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Farmland: The Latest Addition to Your Investment Portfolio

You can easily invest in stocks, bonds and real estate … so why not farmland? AcreTrader set out to make investing in farmland easier and more accessible than ever.

AcreTrader Investment Portfolio

When AcreTrader founder and CEO Carter Malloy was working in public market investments in San Francisco, he remained true to his Arkansas farm roots and continued to buy and sell farmland with his father. He had his foot in the door and sang the benefits of investing in this asset class. So when a neighbor approached him wanting to buy some land with him, Malloy was ready to help. However, what Malloy thought would be – and should be – an easy process turned out to be the opposite.

When searching for farmland to invest in online, the two came up dry. “There was just this moment of realization that here’s this multi- trillion-dollar asset class – with pretty incredible asset performance and investment performance – and no simple access to get it for most people,” said Malloy. “It was really about asking how we could simplify access to this exceptional asset class.”

Exhibited on the front page of AcreTrader’s website reads the Mark Twain quote, “Buy land, they’re not making it anymore.” So to provide investors the ability to do just that, Malloy created AcreTrader. At its core, AcreTrader is a farmland investment platform. “Rather than having to go out and buy a whole farm, we simply compile groups of people to buy farms together,” said Malloy. This is achieved with really great underwriting and really great software, making it easy for people to come online, invest in farmland and build their portfolio. “Users can buy small slices of farms in [places like] Arkansas, Mississippi, Indiana, Illinois and California and invest in a diversified portfolio across the U.S. for far less than they’d have to spend to buy the whole farm,” Malloy said.

Since it’s founding in 2018, AcreTrader has seen tremendous growth and support. “The business is growing like crazy. We’ve doubled our business from last quarter to this quarter and we are seeing really tremendous growth,” Malloy said. AcreTrader is growing its team, which currently comprises of just over 20 bright, exceptional and curious people. “I can’t stress how much it’s a team effort here and how incredible the people that work at AcreTrader are,” Malloy added. “I’m more excited today for our business than I ever have been.”

In any new innovation, potential users have a lot of questions. To get to know AcreTrader better, we spoke with Malloy to answer some of those big questions.

Advantages of using AcreTrader

First things first, what is AcreTrader?

Through a proprietary online investment platform, AcreTrader utilizes a method similar to crowdfunding to aid people who want to invest in farmland. AcreTrader removes the grunt-work traditionally associated with land ownership by handling all aspects of administration and property management. From insurance and accounting to working with local farmers and improving soil sustainability, you can be hands-off in all aspects beyond the initial investment.

I know about stocks and bonds and those types of investments. How is this different or better?

Land is one of the oldest investment classes in existence, producing enormous wealth over generations. United States farmland represents an attractive, long-term investment while providing significant relative capital preservation during times of economic turmoil. No matter the economic swing, land and food remain crucial to our existence and therefore will remain valuable. Our global population is growing and the amount of U.S. farmland acreage is shrinking, making the laws of supply and demand in favor of farmland investing. As a result, farmland has consistently beat out other asset classes over time.

Perhaps more impressive is the consistency of farmland returns over time. While the value of gold or stock markets can go down over 40 percent or 50 percent in a single year, farmland returns have been positive every year since 1990 (the first year of the index).

Investing in farmland makes for portfolio diversification away from the mainstream financial system. Instead of (or in addition to) investing in the lofty ideals of financial institutes, investing in farmland is a real asset that produces an essential commodity: food. Even during “bad years” on the farm, low historical volatility suggests a limited downside in these times. So even in economic turmoil, investment in farmland has helped its investors maintain wealth.

AcreTrader Cumulative Returns of Major Asset Classes

Why should I trust AcreTrader?

Malloy himself states that the most important thing the company does is doing the right thing. AcreTrader’s core theme of transparency and liquidity is one they are most proud of, even as a fresh and new business.

“Without a doubt, [credibility] was our biggest barrier, and remains so today,” said Malloy. One way AcreTrader has tackled this barrier is through transparency and sheer volume. The more transactions and the more successes that AcreTrader creates, the more positive word-of-mouth spreads. To get that credibility-achieving volume, AcreTrader ensures all their documents and verbiage are clear and honest so that users feel confident in the process. On their website (www.acretrader. com), they provide informational documents, videos, graphs and even a 21-page risk factor document to answer virtually any question a user might have. “What we do as a company to address the trust question is to be transparent always, about everything. Our documents are very clear, they are very favorable to the investors and farmers we are working with,” said Malloy.

Who currently utilizes AcreTrader?

AcreTrader has two sets of customers: farmers and investors.

While there are lots of farmers on the platform, Malloy says that most of its investor-side users are people outside of the agriculture industry. “We have investors all over the country and in big cities. And then we also have people who invest in farms that are down the road from them, in their communities,” he said. “It’s all of the above. And that’s what we are really excited about, is that we can make it accessible to both the farmer down the road and to he doctor out in Charlotte who didn’t have access to investing in farming before.”

As a visual token of their investment, investors are sent a small vial of soil from the farm they bought into. These glasses of soil also serve as great conversation starters when displayed in the office or home.

Vial of soil from farms bought into

Who is behind this and how is it funded?

At the core of AcreTrader is a highly qualified team with decades of experience and billions of dollars in revenues and investments. Currently serving on their Board of Advisors are Don Robert, Chairman of the London Stock Exchange; Warren C. Jenson, CFO of LiveRamp (formerly Acxiom) and former CFO with, NBC, Delta Airlines and Electronic Arts; John Wright, former Vice President of Operations with J.B. Hunt; JayMcEntire, Manager of Glennoe Farms, Chairman of Utah Gas Corp., Chairman of Asset Revitalization Solutions and former CEO of Cogency Software Inc.; and BarryKnight, Head of Indigo Research Partners and formerly CEO of Cresco Ag, CCO of Pinnacle Ag Holdings and President of Jimmy Sanders.

In addition to a strong team of advisors, AcreTrader has heat behind its funding. This past year, AcreTrader raised over $5 million in funding, by RZC Investments, a private equity firm owned by members of Walmart’s Steuart and Tom Walton.

What does the future look like for AcreTrader? What’s the big picture?

The farmer’s market is notoriously confusing and there’s not a lot of information out there to remedy this. From the start, AcreTrader has had the intention of improving the overall experience of farmland investment, and they continue to make this a priority. “Improving the speed of transaction and improving transparency in that process is close to us. It’s what we are most excited about,” he said.

A two-sided marketplace business is known to be a win-win for all partners involved. Businesses like Airbnb or Uber have unlocked the successes of this business model, also known as a “Platform Business Model.” So what if we could make a similar win-win experience for farmland investors and farmers alike? Creating a similar business model for farmland is what AcreTrader is interested in perfecting in the long-term.

How do I invest in land?

For investors, step one is creating a free account with AcreTrader. Upon registration, users electronically sign documents within the platform and link up their bank account through a third-party provider, Plaid. Plaid provides a similar service as a Venmo or Paypal, meaning the staff at AcreTrader never sees the user’s personal information and none of the login information is captured by the company.

Once online, AcreTrader provides portfolio tools where the user can see everything you own, even the ability to view them spread out on a map of the United States. AcreTrader prides itself on the seamless, easy-to-use user interface and its ability to allow investments to take place completely electronically. “Quite literally, you can go on our website and within five minutes own U.S. farmland,” said Malloy.

When investing, the user is purchasing shares in the entity that owns a farm. Each entity is divided into shares equivalent to 1/10 of an acre. So, if the user buys 20 shares, their ownership represents the equivalent of two acres of land and the associated distributions.

Cumulative Returns of Major Asset Classes

How do I know land is worth the investment?

AcreTrader’s key to success is its thorough underwriting process. Through an incredible team, they eliminate over 99 percent of the parcels that they evaluate, which means there is often downtime between offerings. Each accepted farm and its legal title are then placed into a unique entity (usually an LLC) and a real estate contract with the landowner is established. Since the landowner is provided ample time to complete due diligence, legal work and fundraising on AcreTrader, new listings are only available every one-to-two weeks, and this land goes quickly.

To give investors a fair shot, users are notified as new offerings become available. Up until they go public, AcreTrader also conducts webcasts on the land and provides that crucial educational key. When the rush to buy happens, users were provided with enough information beforehand to feel confident in their investment.

How do farmers work with AcreTrader?

For farmers, the first step in getting started is filling out a form online on AcreTrader’s website. An AcreTrader representative will reach out and gather more initial information to ensure you are a good fit.

Next, the AcreTrader team will conduct in-depth land valuation work and provide recommended next steps to determine value. Once the foundation is there, AcreTrader will work with you (the farmer) to sell their land through the method of sale that best fits their needs. AcreTrader is dedicated to working alongside the farmer throughout the process, answering questions along the way.

Carter Molloy CEO and Founder of AcreTrader
Carter Molloy, CEO and Founder of AcreTrader

AcreTrader’s promises:

Transparency: No hidden fees. Simple. Straightforward. Always.

Security: AcreTrader uses 256-bit encryption, the highest level of encryption commercially available, to ensure that every transaction, financial or otherwise, is secure with the maximum level of protection.

Flexibility: Invest online in minutes and access potential liquidity through the AcreTrader marketplace.

What do you think?

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