How It Works

We select a tiny fraction of the parcels we review, ensuring each offering is of the highest quality. 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.

You purchase shares in the entity that owns a farm. This can be done in just minutes online.

• 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.

AcreTrader Management handles all aspects of 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.

AcreTrader disburses excess annual income to investors. We would generally expect an unlevered 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.

Investors will generally hold ownership for 5-10 years. Upon sale of the land, you receive your principal and any appreciation over the hold period. Should you wish to sell some or all of your shares, you may be able to do so on the AcreTrader

marketplace.

AcreTrader anticipates adding secondary market capabilities in 2022, subject to regulatory and other approvals. Resales may only occur in accordance with applicable securities law exemptions and are subject to certain restrictions such as 1-year hold period.

• 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, AcrePro, and work with other potential brokerages, funds and farmers to work towards the best outcome for investors in each entity.