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How to Buy Farm Land (Mini Guide)

What Is Recreational Land

According to the U.S. Department of Agriculture, farmland in America totals about 911 million acres. Approximately 61% of the property used by ranchers and farmers is their own, with the other 39% being rented from other landowners.

The other 31% of America’s farmland is owned by investor groups (such as retired farmers), with 10% owned by trusts, companies, or other owners, and 21% possessed by non-operating partnerships or individuals. Other operators control 8% of this farmland.

With this distribution, just a small portion of the farmland in the nation is owned by non-farming investors. As more investors add profitable farms to their investment portfolios, that portion has been expanding.

This mini-guide will look at the expanding range of strategies for buying farmland to include it in your portfolio as well as the reasons why you should consider investing in farmland.

How to Buy Farmland

Even though tenant farms in America date back to the aftermath of the Civil War, the agricultural industry continues to be an unconventional asset class for property investors. The bulk of the nation’s agriculture and pastureland is owned by farmers, both active and retired.

However, since new avenues for investing in the industry have opened up recently, farmland has become a more popular asset category for investors. Here’s how you can diversify your holdings by purchasing some acreage.

1. Buy land directly

The most straightforward strategy to invest in farmland is to buy suitable cropland or pastureland and then rent it to a rancher or farmer. Since an investor would probably need to buy a substantial piece of land, this agricultural investment strategy entails a high upfront cost. 

As per the USDA, pastureland cost roughly $1,390 per acre, while crops averaged $4,130 per acre in 2018. While this was going on, investors generally rented out pastureland for $12.50 an acre and crops for $138 per acre, suggesting cash returns of 3.3% and 0.9%, respectively.

There are a number of options available to buyers of land who want to engage in farming, each with advantages and disadvantages of its own:

2. AcreTrader

A crowdfunding website called AcreTrader gives certified investors easy access to farms. The minimum investment requirement for the majority of its products is 10 shares, which is equal to one acre of land, which typically costs between $3,000 and $10,000 per acre. Investors own shares in a Limited Liability Corporation (LLC) which owns the legal title rather than the actual acreage of the land itself.

3. Invest through a farming-specific crowdfunding site

In recent years, a number of businesses have emerged to offer online access to farmland assets. The majority of such farmland crowdfunding platforms, however, are only accessible to accredited investors, who are defined as having a high net worth of at least $1 million, exclusive of the capital in their principal home, or a high income of at least $200,000 over the previous two years, and $300,000 if married.

4. FarmTogether

FarmTogether is a digital farmland investment marketplace. It offers prescreened U.S. farmland investment possibilities to authorized investors directly. Investors have the option of making direct investments in particular farms or in a portfolio that holds many farm holdings.

5. Steward

Steward is a platform for crowdfunding with an emphasis on purchasing sustainable farms. It tries to give farmers money (in form of a loan) so they may maintain and grow their crops. With a modest minimum investment requirement of $100, its debut product, the Steward Farm Trust, will be accessible to all investors and will hold a portfolio of loans available to farmers.

6. Farmland LP

The primary objective of Farmland LP is to purchase commodity farming and turn it into more desirable organic farmland. It gives accredited investors the chance to take part in a private equity fund with the option of eventually turning into a REIT and being publicly listed.

7. Buy shares in specialty REITs 

There are now two publicly listed (REITs) real estate investment trusts that concentrate on buying farmland and renting it to farmers:

The largest publicly listed agricultural REIT in the United States is Farmland Partners. It possessed assets worth around $1.1 billion as of mid-2019, comprising 158,000 acres of land spread over 17 states. More than 100 tenants who grow 26 different crops, including 57%  of row crops (cotton, rice, corn, and soybeans ) and 42% of permanent and specialized crops, were given the lease to use this land (vegetables, non-tree fruit, wine grapes, avocados, and almonds).

In contrast, Gladstone Land controlled 111 farms totaling 86,534 acres across 10 states, worth $876 million. It largely focuses on agricultural land that is used to cultivate nutritious foods, including nuts, vegetables, and fruits.

These agricultural REITs are the most accessible and affordable option to invest in farmland since they are open to every investor having a brokerage investment account as well as enough money to purchase one share. They do, however, face some market risk because they transact on stock markets.

Why Should You Buy Farmland?

Farmland has a reputation for delivering reliable returns for investors, which is the key reason why more of them are turning to it as an investment option. There are two types of returns:

  1. Crop yields or rent payments in cash
  1. Increases in the value of farmland

American farmland has increased in value by around 6.1% every year during the past 50 years, with only five years of decline. Even more spectacular returns have been received by investors when cash rent yields are included.

According to the USDA, farmland has generated an average yearly return of 11.5% since 1991, making a profit each year. With the exception of the Dow Jones REIT Index, it has exceeded all other types of assets throughout that time period, to put this return into context.

Aside from the potential for above-average overall returns, owning farmland offers investors a number of other advantages:


Farmland has often made profitable investments. Unfortunately, due to the high initial cost of purchasing farmland, not many buyers have been in a position to profit from this asset type.

That has improved recently, though, as a result of the emergence of new options like REITs and crowdfunding platforms for agriculture. As a result, American farmland is now considerably more affordable for investors to purchase, making it a more widely available asset class.
If you have farmland that you need to sell, we’ll help you sell your land quickly without listing fees, and you’ll get a free, no-obligation cash offer. Why not give us a call today?

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