Investing in farmland may be one of histories first investments. Buying land to farm and produce crops can be a rewarding career as well as a great investment. Over the years the farming industry has changed dramatically. The way farmland has been funded has also evolved. Real Estate Investment Trusts have provided a way for investors to gain exposure to farmland in their portfolios. New and exciting ways to enter into farmland investment have popped up in recent years with the development of fractional ownership. There’s a few simple ways to invest in farmland you need to know about.
A few of the biggest farmland REITs are Farmland Partners and Gladstone Land Corporation. These investments have a few attributes which make them desirable. The first benefit is they are publicly listed on the New York Stock Exchange and Nasdaq exchange and trade everyday. This makes REITs highly liquid compared to owning land outright where you can sell and take your cash elsewhere at anytime. The second feature of farmland REITs is the dividend yield. Farmland Partners currently pays a 3% dividend while Gladstone Land Corporation pays nearly 4%.
When investing in the Farmland Partners REIT you gain access to over 160,000 acres of land located in 17 states across the U.S. The land is farmed by 125 tenants growing 30 commercial crops. They are also engaged in seeking out additional high quality farmland to add to their portfolio. REITs make sense if you consider the high costs and overhead involved in purchasing your own land and maintaining leases with farmers across the county.
Gladstone Land Corporation is a publicly traded real estate investment trust and is listed on the Nasdaq. They manage farmland in 14 states across the county and are active in the purchasing of additional land to add to their portfolio. The current value of their holdings is over $500 million.
Farmland Fractional Ownership Companies
There’s numerous fractional ownership companies popping up lately with many attractive features. We’ve discussed Farm Together here, where the minimum investment is $50,000. Offering over 80,000 acres, Farm Together boasts some of the best management in the industry with over 70 years of experience. Purchasing quality land at a discount because of their strong financial backing is one of their competitive advantages. Negotiating directly with landowners to reduce broker fees is another tactic Farm Together cites as a company strength. They estimate a 9 – 12% total return along with a 4 – 6% yield.
AcreTrader is another fractional ownership company to offer attractive returns on farmland while diversifying your portfolio. The company website lays out the argument for farmland investing with a few main points. The first benefit to investing in farmland is to diversify. Farmland investing enables you to move away from the mainstream financial system. It’s also non-correlated to other asset classes. It can act as an inflation hedge. Finally, it has lower volatility historically than other investments and performs relatively well in periods of economic slowdowns. With the growth in fractional ownership there’s ever increasing and simple ways to invest in farmland.