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Farmland Investing For Beginners 2022 | How To Buy Land! - YouTube
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how's it going today guys welcome back
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to the channel hope you're having a
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great day so far so in this video today
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we're going to be talking about farmland
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investing for beginners now this is an
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asset class that most people are
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probably just simply not familiar with
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and so i want to basically shed some
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light on that for you if you're a
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complete beginner talking about what
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this investment actually is but in
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addition to that if you're somebody who
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is more familiar or ready to get started
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with an actual farmland investment i'm
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going to be showing you exactly how to
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do that as well so make sure you guys
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grab a pencil pad of paper drink
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whatever else you might need because we
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have a lot of information to cover here
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and that being said guys let's jump
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right into the presentation okay guys so
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let's talk about farmland investing for
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beginners or why exactly people are
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beginning to either invest in farmland
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or explore it more as an investment
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option real quick guys i just have to
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make a disclaimer here that i am not a
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financial advisor this is not any sort
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of financial advice and you should
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always do your own due diligence above
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and beyond this video before making any
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sort of investments out there also i
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have been getting a lot of spam and scam
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comments down in the comment section
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below so just make sure if you are you
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know commenting or discussing with
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anyone down there don't give out any
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personal information and if you are
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uh talking with me make sure there is a
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white check mark next to my name
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otherwise that is almost certainly going
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to be a scammer so right off the bat
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what exactly is farmland investing no it
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doesn't necessarily mean that you're
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going to go out there and buy your own
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farm and be an owner operator of
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farmland that is just one of the many
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ways that people do it simply stated
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farmland investing is an investment
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dealing with crops now there's pretty
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much three main avenues that this is
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accomplished right now number one is
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farmland wreaths number two direct
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purchase of farmland or a particular
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farm that would be if you went out
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yourself in your local area or somewhere
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in the country and found a farm got a
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mortgage bought it yourself and then
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rented it out most likely to a farmer or
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decided to be an owner operator and farm
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that land yourself
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number three is the one that is growing
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in interest much quicker and that is
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investing in farmland via crowdfunding
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that is where people from all over the
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place kick in a investment towards a
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particular farm they all invest together
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and there is a separate entity managing
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the farm related duties now we're going
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to cover the basics here in this video
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guys but if you are looking to learn
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more about farmland investing i actually
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have a completely separate blog that i
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started exclusively about investing in
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farmland about a year ago it has free
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guides for beginners we have reviews of
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pretty much every single farmland
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investment platform available today
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right now on the blog we also have
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comparisons as well as podcast
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interviews with many of the top farmland
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investment platforms so if any of that
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interests you guys
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make sure you jump over to
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farmlandriches.com
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and bookmark that website for your
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future reading pleasure there's also
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going to be a link down in the
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description below so let's start off
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with some statistics about farmland in
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the united states well first of all
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there are 911
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million acres of farmland in the u.s and
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over half of the acres are rented rather
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than owned so a lot of people are
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actually buying farmland as an
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investment and then renting it out to a
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farmer as a means of income or
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potentially preservation of wealth as
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well 45 of us farmland is in small
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family farms and 80 percent of rented
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farmland is owned by non-operators now
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here in the united states the top three
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crops grown are number one corn number
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two soybean and number three wheat so if
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you have ever driven all over the u.s
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which i actually did a couple of weeks
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ago it was amazing to see all of these
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massive corn fields and soybean farms
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all over the country
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i don't know that i saw a lot of wheat
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farms but i do know those are all over
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the united states as well so this is
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pretty basic stuff here guys but here's
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a few examples of the different crops
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that we grow here in the united states
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corn oranges peanuts also rice you know
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apples cotton walnuts etc now beyond
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that why are people actually investing
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in farmland well the main reason is the
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consistency in returns of this
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investment since 1992 it's been an
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annualized return of over 11
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and for those who know a lot about the
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stock market well that has actually beat
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the s p 500 which returned 10.7 over
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that same time period now not only are
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these consistent returns since 1992
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higher than the s p 500 it comes with
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another ideal element which is low
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volatility that is the fact that
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farmland is not correlated to the stock
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market so you tend to see less up and
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down movement with farmland it's sort of
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a slow and steady investment on top of
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that we're seeing increasing demand for
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food worldwide as well as shortages at
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the grocery store
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and we're also seeing that farmland
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itself is not increasing in fact we're
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actually destroying a lot of farmland
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and building houses and different
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complexes on top of it and then also
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plain old diversification of assets has
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pushed more and more people into this
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category of alternatives and this is
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pretty wild right here guys according to
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the ncreif
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bloomberg bank rate report here this is
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the average annual returns comparing
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these different assets so farmland is
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coming in at the highest 11.3 next to
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the s p 500 at 10.7 commercial real
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estate 8.0 gold 6.5 bonds 6.4 cds 2.6
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now still most experts would recommend
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having your money spread probably across
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all of these different assets here so
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you wouldn't want to put all of your
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money in farmland but my hunch is that
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most of us are probably overweight in
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equities or other things on here many of
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us probably have zero exposure to
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alternatives or any type of farmland
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investment now one of the most important
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things to understand about an investment
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is how does it actually make me money so
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with farmland investing how are returns
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realized number one is capital
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appreciation or simply an increase in
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the value of the land over time that's
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pretty much the easiest one to
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understand
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and then number two is going to be
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distributions which is where you're
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earning a portion of the rents received
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or potentially a portion of the crops
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that were sold so that's what's really
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cool about farmland and other real
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estate investments is that it allows you
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to be paid in two different ways
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and when it comes down to actually
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investing in farmland right now the
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options are getting a lot better but in
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the past they really weren't that great
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we do have an article over on farmland
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riches going into more detail about
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these two particular wreaths so if you
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guys want to learn more about that i'll
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put a link down in the description below
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now beyond the reits you can of course
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make a direct investment or purchase of
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farmland yourself but that of course is
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going to have a bigger risk because
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you're not diversified across many
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different farms you're putting all of
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your eggs in one basket and you're gonna
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have to pony up a good amount of money
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to secure a mortgage or buy that farm
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outright but it is an option nonetheless
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number three is the most popular one
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these days and that is crowdfunded
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platforms however most of them are
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limited to accredited investors only if
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you want to learn more again guys on
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farmlandriches.com
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we have a tab of platform reviews where
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we have over a dozen reviews of many
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different farmland investment platforms
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available on the market today
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both here in the us as well as in canada
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so if you are watching this from canada
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we have been adding a lot more content
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specifically for canadian farmland
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investing also if you guys want to look
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at live deals right now there's also an
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affiliate link down below for acre
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trader which is one of the best options
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for getting into farmland investments
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assuming that you are an accredited
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investor and even if you're not you can
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still peruse the website take a look at
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offerings and just simply learn more
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about farmland investing as a whole so
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if you guys want to check that out there
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is an affiliate link down below for acre
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trader
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now going over the three options here
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for investing in farmland it's always
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good to do a comparison to understand
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you know why it is that one may be
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different than the other so starting off
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in the category of the wreaths it's
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appealing to a lot of people because of
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the low cost you can get started for the
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cost of a single share of that reit the
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complexity is low but the volatility is
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high because it trades on a major
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exchange with stocks so you do have high
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liquidity it's easy to sell but you're
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going to have a lot of correlation to
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the stock market and overall with those
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reits i have found
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historically the return potential to be
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low so personally it's just not a way
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that i would recommend gaining exposure
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to farmland direct purchase if you have
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you know the know-how and you have the
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money it could certainly be a good
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option but return potential is unknown
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because you're going to be going all in
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on one particular farm you could do
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really well or it could do poorly but
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it's all dependent on that one
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particular farm and whatever crops are
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being grown there and those local
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weather patterns and different elements
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this is going to have low liquidity but
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low volatility because it's not on a
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major exchange it's a physical farm you
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know an actual piece of real estate
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higher level of complexity and much
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higher cost crowdfunded sort of gives
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you the best of both worlds you have
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better return potential than reits there
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is lower liquidity so you do have to be
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in it for the long haul you know this is
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this is not the type of investment where
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you put your money in for six months and
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take it out
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in most cases it's going to be probably
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a five plus year time horizon but you're
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gonna have that low volatility because
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you're not correlated to the stock
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market a little bit more complexity but
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a lower cost more complexity than on the
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reit but obviously less than a direct
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investment in farmland however if you do
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decide to use one of these crowdfunded
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platforms in particular acre trader they
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have a whole team that manages all of
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this for you so you simply choose the
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farms you want to invest in
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make an investment and let them manage
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everything else now of course there's a
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lot of different platforms out there for
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investing in farmland i'm not going to
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cover any of them really here in this
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video guys because it would be probably
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two hours long if i went into it but we
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have a review of every single one of
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these platforms over on farmland
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farmlandriches.com if you decide that
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you want to learn more about any of them
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that being said a quick overview here
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some of the most popular ones are acre
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trader as well as farm together and
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steward and then over in canada you know
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you have area one farms and a couple of
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others that are canadian options as well
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now as mentioned earlier most of these
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crowdfunded platforms require you to be
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an accredited investor so i think it's
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important to identify what exactly that
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is so in order to be an accredited
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investor you need to meet one of the
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following requirements number one you
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must have a net worth of one million
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dollars or more excluding the value of
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your primary residence number two an
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annual income of 200 000 or more and if
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you're married that is going to be 300
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000 or more for the last two years with
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expectations it will remain this high
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going forward or number three you hold
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an active series 7 series 65 or series
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82 license lastly guys i do want to
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cover the risks associated with farmland
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investments because as we know there's
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no such thing as a perfect investment
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out there so here are the three most
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common risks associated with investing
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in farmland number one weather risk this
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is not something that you would run into
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with most investments out there but with
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farmland the weather plays a huge role
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in the profitability of a farm and even
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if you're just renting that farm out
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well if your farmer doesn't have money
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because the crops aren't coming in that
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could also be a problem number two
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there's also crop risk from things like
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insects or disease and then number three
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there is that liquidity risk because of
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the fact that it's not as easy to sell a
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farm as it is to go out there and sell a
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stock so anyways guys that's going to
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wrap up this video i hope you enjoyed it
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if you did please go ahead and drop a
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like for the algorithm and go ahead and
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subscribe for those future notifications
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as mentioned in the video if you want to
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learn more about farmland investing or
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learn about different platforms that
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allow you to invest in real estate in
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particular farmland make sure you check
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out my blog
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farmlandriches.com and there's also
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going to be a link down below for acre
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trader which is one of my most trusted
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platforms in terms of farmland
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investment and if you are an accredited
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investor you can view offerings right
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now and potentially make an investment
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so there's an affiliate link down below
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for acre trader as well but thank you
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guys so much for tuning in i hope you
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enjoyed this video don't forget to
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bookmark farmland riches for your future
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reading pleasure and as always i hope to
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see you in the next video
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