purchase land directly, but keep in mind that you’ll need to make sure you have a solid lease in place. 

Most investors choose a more passive route by either investing in one of the REITs mentioned above or pooling their money with other investors through a real estate crowdfunding platform. The most popular farmland crowdfunding platforms are: 

AcreTrader: AcreTrader’s investment platform is available to accredited investors with minimum investments ranging from $10,000 to $25,000, or the equivalent of about 4 acres.  

View more information about the AcreTrader platform. 

FarmTogether: FarmTogether is another crowdfunding platform for accredited investors with minimum investments ranging from $15,000 to $50,000. The company also has options available for investors that want sole ownership and are willing to invest $1 million or more. 

View more information about the FarmTogether platform.

Photo: Dan Meyers on Unsplash.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.