Agriculture Real Estate | Why Investors Should Consider Farmland
November 11, 2019
If you’re a real estate investor, it makes sense to include a variety of properties in your holdings, including residential, commercial and farmland. Many investors think that agricultural and undeveloped land is a long-term investment that won’t pay off for years. It’s also harder to get a loan for unimproved land. This may be true for individual purchasers, but farm crowdfunding provides an alternative that lets you make money every year for a relatively small investment.
Farmland investments are excellent assets if you are a real estate investor looking to expand your portfolio. When you invest in farmland, you immediately add an inflation-resistant asset that helps you hedge against losses in traditional asset investments. That’s because land values run counter to conventional equity investments. Furthermore, land maintains intrinsic value even during a recession. Let’s look at the ways you can access a farm investment, including crowdfunding for agriculture.
If you invest in residential real estate, chances are you have to dip into a reserve fund or borrow money to acquire a property, fix it up, stage it and resell it. This can take anywhere from several weeks to several months. It’s also super stressful. If you invest in commercial real estate, there’s a huge entry barrier in terms of the amount of cash you need to get into this sector.
Commercial income properties require hand’s on management or expensive property management companies to stay on top of filling vacancies, collecting rent and keeping the building in working order. There’s also no guarantee that you’ll make money.
Investing in farmland comes with tax advantages not available in traditional real estate investing. These include depreciation, based on certain crops, such as grapes and nuts. You can also declare the land a conservation trust, which preserves the land as farmland, which has favorable property tax rates in every state.
Generally, agriculture and real estate are both long-term investments with little liquid value. Both are less sensitive to market changes than the stock market. However, all real property, include farmland, moves in cycles, which include price dips. Sometimes, this is tied to the value of crops.
When agriculture prices drop, so do land values. For savvy real asset investors, this presents a golden opportunity. Also, while prices move up and down, farmland rarely sees a “bubble” like the one that before the 2008 financial crisis.
When you invest in farmland through agriculture crowdfunding, you get all the benefits of investing in a lasting commodity at a much lower risk.
Many platforms allow you to create a free account so you can review and track available assets. This is a great way to compare platforms or make a small initial investment. When you buy real property, you don’t have this option, so this is one way that agriculture crowdfunding offers more flexibility to investors.
You should also consider the type of farmland you wish to invest in. With food prices rising across the board, any farmland may seem like a great investment. However, choosing properties that produce in-demand crops shields your portfolio from sudden drops in the market.
Look for a management team with roots in agriculture and an established presence online. Scams abound on the internet and it’s important to do your homework when vetting out a partner for farmland investments. For example, FarmCek was the first dedicated farm crowdfunding platform and is the brainchild of fourth-generation farmer Brandon Silveira.
FarmCek is a real estate asset company. Check out their available opportunities and note the high-return potential. Through agricultural crowdfunding, you become an owner and can earn a profit each harvest. Meanwhile, FarmCek manages or hires someone to manage the operations from planting to selling the harvest.
Available farmland is disappearing, so this low-cost approach provides access to farmland investments to those who don’t have the time or resources to run a cherry farm or till cornfields. Because of its experience as the first agriculture crowdfunding site, FarmCek offers a safe, secure portal with solid investment opportunities vetted out by leaders who know about farming.
Crowdfunding for agriculture provides a safe, low-cost way to invest that has tax advantages conventional real estate investing doesn’t offer. It’s also a lot less risky to put a small amount of money into crowdfunding then it is to invest thousands of dollars purchasing, fixing and flipping an investment property. Best of all you won’t have to deal with contractors or pick up a hammer.
Sign up for a free FarmCek account to explore available farmland opportunities or review our Ultimate Guide to Investing in Farmland to learn more.
